Thank you. Good morning and welcome to the AMC Networks third quarter 2024 earnings conference call. Joining us this morning are Kristin Dolan, Chief Executive Officer; Patrick O'Connell, Chief Financial Officer; Kim Kelleher, Chief Commercial Officer; and Dan McDermott, President of Entertainment and AMC Studios. 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. The required definitions and reconciliations can be found in today's press release. With that, I'd like to turn the call over to Kristin.

Thank you, Nick. And thanks, everyone, for joining us. It's been about 18 months since I became CEO of AMC Networks, and I am proud of the work we've done to align the company with our popular, high-quality content and unique strengths during these changing times in media. We're pleased with our results in the third quarter. I would like to highlight the significant progress we've made in one of our key priorities, generating free cash flow. Year-to-date, free cash flow stands at $293 million, and we are on track to meet our goal of approximately $0.5 billion in cumulative free cash flow over two years. Our focus remains on three strategic pillars: programming, partnerships, and profitability. During this quarter, we've made substantial advancements in all three areas. Starting with partnerships, in a complex media landscape, our collaborations have become increasingly important. I am particularly happy to share that we have renewed several major affiliate agreements, including an early renewal with Charter. Our new long-term contract aligns with Charter's strategy of maximizing customer value by integrating linear networks and streaming services into their video product, now offering the ad-supported version of AMC+ to all Charter video subscribers at no extra cost. In late August, we launched an innovative partnership with Netflix, making prior seasons of 15 AMC series available to their US subscribers for the next year. This curated group of shows is branded the AMC Collection, and its performance on this significant streaming platform has been impressive. Shortly after launch, shows like Dark Winds, A Discovery of Witches, and Anne Rice's Mayfair Witches ranked in Netflix's top 10 charts for weeks. The AMC Collection shows have seen high engagement from Netflix viewers, and this exposure is benefiting our platforms as well. The second season of The Walking Dead: Daryl Dixon is exclusively available on AMC+. Following the release of season one on Netflix, we experienced a more than twofold increase in acquisitions related to the show on our platform. Similarly, since season one of Anne Rice's Interview with the Vampire appeared on Netflix, AMC+ acquisitions driven by season two saw a nearly fourfold increase from the baseline prior to Netflix. We anticipate this trend will continue with new seasons of other series, such as Anne Rice's Mayfair Witches, Dark Winds, and The Terror. In January, we'll introduce two new series from our Walking Dead universe to the AMC collection on Netflix: The Walking Dead: The Ones Who Live and The Walking Dead: Dead City. Observing The Walking Dead universe content perform so well on Netflix is satisfying, especially as we prepare for the return of US rights to AMC Networks in two years. Amazon is an important partner for us in various ways. In addition to offering AMC+ and other specific streaming services on Prime Video channels, Amazon has recently launched 15 of our fast channels on their platforms. We recognized the potential of FAST and CTV early and understand how crucial these new platforms are to connect with younger viewers and enhance our linear distribution and ad sales. Currently, we have 18 channels active across 12 different platforms, totaling 130 active channel feeds. Our presence in FAST, along with the ad-supported version of AMC+ launched last year, aids our transition from linear viewing and underscores the importance of cross-platform purchasing to reach targeted audiences. We plan to introduce ad-supported versions of our other targeted streaming services, starting with Shudder. Armed with advanced tools, including addressable, programmatic, and data insights from our Audience+ platform, we can assist advertisers in connecting with viewers wherever they consume our content, reaching the largest ad-supported audiences in our history. Our targeting and relevance are more refined than ever before. This month, we initiated a content sampling campaign with MGM+, providing MGM+ subscribers with the first seasons of nine of our series, while also bringing the first seasons of nine of their series to AMC+ for two months. Amazon's Prime Video channels currently offer an AMC+ MGM+ bundle for $10.99 a month, making this sampling initiative a great way to raise awareness of programming on both platforms and attract new customers. Additionally, we have a promotion with Verizon that allows Verizon Wireless customers to access the ad-free version of AMC+ for six months at no cost, after which it transitions to the regular monthly price. We remain committed to creating exceptional content and managing our business efficiently as the industry adapts to shifts in consumer behavior. We see considerable opportunities to engage with the new offerings from long-time partners like Comcast and Charter Xumo, now being deployed across its footprint. Another noteworthy example is our recent agreement with Comcast Technology Solutions, which will handle most of our back-end content distribution, leveraging Comcast's cutting-edge technology to improve the predictability of our operational costs. As I mentioned earlier, our strong programming continues to captivate audiences, and we are witnessing momentum across all platforms. AMC+ is achieving viewership milestones with The Walking Dead: The Ones Who Live, its most-watched series ever this year. AMC+ has also had two of its three most-watched returning seasons this year, with Anne Rice's Interview with the Vampire Season 2 and The Walking Dead: Daryl Dixon. Daryl is on track to become the second most-watched original series this year on both AMC and AMC+, following only The Ones Who Live. Acorn TV, a favorite destination for fans of international crime dramas and mysteries, is thriving as well. In the third quarter, Acorn saw improvements in both customer retention and signups, making it our strongest quarter for customer acquisition this year. This is notably commendable considering a rate change we implemented in the second quarter and speaks to the dedication and engagement of Acorn subscribers. We are in production on a new Acorn series called Irish Blood, starring Alicia Silverstone, with more series on the horizon. We recently concluded the 28th installment of our FearFest horror programming event, now curated by Shudder, which has achieved excellent results across our platforms. October was AMC's highest-rated month this year, positioning the network as a top five movie destination in cable. FearFest titles drove a record high in film viewership on AMC+, surpassing last year's peak. Even as FearFest wraps up, Shudder will continue the festivities with its Season of Screams programming and new movie releases, including weekly watch parties on Friday nights. I should mention that Rotten Tomatoes released its list of the best horror films of the year, with five of the top 10 films produced by Shudder or IFC Films. Critics and dedicated horror fans agree that we dominate this cost-effective and financially viable genre, which consistently generates high levels of engagement and enthusiasm from fans. Our fastest-growing targeted service, HIDIVE, tailored for anime enthusiasts, has also delivered impressive results. In the third quarter, both signups and viewership reached an all-time high. We are particularly thrilled with the performance of I Parry Everything, now the most-watched series ever on HIDIVE. Our exciting upcoming lineup on AMC and AMC+ includes the second season of Anne Rice's Mayfair Witches and a third season of Dark Winds, both set to premiere early next year. These series are expected to gain traction thanks to our Netflix partnership, given the popularity of their prior seasons on that platform. We are currently producing the third season of The Walking Dead: Daryl Dixon in Spain. We also wrapped production on a new season of our horror anthology, The Terror, titled Devil in Silver, filmed in Staten Island. Additionally, a third series set in Anne Rice's universe, The Talamasca, is filming in Manchester, England, and a writer's room is open for a highly anticipated Silicon Valley project from Jonathan Glazer, an acclaimed writer-producer known for AMC's Better Call Saul and Succession. Before Patrick provides a detailed overview of our financial results, I want to emphasize that despite the turbulence and uncertainty facing many in our industry, we continue to leverage our size, independence, and status as one of the last pure play premium programmers. We are capable of collaborating with a diverse range of partners to reach and engage viewers on our platforms, including Comcast, Charter, Netflix, Amazon, Roku, YouTube, Samsung, Vizio, Filo, and many more. We are agile and opportunistic and have revamped our company for the current landscape, placing viewers and high-quality content that resonates with and influences popular culture at the forefront of our efforts. I am grateful to our team for dismantling traditional practices and embracing a fast-paced, innovative mindset more akin to a startup than a legacy media company. This fresh approach is essential in today's media landscape, and I am proud to state that we are excelling in many aspects. With that, I'll turn the call over to Patrick.

Thank you, Kristin. We remain consistent in our strategic and financial priorities. We continue to lean into our unique strengths as an independent, innovative, and nimble premium programmer, allowing us to successfully execute our disciplined financial framework even as the overall industry continues to redefine itself. We're quite proud of the significant strides we have made towards our key financial goals, including the optimization of our programming investments, the generation of robust free cash flow and the continued preservation of the strength of our balance sheet. As Kristin mentioned, year-to-date, AMC Networks has generated $293 million of free cash flow. This puts us solidly on track to achieve our financial outlook of year-over-year free cash flow growth for 2024 and approximately $0.5 billion of cumulative free cash flow by the end of 2025. As mentioned in our earnings release this morning, we closed the transaction with BBC Studios last Friday, where we acquired the remaining 50% of the BBC America joint venture that we didn't already own for $42 million in cash, including cash that was distributed from the JV's balance sheet. We now own 100% of this iconic channel with full operational control and look forward to what the future holds. Of course, we still maintain a close commercial relationship with BBC Studios to ensure the brand and programming remain top tier. We will continue to fully consolidate BBC America as we did prior to the transaction. Assuming this transaction closed on September 30, $133 million of redeemable non-controlling interest related to BBC America reflected on our consolidated balance sheet would be eliminated. Going forward, we'll keep 100% of the cash the business generates and will no longer be making any related cash distributions to non-controlling interests. Moving on to our third quarter consolidated results. Consolidated revenue for the third quarter was $600 million, representing a decrease of 3% excluding 25/7 Media in the prior period. Adjusted operating income was $131 million, representing a 22% margin, and we generated $54 million of free cash flow in the quarter. Now looking at segment level results. Domestic Operations revenue decreased 2% to $530 million. Subscription revenue of $316 million decreased 5%, primarily due to linear subscriber declines, resulting in a 13% decline in affiliate revenue. This was partially offset by streaming revenue growth of 7%. Streaming growth was driven by both subscribers and rate, and we ended the third quarter with 11.8 million streaming subs. We are pleased with the performance of all of our services and we're encouraged by the strong retention we have seen to date, particularly across our portfolio of targeted services where we saw year-over-year improvements in retention in the third quarter. As Kristin discussed in detail, our high-quality programming performs very well on both owned and third-party platforms. It remained highly sought after and we continue to focus on optimizing the monetization of our AMC Studios' owned IP across an array of different windows. This includes finding new fans and building new audiences through broadly penetrated distribution partners, providing us access to the widest possible audience and in turn increasing the value of our IP. The results are clearly visible in our strong third quarter licensing performance. Domestic ops content licensing revenue increased 31% to $81 million, driven by the timing and availability of deliveries, including deliveries related to the AMC Collection on Netflix. Echoing what Kristin said earlier, we are thrilled with our performance here and the halo effects to date. Advertising revenue of $133 million declined 10%, largely due to lower linear ratings, partially offset by continued digital growth. It is worth highlighting that this is the second quarter in a row where we saw sequential improvement regarding the year-over-year rate of change in ad revenue. Domestic Operations AOI was $150 million for the quarter with a healthy margin of 28%. The year-over-year decrease in AOI was largely driven by linear revenue declines in the quarter. Moving to our International segment. Third quarter International revenue was $74 million. Excluding 25/7 Media in the prior period, International revenue decreased 6%. International advertising revenue growth remained robust in the third quarter with growth of 16%, largely driven by the momentum of new AVOD offerings, namely ITVX in the UK, in addition to growth in Central and Northern Europe. International AOI was $14 million for the quarter, with a margin of 18%. Moving to the balance sheet. We ended the third quarter with net debt of approximately $1.6 billion and consolidated net leverage ratio of 3 times. As a reminder, we completed a series of meaningful financings this year and significantly extended our maturity profile. And as such, we now have no bond maturities until 2029. We ended the quarter with approximately $1 billion in total liquidity, including $816 million of cash on the balance sheet and our undrawn $175 million revolver. We appreciate the flexibility and optionality of our meaningful cash balance. We believe our capital structure will continue to present attractive opportunities for us to deploy cash in an accretive manner, benefiting both the equity and the credit over time. In the third quarter, in addition to our regularly scheduled amortization payments, we paid down an incremental $35 million of our credit facility debt. Our capital allocation philosophy remains prudent and opportunistic. First, we look to support the business by creating and acquiring compelling programming that resonates with our audiences while maintaining healthy levels of profitability and cash flow generation. Second, we look to improve our balance sheet by reducing gross debt and optimizing our capital structure. Third, M&A and share repurchases or dividends remain further down our current priority list. Moving on to our outlook. We are pleased with the progress we have made year-to-date and we believe we are well positioned to achieve our outlook for the full year. Beginning with free cash flow, we continue to expect to grow free cash flow this year year-over-year for the full year 2024 and, by 2025, we expect to have generated cumulative free cash flow of approximately $0.5 billion. In terms of revenue, we continue to expect total revenue of approximately $2.4 billion for the full year. On AOI for 2024, we continue to expect consolidated AOI of $550 million to $575 million with growth in streaming and digital advertising as well as prudent expense management remaining key focuses of ours despite ongoing linear revenue headwinds. We anticipate cash programming spend to be a little bit less than $1 billion this year and that programming amortization will be similar to 2023 levels. I'll close with what I've said in the past regarding our overarching financial philosophy. We continue to employ our back-to-basics approach that emphasizes broad distribution of our content and brands across platforms and prioritizes near-term monetization, and at the same time takes advantage of our unique position as a nimble and innovative premium programmer. We'll continue to allocate our capital wisely to ensure we maintain a healthy balance sheet, remain extremely disciplined on expenses and balance appropriate levels of programming investment against available monetization opportunities. With that, operator, please open the line for questions.

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

Thank you so much. I'm hoping to get a bit of an update on the ad-supported tier for streaming and how that may or may not have kind of evolved over time as a broader mix of your 11.8 million subscribers. You have that and then you have the momentum on your FAST channels. Just trying to collectively think about the inventory that you have to play with and whether or not you're still agnostic to the ad tier versus non-ad tier in terms of adoption as you kind of drive your OTT growth.

Hey, Thomas. Good morning. It's Kristin. There's a lot to unpack here. I think I'm actually going to throw it to Kim to take you through the specifics on your questions.

Sure. We're very encouraged by early results of our ad-supported growth in streaming. Obviously, we just launched late last year and we continue to see it play a pretty aggressive growth aspect of introducing new customers to AMC+ in all the right ways. That said, it is still a very targeted approach. And as you point out, the way we go to market with that inventory is coupled with our digital inventory from other distributions, including FAST and AVOD. Our priority has been to maintain a first sales position across all platform partnerships, which gives us that first sales right of bringing our inventory attached to our programming to market. So it's a slightly different strategy than many of the others in the marketplace, but it's serving us incredibly well and helping us to scale. So we're seeing quarter-over-quarter growth consistently for our digital revenue. And on top of that, we're very, very aggressive with making our inventory more seamlessly transactable, more real-time and more addressable, not only across the digital footprint, but also our linear footprint. Happy to expand on that more.

We are comfortable with the division between premium and ad-supported on the AMC+ streaming service, and it was not surprising to us. Although we cannot disclose specifics, we are pleased with how this is developing. By introducing the ad-supported tier, we've been able to raise the price of AMC+ while keeping our streaming services under $10 a month. This allows customers the flexibility to choose a lower-priced option while maintaining access to the service. It’s also crucial to note that both the ad-supported and premium tiers remain below $10.

Got it. So it sounds like it's fair to say you're willing to sacrifice maybe direct ARPU on an ad-supported subscriber for maybe some of the broader holistic things that it brings you from a...

Yes, particularly, as Kim noted, because of the opportunity to truly sell cross-platform and to sell audiences versus just spots.

Got it. And then, Kristin, you mentioned the original Walking Dead rights return to you in the next few years. Do you see that particular title as something that deserves a different approach? Or how are you thinking about redeploying that catalog or what flexibility does that open up to you relative to what's actually happening now? Because I feel like you have some options.

Yes. It's about 20% of the value of our inventory or the value of our catalog is vested with the Walking Dead. And we know that with having all of it back inhouse within two years, Dan has been doing a lot of thinking. I'll flip it to him about how to best utilize that catalog and the associated IP to maximize the value, but it continues to be hugely popular around the world. So it is important that we're getting all the rights back.

These rights are very valuable to us. They will return to us in roughly two years and may become even more valuable as part of a comprehensive package that includes all Walking Dead shows. We have various options and strategies to drive monetization, and we will ensure to be strategic in ways that maximize value for the company while serving our fans. We are looking forward to that time.

Okay, understood. Thank you very much.

Thank you. And one moment as we move on to our next question. Our next question is going to come from the line of Steven Cahall with Wells Fargo. Your line is open. Please go ahead.

Thank you, Kristin. It seems you've really recognized the impact of your prominent content on Netflix, and it’s clear how that’s helping to attract more subscribers to AMC+. What is your perspective on the value of those new AMC+ subscribers for the upcoming seasons? Additionally, there's a studio aspect of AMC that's responsible for this content. How do you evaluate the decision between featuring those new seasons on your AMC+ platform versus selling directly to Netflix with original content, considering the substantial reach Netflix has and its effect on your programming? I would appreciate your thoughts on this balance between being a studio and a distribution company. Patrick, I also appreciate your insights on capital allocation. It appears that you are currently downplaying share repurchases or dividends. Although you’re not providing long-term guidance on AOI, can we interpret this as a suggestion that you anticipate potential AOI growth challenges on the horizon that might result in slightly higher leverage? I understand you’re managing some of your debt with your free cash flow. I'm trying to gauge whether this year will be the end of AOI declines or if there may still be some downward trend to expect. Thank you.

All right, great. I'll start. So your question about the new seasons, the way that we look at acquisition for AMC+ is we'll look at the first stream that people watch when they come into the service, right? And so, with the shows that are on Netflix, as you're aware, it's only prior seasons. So as I noted in my remarks, we see significant uptake on new customers coming in that are watching the new seasons of the shows. So it's a roundabout way of answering your question. The value of those new seasons on AMC+ are really, really important. But that being said, we're getting more and more sophisticated through our data and our analysis around viewership and what hunts and what doesn't and what works in linear and what works in streaming that Dan and team are getting much more sophisticated in really taking everything we have available to us and, when doing it, in a very strategic way. So I'll let Dan comment on that to answer your second question.

Yes, going back to what Kristin mentioned earlier, creating and curating great content is crucial for our overall monetization potential and contributes to building lasting asset value. This is especially true for the value we hold within our studio, whether we're producing for AMC or for external platforms. The advantage of having a studio is that the rights to the content are ours, and we are currently focused on creating opportunities to sell to third-party platforms effectively. For instance, we produced Silo for Apple, which has been quite successful for them. Season 2 will be released soon, and we are about to begin production on Season 3. We have many plans to continue expanding the library of assets in our studio and are eager to execute these plans over the next couple of years.

Dan and his team excel at producing content at low costs while delivering high-quality shows like The Walking Dead, Mayfair Witches, and the currently filming Talamasca. We also generate quality content affordably for Acorn and ALLBLK. Our production costs range from around $50,000 to $100,000 per episode up to $6 million or $7 million per episode, maintaining excellent quality throughout. Dan and his team are meticulous in choosing the right content, producing it efficiently, and distributing it effectively. Interestingly, we find that some shows, which we might label as lower budget, achieve remarkable success even on platforms like Netflix.

Yes, Steven, it's Patrick. Regarding your question about the broader financial outlook, I would say the industry is undergoing a significant change in its operating model. We are experiencing similar trends as others and are adapting our business model accordingly. We are aware of the programming investments and expenses associated with this business. I believe we've shown our ability to be flexible and target opportunities effectively, such as the recent content licensing deal with Netflix. We are confident in our strong assets, particularly the value of our studio and the content it produces, which we expect will benefit the company and our shareholders over time. In the near to intermediate term, things are a bit less clear. As I mentioned, we've taken steps to reduce risks in our operations. Financially, we remain focused on generating maximum free cash flow to ensure strong financial flexibility and liquidity. As evident from last quarter's free cash flow generation, we are well positioned to meet our two-year guidance of $0.5 billion in free cash flow. Overall, we are still in the early stages of the industry's evolution and have taken significant steps both operationally and financially to capitalize on available opportunities while managing risks. We feel good about our progress and will continue to move forward. Thank you.

Thank you.

Thank you. And one moment for our next question. Our next question is going to come from the line of David Joyce with Seaport Research Partners. Your line is open. Please go ahead.

Thank you. A couple of questions on the impacts of the strategies that are coming to light. First, on the content licensing, a nice growth in that year-over-year, obviously, with the Netflix deal. I'm just wondering, given you've got a kind of a wide aperture for where you're placing and selling your content, how should we think about this revenue stream? Is this kind of one-time for Netflix or is there something recurring there that we can look forward to each quarter? I know typically it is a fairly lumpy revenue line. Just wanted your thoughts on that. And then secondly, on the SG&A expenses, they were up a little bit year-over-year. But I'm just wondering if there's a shift in the selling or if there are one-time items in this expense line. I'm just wondering how to think about that going forward as well. Thanks.

Thanks. It's Kristin. Regarding content licensing, I want to clarify that Netflix is not the main factor behind our content licensing growth this year. I believe that could be inferred from your question. Our main focus is on distributing content widely and achieving the best return possible. Our owned intellectual property and everything we license are strategically timed around the globe in different ways. We license content to ourselves for our international markets and license to others in areas where we don't have distribution. I'll let Kim elaborate on the growth, as it has been a significant highlight for us and is expected to continue.

Absolutely. Thanks, Kristin. To build on what Kristin mentioned, we actively seek opportunities in markets where we do not have our own operations and ensure that our content is accessible to viewers everywhere. This has been a global strategy that we have had in place for a long time and it continues to evolve and expand. Domestically, we are increasingly concentrating on non-exclusive agreements that enable us to monetize our content multiple times across various platforms, whether they are ours or those of our partners, often both. We approach this carefully to protect the value of our content by keeping the premieres and new seasons exclusive. A premiere is essentially the first time a viewer watches something, which allows us to take advantage of market fragmentation to benefit our efforts.

And I'd add one other thing on that is just the way that we've reorganized the company in integrating the majority of the brands both on linear and streaming into one part of the organization. And so, we've been able to utilize content across all platforms, across all services. And interestingly, we don't have a lot of overlap between our various brands as far as the viewership is concerned. Even when you look at AMC+, right? AMC+ is arguably a catch-up service for the linear network. And when we went day and date so that everything is released on both at the same time instead of premiering things on the streaming service, we haven't seen a decline in viewership. Everybody is gravitating to watch the way that they want to watch. And so, the opportunity to move things around has not negatively impacted viewership on any of the brands and actually has allowed us to take content that might historically have been nestled under one brand and not been widely used across all the different verticals that we have. We've gotten much better at taking content, spreading it around and not cannibalizing ourselves while maximizing the value of particularly the things that we create ourselves.

David, it's Patrick. On the last question regarding the year-over-year trends on the SG&A line, that is largely due to an increase in marketing year-over-year. We've made a concerted effort to be quite tactical in our deployment of marketing dollars. And so, this is mostly what we call performance marketing, bottom of the funnel where we've got people in the ecosystem that have kind of very high intent, whether this is search or kind of other verticals where the CPAs are attractive. And so, we've continued to be very tactical in the market that way and also across our various products. And so, those are well-spent dollars. There's kind of, I would call it, very near term, like inside 12 months, certainly within 12 to 18 months ROI on those dollars. So it's mostly marketing on the SG&A line. Not seasonal so much as just tactical in terms of you know where and when we find subs at the right price.

All right. Appreciate the color. Thank you.

Yes.

Thank you. Our next question comes from Charles Wilber with Guggenheim Securities. Your line is open. Please go ahead.

Hi, good morning. I was hoping, first off, on the Charter renewal that you called out, if you could share any color on how the revenue recognition might evolve between your affiliate revenues and your streaming revenues with the new deal and then when and how any subscribers to your streaming services might be recognized there? And then, secondly, on free cash flow, you guys have done really well through the first three quarters of the year. I know you highlighted the $42 million payment for BBC America, but wanted to see if there were any other kind of high-level items, puts and takes that you might call out for the fourth quarter, if there were any strike-related benefits in the prior year that you're lapping or content production timing or anything like that? Thank you.

Hey, David. It's Patrick. I'll take both of those. So first, what?

No, I was going to say for Charlie. Just on the Charter renewal? I'm sorry. We obviously don't comment on specifics of any deal, but we sell as a bundle and we get paid as a bundle and that's really important for us because we are, I think, one of the first that has integrated our streaming products as well as our linear products on renewal and opportunistically with Charter, with Filo and with others in this space. So I'll throw it back to Patrick because I think the industry itself is still figuring out how we're going to count these subs and how they're going to report them. But as far as the terms of the deal, we fully integrate and that's the way it works. Sorry, Patrick.

On the accounting side, this deal will not be operational until early 2025, so stay tuned for updates. We won’t delve into the accounting specifics right now, but as revenue comes in, we will clarify how it is recognized across different revenue categories. As for free cash flow, we are pleased with the cash generation from the business. Our two-year guidance serves to show our commitment to generating this free cash flow to support both the balance sheet and the business's liquidity, as well as to demonstrate our confidence in delivering it. This allows us not to manage cash flow strictly on a period or quarter basis, even though it can fluctuate based on when content licensing deals are signed or production timelines. While I won’t highlight anything specific for this quarter, expect some variability quarter-to-quarter. However, you can rest assured that we are focused on achieving these targets, and our current performance positions us well to do so.

I'll just finish the question, Charles, by also pointing out, it's important to us to remind people that we're driving the profitability by refining and improving the organization, not by cuts. And so, the Comcast Technology Solutions decision that will bear fruit when we complete that transition over the next period of time. It doesn't happen overnight. And reorganization, as I mentioned earlier, more efficient marketing, more strategic utilization of data. All of that is helping us bring the costs down without just aggressively making any cuts. It's really about running the company more efficiently and utilizing a lot of the technology and the capabilities that we have at our fingertips here every day.

Great. Thank you.

Thank you. This does conclude today's question-and-answer session. And I would like to hand the conference back over to Nick Siebert for closing remarks.

Thanks for joining us today. Have a good day.

This concludes today’s conference call. Thank you for participating. You may now disconnect.