AMC Global Media Inc. Q4 FY2022 Earnings Call

Good day, and thank you for standing by. Welcome to the AMC Networks Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nick Seibert, Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to the AMC Networks Fourth Quarter and Full Year 2022 Earnings Conference Call. Joining us this morning are James Dolan, Interim Executive Chairman; and Patrick O’Connell, Chief Financial Officer. Today’s press release is available on our website at amcnetworks.com. We will begin with prepared remarks, and then we’ll open the call for questions. Today’s call may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to AMC Networks’ SEC filings for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements made on this call. Today, we will discuss certain non-GAAP financial measures. Required definitions and reconciliations can be found in today's press release. With that, I'd like to turn the call over to Jim.

Good morning, and thank you for joining us. Before we start, I want to take a moment to say that after a thorough search by the Board of Directors, we were very pleased to announce earlier this week that Kristin Dolan will be taking over as CEO of AMC Networks. Based upon Kristin's considerable executive and operational experience for over 30 years working in media and entertainment, including her prior history managing subscription-based businesses, the Board concluded she is the best candidate for the role. As Founder and CEO of the Audience Measurement and data analytics company 605, Kristin has been on the frontlines of the evolution of advanced advertising and audience targeting. She also has a strong record driving organizational change. These are critical areas as we transform AMC Networks and further monetize our high-quality content during this pivotal period in our industry. Before turning the call over to Patrick, I'd like to briefly provide my perspective on the industry and the company, and how we see the business evolving. Across the board, the content industry is being disrupted by cord cutting in the traditional linear sector, or MVPDs, and also in the streaming sector, which is also being disrupted by changing viewership habits, a challenging ad market and rising content costs. As I've said in the past, the current mechanisms for monetizing content are not working. The content industry needs to reorganize itself. We're seeing this now with most media companies beginning to course correct to better monetize content and improve the economics of their business. We believe large distributors and programmers will lead the way. AMC will follow. Streaming is a retail business—that's what DTC means. For now, as the industry continues to evolve, AMC Networks will focus on streamlining our organization, operating more like retailers than wholesalers, driving cash flow and maintaining our strong balance sheet. At the same time, we will continue to do what we do best, which is making great content. We believe this strategy will position AMC Networks well to navigate current industry dynamics and generate long-term shareholder value as an even stronger company. With that, I will now turn the call over to Patrick.

Thank you, Jim. As Jim highlighted, AMC Networks' unique assets and capabilities position us well to succeed as the landscape shifts and consumer behaviors continue to evolve. We took steps in the fourth quarter to recalibrate our business. We streamlined the organization to create a more nimble operating team and reduce costs to drive increased free cash flow. We are optimizing our content monetization through an array of options available to us. This includes our Linear and Genie platforms as well as opportunistic content licensing. We will further leverage our 15 FAST channels as we continue to expand our innovative advanced advertising capabilities and utilize data to enhance the value of our inventory. In addition, we are extending our partnerships with new and existing distributors with six recent renewals, including Charter, Altice, and Bell Canada. We are now beginning to see movement towards new pricing and packaging models, including streaming bundles. One example is Verizon, which recently tested an AMC+ and Netflix offer as part of their Verizon's +play offering, and we expect more to come on this front. We are staying true to our mission of super serving our passionate audiences by creating compelling content that breaks through in a crowded marketplace. We had a strong slate in the fourth quarter, including the series finale of The Walking Dead and the first series in our new Anne Rice, The Immortal Universe, Anne Rice's Interview With the Vampire. Last month, we followed up with our debut of the second series in that Universe, Anne Rice's Mayfair, which is starring the Emmy-nominated actress Alexandra Daddario. Based on the first 30 days of viewership, Mayfair is now the most viewed season of any series ever on AMC+ ahead of Interview and the final season of The Walking Dead. On Linear, Mayfair is off to a strong start with ratings continuing to build as the season progresses and is already a top 10 cable drama for the 2020 to 2023 television season in key demographics. Based on strong debut performances, we've greenlit both Interview and Mayfair for second seasons. After The Walking Dead, that world continues to resonate with advertisers and captivate viewers. The final season of The Walking Dead commanded the highest pricing the series has ever seen over its 11 seasons, strong evidence of the continued power and relevance of this franchise. Also on that point, following its successful run on AMC and AMC+, the 11th season of The Walking Dead launched on Netflix earlier this month. In the first full week it was available, Netflix consumers streamed 1.43 billion minutes of the series. It was the number one most-watched acquired series on the platform and the number two series overall. We are thrilled to have two highly anticipated Walking Dead spin-off series planned for 2023, The Walking Dead: Dead City and The Walking Dead: Daryl Dixon, along with a third production currently in development, slated for 2024, starring Andy Lincoln and Danai Gurira, who viewers know as Rick and Michonne. Next month, we will premiere Lucky Hank starring Bob Odenkirk in his follow-up series to Better Call Saul on AMC and AMC+, and later this year, we will have the second season of the popular and critically acclaimed Dark Winds. This is just a sampling of the new content we will be bringing viewers on AMC, AMC+, and across our other linear networks and streaming services. BBC America is currently featuring its latest Natural History tentpole series, as well as the remarkable, Sir David Attenborough's Frozen Planet II. Next year, we will have Planet Earth III as we extend our leadership position in bringing viewers the very best franchise titles in this popular programming category. This spring, BBC America, Acorn TV, and AMC+ will bring viewers the third season of the British crime drama Happy Valley. A season that just premiered in the UK and became must-watch appointment television in that country. Acorn TV will also premiere a new season of the hit series Harry Wild, starring Jane Seymour later this year, in addition to a full slate of its popular international dramas and mysteries. We also continue to see remarkable strength and interest in the franchise sets on our WE TV reality network. All three series in the Love After Lockup universe attract large and dedicated audiences, as do our Growing Up Hip Hop franchise, which is slated to expand to include a new series later this year. Before I review our 2022 financial performance and 2023 outlook, I'd like to summarize a few of the one-time items that are reflected in the 2022 results. First, in the fourth quarter, we realized restructuring and other charges of $449 million, comprising $404 million of strategic programming write-offs, and $45 million of organizational restructuring costs. While the majority of the restructuring and other charges are non-cash, we accrued for the cash portion in the fourth quarter, including $73 million of strategic programming write-offs and $41 million of severance and employee-related costs, which will contribute to a cash outflow of approximately $115 million in 2023. Second, we took a separate goodwill impairment charge related to AMC Networks International. Moving on to our full-year 2022 financial performance. Consolidated revenue increased 1% to $3.1 billion. Consolidated adjusted operating income was $738 million, representing a margin of 24%. Adjusted earnings per share was $9.21, and we generated free cash flow of $103 million in 2022. For the fourth quarter of 2022, consolidated revenue increased 20% to $965 million. Adjusted operating income grew 34% to $137 million, and adjusted earnings per share was $2.52. In our domestic operations segment, full-year and fourth-quarter revenue grew 4% to $2.7 billion and 26% to $861 million, respectively. We ended the year with 11.8 million paid streaming subscribers, representing year-over-year growth of 31%. Subscription revenue grew 6% for the full year and 7% in the fourth quarter. Full-year streaming revenue was $502 million, representing 35% growth year-over-year. Fourth-quarter streaming revenue grew 41%. Affiliate revenue declined 5.8% for the full year, and 7.5% for the fourth quarter. Affiliate revenue performance was driven by declines in the basic subscriber universe, partially offset by contractual rate increases. Content licensing revenue grew 18% for the full year, and 152% for the fourth quarter. The increase in content licensing revenue was driven by the timing and availability of deliveries, including Wool, which is a series produced by AMC Studios for Apple TV. Deliveries of Wool represented approximately $126 million of content licensing revenue for us in the fourth quarter of 2022. While we typically produce content for ourselves, we are partial to ownership economics. Wool is an example of how we utilize our assets across the company, including our studio opportunistically. It's worth noting that generally production for third parties have lower margins as compared to the rest of our business. Typically, third-party production margins are in the 10% range. Also in the fourth quarter, we delivered certain titles in The Walking Dead Universe that we had previously planned to deliver in 2023. The early delivery of these titles contributed to our fourth-quarter licensing revenue growth. Full-year domestic operations advertising revenue decreased 7% to $788 million. Fourth-quarter advertising revenue declined 12% to $206 million. The decline of advertising revenue is primarily due to lower linear ratings and softness in the ad market, as well as fewer episodes of original programming, partly offset by digital and advanced advertising revenue growth. Broadly speaking, our ad-supported networks and digital platforms are experiencing the same environment as others in our space. The scatter markets have been soft as the climate of economic uncertainty has resulted in our advertising partners being more conservative with their spending. Domestic operations adjusted operating income was $789 million for the full year 2022. AOI performance for the full year was largely attributable to lower advertising and affiliate revenues, increased programming investments, and increased SG&A expenses. For the fourth quarter, AOI increased 27% to $154 million. The increase in fourth-quarter AOI was largely attributable to an increase in content licensing revenue and a decrease in subscriber acquisition marketing, which was partly offset by an increase in programming investments. Moving to international and other, revenue decreased 14% to $443 million for the full year 2022 or 7% on a constant currency basis. Fourth-quarter revenue was $108 million, a decrease of 12% or a decrease of 4% on a constant currency basis. Full-year international and other revenues reflect lower distribution revenues due to the timing of production at 25/7 Media, lower advertising revenues due to the impact of the planned wind-down of two channels in the UK and lower ratings in the UK. Fourth-quarter revenues reflected similar trends with the exception of content licensing revenues, which increased in the fourth quarter due to the timing of productions at 25/7 Media. International and other AOI decreased 17% to $69 million for the full year 2022 or a decrease of 15% on a constant currency basis. For the fourth quarter, AOI was $13 million representing growth of 8% or 4%, excluding the beneficial impact of FX translation. Full-year and fourth-quarter AOI performance was driven by revenue performance, lower technical and operating expenses, and lower SG&A expenses. Consolidated free cash flow for 2022 was $103 million and reflected the beneficial timing of certain production-related payments, a reduction in marketing spend, the timing of tax credit payments, and lower cash taxes. We ended 2022 with net debt and finance leases of approximately $1.9 billion and a consolidated net leverage ratio of 2.6 times. We have substantial financial flexibility and total liquidity of $1.43 billion, including $930 million of cash on the balance sheet and our undrawn $500 million revolving credit facility. We continue to monitor the markets and will be opportunistic in addressing our upcoming maturities. There were no repurchases of AMC Networks common stock in 2022. Our capital allocation philosophy is both disciplined and opportunistic. First, we will look to support the business with a particular focus on creating compelling content that resonates with our audiences while balancing overall profitability and cash flow generation. Second, we remain focused on the balance sheet and addressing our upcoming maturities. Further down our priority list at the moment is the pursuit of strategic M&A and returning capital to shareholders. Moving toward the outlook for 2023, starting with the top line, we expect 2023 consolidated net revenue to be approximately $2.9 billion, largely due to the industry-wide dynamics Jim mentioned. Regarding streaming revenue, we expect growth for the full year at a moderated pace compared to 2022 driven by lower gross additions due to a reduction in subscriber acquisition marketing. Streaming is an important part of our future and represents a meaningful opportunity for us. We will continue to focus on delivering highly curated content to our passionate and engaged audiences. But as we are focused on optimizing monetization across our entire business, we are no longer providing streaming subscriber targets at this time. Regarding affiliate revenue, we anticipate that existing cord-cutting trends will continue and our year-over-year comparison will be incrementally impacted by strategic non-renewal with a virtual MVPD that occurred at the end of 2022. On content licensing, we anticipate a decrease in licensing revenues as our year-over-year comparison is affected by the 2022 deliveries of Wool and certain Walking Dead universe titles, which we will partly offset by new international licensing revenues. Moving to advertising, we expect 2022 trends to continue through 2023, including lower linear ratings and a soft overall ad market, partially offset by digital and advanced advertising revenue growth. We have a strong content slate for 2023, and we are optimistic about our upfront strategy. In terms of adjusted operating income, we are beginning to realize the benefits of our strategic cost measures, including material year-over-year reductions in programming, marketing, staff, and other costs. As such for the full year of 2023, we anticipate that consolidated AOI will be in the range of $650 million to $675 million. Beginning with the first quarter of 2023, we'll be adjusting our free cash flow definition to exclude distributions to non-controlling interests which are discretionary in nature. This will better reflect the earnings power of the business in our reporting and will more closely align our definition with those of our peers. Additionally, we will provide supplemental cash flow schedules that will include details regarding one-time items that may affect comparability. For 2023, we expect to generate reported free cash flow using our updated definition in the range of $70 million to $90 million, which no longer reflects the inclusion of approximately $35 million of expected distributions to non-controlling interests in 2023. The $70 million to $90 million range represents free cash flow on a reported basis and includes the negative impact of approximately $115 million of one-time cash costs associated with our restructuring plan. Our 2023 reported free cash flow guidance implies $185 million to $205 million of free cash flow excluding these one-time items, which represents the level of cash flow that we feel we can maintain and grow over time. However, due to the timing and cadence of productions, we anticipate net cash outflows during the first half of 2023 and expect to generate the majority of our full year free cash flow closer to year-end, similar to the pattern in 2022. In terms of our content investment strategy, we continue to focus on making efficient and highly curated content decisions as we super serve our distinct audiences. 2022 represented our peak content investment year; we continue to refine and improve our approach towards content investments, something over which we have a high degree of control. For 2023, we expect cash content investment to be approximately $1.1 billion as compared to $1.35 billion in 2022. Looking past 2023, we anticipate that our cash content investment will be in the $1 billion area consistent with our historic pre-pandemic levels. 2023 will be a key year for AMC Networks, as we execute our differentiated strategy of being everything to someone, rather than offering something for everyone. We are thrilled to be nurturing and growing our newest franchise, the Anne Rice Immortal Universe, while extending and expanding our most storied franchise, The Walking Dead Universe. We are streamlining our organization and optimizing our monetization on meaningfully growing our free cash flow year-over-year. With that operator, please open the line for questions.

Thank you. Our first question comes from Thomas Yeh with Morgan Stanley. Your line is open. Please go ahead.

Thank you so much. Jim, I wanted to dig into your comment about operating more like retailers versus wholesalers going forward. What do you see as the major incremental steps that AMC needs to take to move toward that direction? Do you guys have kind of been in the streaming market for some time? Is it a different marketing approach or partnerships or something else? And then Patrick, on the $1.1 billion of programming spend cash. Can you talk a little bit about as kind of the write-down flow through and you refocused the spending? How we look to the general mix of focus around high-end scripted original programming relative to targeted programming and how the balance of that looks like over time? Thank you so much both.

Got a long set of questions. Okay. Well, look, AMC has been a wholesaler, right, as most of the programming companies have been. In wholesaling, someone else takes care of the customer, someone else watches the customer, and someone else actually ends up pricing to the customer. When you go DTC, all those things become your responsibility, and for an organization to move from wholesaler to retailer is to really significantly change its focus. Things they need to pay attention to, like the customer journey and churn, are all part of becoming a good retailer. Pricing becomes very important, and where you apply your manpower is critical. It is not just about affiliate relations; it's not that you're stopping affiliate relations, but affiliate relations is a much smaller task now compared to understanding the customer and serving them well. That is a cultural change for AMC, as it will be for a lot of other companies.

Okay. Thanks, Jim. Thanks for the question.

Thomas, on programming spend listen, I think it's important to contextualize our reduction in programming spend. DTC historically averages about a billion dollars in cash expenditure. During this period, we obviously had amazing programming that you all know when low. It was really only during 2021 and 2022 where programming bumped up to the $1.35 billion level. We are just taking cash spending down to $1.1 billion this year. That's obviously a meaningful reduction of about $250 million, roughly 20%. This still leaves us with plenty of firepower to continue our historical programming cadence. And I would say on that front, we cover this fully. We've got an amazing set of shows, as I mentioned in my comments at the top of the call here. I think it's also worth noting that the numbers I'm giving you are obviously cash numbers, right? This is distinct from programming amortization that runs through our P&L which has a little lag to it versus cash given that it's attempting to match earned revenue with expenses. It's an equally valid metric. It just has to do with differences in timing. We are very much focused on cash here, as you've heard from me before. I think the punchline here is that we're trying to strike the right balance between continued investment in the business and generating sufficient profits and cash flow in the near term. In terms of where the cuts are coming from, we took a harder look at all of our platforms and are trying to maintain as much programming efficiency as possible across all of them. But we looked at shows that were not on brand or some of the others. We had to pull out things that weren’t as on brand or on strategy. This happened across linear and streaming and across channels. So it was really a broad review across the entire portfolio. We also reduced some of our spending on the international side as well. In terms of the skew linear versus streaming, I would say, we've given the fact that we've got some smaller streaming platforms that we can still invest capital into and grow nicely. We protected those to a degree. So we'd like those businesses to continue to invest there for profitable growth. We like our programming level at AMC and AMC+. It's fair to say that maybe a slight skew towards ensuring that the monetization of the programming is front and center, and so maybe a bit less exclusive programming on AMC+, as we recalibrate the business for profitability. But that said, all we're trying to do is be as thoughtful as possible about the winning of the content and really kind of sweating the assets that we have. And that's kind of the game plan.

It's very helpful. Thank you both.

Thank you. One moment for our next question. Our next question comes from Robert Fishman with MoffettNathanson. Your line is open. Please go ahead.

Hi. Good morning. Jim, can you help us think about how you see the future of this company? There's obviously been a lot of press reports about possible M&A scenarios over the past couple of years. Do you prefer to see AMC Networks as a standalone entity in a few years or rather combined with another strategic partner? And I have a follow-up. Thank you.

Well, look, I think that our first concern is always going to be creating value for our shareholders. So what form that comes in can be staying the course, it could be an M&A strategic transaction, that to be honest, we're much open to all those ideas. But right now, we have the company that we have, and we're trying to guide it through as if it was going to remain a standalone entity. That doesn't mean that we won't consider M&A and see if we can improve shareholder value that way. So I think that kind of answers it.

Yes. Thank you. And for Patrick, you guys talked about these recent MVPD renewals. I'm just wondering in the context of shifting to this retailer mentality, how should we think about the impact of these renewals on future affiliate fee revenue growth? And given the accelerated level of cord cutting, can we expect pricing to offset any of the cord cutting, or are there other revenues as part of the negotiations with these renewals that can offset traditional affiliate fee decline?

Thanks, Robert. Look, we have very longstanding relationships with our affiliate partners. They've been profitable partnerships for both parties for decades now. As I mentioned earlier, we continue to invest heavily in premium content. We think we punch well above our weight, not just in terms of the relevance of the content itself but frankly, the value for money that our content delivers to our distributors. So obviously, you've taken note of the fact that we've had half a dozen renewals here. We feel really good about these relationships. These relationships continue to expand and grow as many of the larger distributors are now distributing our AMC+ apps and other apps on their platforms. We think this is a win-win for us, for them, and for consumers. So, there are also additional advertising relationships with some of the larger ones as well. We're leaning heavily into that. So, we see these relationships as critically important; we continue to invest in content to support our viewers, and in the technology to support the delivery of our products, vis-à-vis these distributors, in whichever form or fashion consumers would like.

Let me just add – the MVPDs, particularly the cable companies, are also in a state of turmoil. There is cord cutting, and perhaps even more importantly than cord cutting is changing viewership habits. These companies like Comcast, Charter, and Cox have been in this business a long time. They are adept at creating products for their customers, et cetera. Our goal with them should be, and is, to work with them as they create new platforms and new environments for their consumers. We anticipate that, particularly due to our long relationship and our support to them, we will do those things together, which should accrue well to AMC as a company.

Great. Thank you very much both of you.

Thank you. Our next question is from Brett Feldman with Goldman Sachs. Your line is open. Please go ahead.

Yeah. Thanks for taking my question. It was interesting to hear you talk about thinking more about being a retailer. If we think about retail business models, they tend to have higher cost structures than wholesale business models. But they also typically get higher pricing in a retail channel than they do in their wholesale channel. A question we get a lot from investors is that it seemed like in your traditional linear wholesale model, you had a lot of pricing power. As you think about being more retail focused with your content distribution in the future, how are you thinking about the pricing power that you're going to have in that kind of model to ensure that to the extent your costs are higher, your pricing is higher as well? Thank you.

Brett, I think that's part of the overall strategy of the company. What we're saying right now is that those pricing models and those monetization models don't work. You know, you go back to two, two and a half years, there was a lot of optimism about streaming, and the thought process was at that time that a streaming customer was worth $400 or $500 per customer, based on the idea that they were a lot like cable customers, right, because they're going to be with you a long time. The fact is that the model for the consumer is very different. In the cable business, if you wanted to cancel your subscription, you really had to work at it. The same thing honestly was true with signing up a lot of times, but now in the streaming model, it's one click of your mouse. So, what does that make that customer worth? Certainly not $500. There needs to be an adjustment. What AMC is doing is essentially maintaining its revenue streams, stabilizing itself, not doing that kind of investment that values streaming customers at $500, but rather laying back, watching the marketplace, working with retailers like MVPDs, and waiting for our opportunity to take our great content and properly monetize it. That might take a little while.

Thank you.

Thank you. And one moment for our next question. Our next question comes from Douglas Creutz with Cowen. Your line is open. Please go ahead.

Thanks. This is a bit of a follow-up to your last answer. You know, everybody decided to invest in streaming very heavily, others more so than you, and it hasn't worked as you sort of identified. You're cutting costs, and reflecting that, but obviously, if you can't grow revenue, then it's still going to be pressure on your business. So, do you think your ability to grow revenue is something that's completely in your hands, or is it going to take some changes to the market structure to make it a more healthy environment? And if so, what are those changes?

Well, that's an interesting question. I do think it's in our hands, right, because we have great content. We have a product that the customer wants. From that point of view, you can guide your destiny. On the other side, I really think that we have to look for a sea change across the industry. That is something that AMC is not going to be at the forefront of because we're just playing and we're not big enough. We can't drive that kind of change. The marketplace will evolve, and what we need to do as a company is be really in tune with it. We have to watch what the customers are doing, how they're behaving with their subscriptions, what kind of content they like, etc. We're not going to lead the way. I think the rest of the industry, like the larger players, will have a much greater impact than we do. They will continue to watch the customers and get much more adept at things like the research and understanding viewership patterns and all that, so we can keep customizing our products to better meet consumer demand and watch the pricing. I do think that pricing is going to change. How it's going to change exactly? I take a pass on being that prescient, but I do think we're going to see change.

Great. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of David Karnovsky with JPMorgan. Your line is open. Please go ahead.

Hi. Thank you. Just on the overall shift towards driving more cash flow, I'm wondering if there's been consideration towards changing the mix of content toward lower-priced programming like non-scripted that still drives a large audience, or doing less originals. And then Patrick, I want you to just follow on your ad commentary. We've heard from some of your peers about a stabilizing or improving market. I'd like to see if there's an update, or maybe you could say what's assumed in your guidance for the year with advertising.

On the content piece, basically what we did in the last few months is we took and hung on to some of our best programming, the content that performs really well. I mean, that's what we're good at. So no, I don't think we're going to change that strategy. We're just going to try and keep it more efficient and work on the monetization models.

Yes. Hey, on the ad market, I don't have much incremental to add, other than what you've already heard from others, which is that it was very, very weak in the fourth quarter. You saw that in our numbers. Over the last couple of weeks, we have seen the market start to kind of firm up a little bit. We're not prognosticating sort of into the future in terms of what the back half of this year looks like, etc. So implied in our guidance is continued status quo. Not much to add there, but that's what's embedded in our guidance.

Thank you. Our next question comes from John Hodulik with UBS. Your line is open. Please go ahead.

Thank you. Continuing with the direct-to-consumer topic, Jim, you mentioned a major shift that could lead to significant improvements in the streaming economic landscape. It seems you have already adapted to this, but what is your perspective on the industry's potential consolidation moving forward, perhaps involving AMC? Do you think we are on the verge of another wave of consolidation due to the ongoing changes in strategy from several carriers? Additionally, we frequently hear discussions about bundling streaming services. Have you observed any significant initiatives that could unite these services beyond consolidation, or is there anything else you can share regarding that major shift aimed at transforming the business economics?

On consolidation, it’s important to pay attention to the customer and consumer. At this point, it seems unlikely that the industry will engage in significant consolidation, as there is still uncertainty about how to monetize the content effectively. Once companies manage to reorganize and develop a better strategy, consolidation could occur as it would focus on creating stronger products and offerings for customers and establishing a more effective business model. Currently, I believe no one has a clear solution to this issue, and without that clarity, pursuing a consolidation strategy doesn't seem justified.

And on the streaming bundles question, there has been obviously a lot of chatter recently in the market on this topic, and I think for good reason. Obviously, if done properly, it's a win-win-win for programmers, distributors, and most importantly, for consumers. We like the idea of bundled streaming services. We're seeing some movement towards that. As you saw in our release, we've had some interesting beta tests with Verizon around a bundle of AMC+ with Netflix. We think that holds promise. We're holding multiple conversations with other potential aggregators in the market along the same lines. We think to be successful there, you need to have a high degree of complementarity. We want to ensure that, as a programmer, you're adding something to the bundle. Given how well-defined our brands are, given our reputation for premium programming, and given our attractive price point, we believe we're a very attractive partner in this regard. The early tests have been positive, and we're leaning in, hoping to report more in the coming quarters.

Got it. Thanks, guys.

Thank you. This does conclude today's question and answer session for today's conference. Ladies and gentlemen, this also concludes today's conference. Thank you for participating; you may all disconnect. Everyone have a great day.