AMC Networks Inc (Pre-Reincorporation) (AMCX) 2015 Q1 法說會逐字稿

Good morning. My name is Christy and I will be your conference operator today. At this time, I would like to welcome everyone to the AMC Networks Q1 2015 earnings conference call. (Operator Instructions) Thank you.

I will now turn the call over to Seth Zaslow, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Good morning and welcome to the AMC Networks first-quarter 2015 earnings conference call. Joining us this morning are members of our executive team: Josh Sapan, President and Chief Executive Officer; Ed Carroll, Chief Operating Officer; and Sean Sullivan, Chief Financial Officer. Following a discussion of the Company's first-quarter 2015 results, we will open the call for questions.

If you don't have a copy of today's earnings release, it is available on our website at AMCNetworks.com. This call can also be accessed via our website.

Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance or results, and involve risks and uncertainties that could cause actual results to differ. Please refer to the Company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The Company disclaims any obligation to update the forward-looking statements that may be discussed during this call.

Further, we will discuss non-GAAP financial information. We believe the presentation of non-GAAP results provides you with useful supplemental information concerning the Company's ongoing operations and is appropriate in your evaluation of the Company's performance. Please refer to the press release and related footnotes for GAAP information and a reconciliation of GAAP to non-GAAP information which we'll refer to on this call.

With that, I would now like to turn the call over to Josh.

Thank you for joining us this morning, everybody. AMC Networks is off to a strong start in 2015 with top- and bottom-line growth in the first quarter driven by the continued strong performance of our original programming on our networks across multiple platforms.

With shifting consumer behaviors continuing to reshape the video marketplace, I thought I'd spend a few minutes framing our strategic position and share a little bit about how we view our opportunities to achieve near- and long-term growth and to increase shareholder value. As we know, consumption patterns continue to evolve; viewers continue to gravitate toward higher-quality content; and each week seems to bring with it an announcement of a new over-the-top service or so-called skinny bundle.

It is this new environment that we broadly began preparing for some 10 years ago when we implemented our original programming strategy. Today, we believe we are set up quite well to benefit from new opportunities to distribute and monetize our content on these new and reconfigured platforms in a few important ways.

First, as consumers exert more choice over what they watch, they are moving away from TV shows they are indifferent to and are favoring shows that speak to them in some particularly meaningful way; and our shows do just that. Our content orientation and development has over the past decade been toward developing and creating high-engagement, high-quality programming that targets select audiences and resonates with those audiences, with brands, shows, and talent that are among the very favorites of those who watch them. Shows like IFC's Portlandia, SundanceTV's The Honorable Woman, WE tv's Braxton Family Values, and AMC's Mad Men, Better Call Saul, and The Walking Dead.

It is in no small part why we acquired a stake in BBC America. You take a look at the enormous fan communities around Orphan Black and Doctor Who, and we think it's clear those shows matter quite a lot to the people who watch them.

So our shows are not just the show that's on that 10:00, that's after the show that's on at 9:00, that's hoping to pick up whatever random audience happens to have hung around. We think that approach is less effective in a world in which the viewer exerts greater intention, choice, and control.

When viewers have flexibility and choice, our shows are among those that they actively select. In addition, there is growing consumer resistance to paying for channels and shows that they don't value at all.

As MVPDs are increasingly discriminating in their consideration as to whether or not to carry a collection of channels at a certain rate, we feel good about our portfolio. We think it's a strength to have five discrete channels, each of which are programmed with intent. We think it's a strength to have brands that are differentiated, each with their own identity.

We think our portfolio is well programmed and well priced. And we think this has already benefited us in our recent affiliate renewals and will continue to serve us well in this new and changing landscape.

When it comes to new distribution platforms, we are active participants with our US networks now available on DISH's Sling TV service as well as on Sony's PlayStation Vue. We see these services as additive in terms of our potential ability to reach new audiences, and we will continue to participate in them.

On the subject of subscription video-on-demand, we continue to take advantage of a valuable delayed SVOD syndication window, and just last week we announced an exclusive deal with Hulu. In looking for an SVOD partner we considered the many options available to us. We took many factors into account including economics, territories, as well as the impact of the particular SVOD outlet on our linear experience. I'm pleased to say we arrived at a deal with Hulu that is very good for us and, we hope, very advantageous for them.

As new digital offerings and opportunities emerging as we continue to carefully consider and calibrate where and how we participate, we are confident that the work we've done to prepare our business for this changing environment has positioned us quite well now and for the future.

Now if I may, I'll turn to some operational highlights for the quarter in our National Networks and International segments. In the current TV season, viewership across our US networks is solid. Strong advertiser demand for our content drove double-digit ad revenue growth in the first quarter.

The audience profile of our networks remains quite attractive to advertisers, from IFC's young male demo to AMC and BBC America, which top the list of the most affluent audiences on all of ad-supported cable, most notably with AMC's Mad Men and BBC America's Orphan Black. We are still in the very early days of the upfront, but we believe that our investments in content are resonating with viewers and position us well with advertisers.

Our National Networks performance was once again driven by a strong quarter at AMC. AMC ranked as a top-three cable network among adults 25 to 54, and adults 18 to 49 in the first quarter. In the month of February, AMC was the number-one cable entertainment network for adults 18 to 49, thanks to the success of new and returning originals.

The Walking Dead continued to grow in its fifth season and maintains its standing as the number-one show on all of television among adults 18 to 49. The after show called Talking Dad also remains vibrant, ranking as a top 10 show in the same adult 18 to 49 demo across all of television.

AMC's prequel to Breaking Bad, Better Call Saul, premiered to very strong critical and viewer reception, kicking off with the highest-rated premier in cable history and ending its first season as the number-one new original cable series among adults 25 to 54 and adults 18 to 49. We've already ordered a second season of Better Call Saul and we look forward to its return next year.

AMC's Revolutionary War drama, TURN, debuted its second season last month. The show, which has been received quite well critically, has a passionate group of core fans who are enjoying it, and we are hoping to grow its present audience.

Mad Men now in its final run returned last month with 3.6 million viewers for its midseason debut. With two episodes left of the series, Mad Men remains as much a cultural phenomenon as ever.

Across the Company we are preparing for the launches later this year of two new series from AMC Studios, both of which we think will have great potential to appeal to a younger audience: a companion series to The Walking Dead, which is called Fear The Walking Dead, and a dramatic new series in the martial arts genre called Into the Badlands. Both series will premiere near simultaneously on AMC in North America as well as on AMC channels in close to 120 territories around the globe.

This marks a bit of a milestone for our Company, since for a long time we've pursued a strategy of taking content that we own and airing it around the world on channels we own. In addition to launching the AMC channel globally, we continue to expand distribution of our international portfolio in key regions across Europe, Latin America, and Asia; and we are benefiting from new agreements that are adding or repositioning our channels in order to make them more widely available.

Back to the US, we are very pleased with BBC America, which ranked among the top 10 most upscale entertainment networks on TV in the first quarter. BBC America's award-winning series, Orphan Black, continues to be enthusiastically received, with a particularly active and young social media following. We premiered the third season of Orphan Black across all five of our networks -- our first such roadblock, as it's called -- to expose the show to a wider audience; and in aggregate it resulted in a more than 50% increase in viewership over the prior season premiere.

The returning BBC America series Broadchurch, another show with a passionate following, grew double digits in the key demo over season one. The network's Tuesday earth block of natural history programming is up year-over-year in both total viewers and adults 25 to 54.

BBC America is the US home to what we think is the best natural history programming available anywhere on television. In addition to featuring celebrated shows such as Planet Earth, the network is coproducing a number of epic series which promise really to be quite spectacular, including a series called The Hunt, from the makers of Planet Earth and Frozen Planet, which will premiere early next year.

A little bit more about our other networks. WE tv's pockets of strength include a growing and vital lineup of African-American programming with original series such as the returning Braxton Family Values and Mary Mary, which continues to grow. In fact, its fourth season premiere during the first quarter was the series most-watched in key demos.

IFC's critically acclaimed Portlandia completed a strong fifth season, and the network continues to be a destination for top talent in the comedy area. Will Ferrell and Kristen Wiig returned to lead a great cast in the upcoming miniseries, Spoils Before Dying, the sequel to last year's Spoils of Babylon. And Saturday Night Live's Fred Armisen, Bill Hader, and Seth Meyers are behind IFC's upcoming docu-parody series with the working title American Documentary.

SundanceTV continues to build viewership particularly among high-income households. The network is maintaining its reputation for quality programming of the highest level, and it was recently awarded two Peabody Awards out of a total of only nine given across all of television. The recognition was for original series Rectify and the miniseries, The Honorable Woman, starring Maggie Gyllenhaal.

With that overview I'll turn the call over to Sean Sullivan, who will provide some financial detail.

Thanks and good morning. As Josh highlighted, our results in the first quarter were strong in the year is off to a solid start. The Company delivered healthy revenue, AOCF, and free cash flow. We are optimistic about the outlook for the remainder of 2015 and I will touch on that after reviewing the first-quarter results.

In summary, the first quarter delivered total Company revenue growth of 27% and AOCF growth of 55%. As a reminder, the comparability of our results was affected by the Chellomedia acquisition which closed on January 31, 2014, and the BBC America transaction which closed in October.

Turning to our reporting segments, the National Networks revenues increased 25% or $114 million. National Networks AOCF increased 42% or $76 million versus the prior-year period to a total of $253 million.

Advertising revenues increased 25% for the quarter to a total of $260 million. A portion this increase related to the inclusion of BBC America. Excluding BBCA, advertising growth was in the mid to high teens over the prior-year period. AMC was the primary driver as it benefited from the performance of its original programming, most notably The Walking Dead and Better Call Saul.

Distribution revenues at the National Networks increased 26% or $62 million to a total of $302 million versus the first quarter of 2014. Affiliate fee growth for the quarter was in excess of 20% on a reported basis. Excluding the BBC America contribution, growth was in the mid-teens.

The year-over-year growth rate was favorably impacted by rate resets we achieved in connection with several of our recent renewals. I'll have some additional comments about the outlook for this revenue stream later in my remarks.

Distribution revenue growth for the first quarter also reflected a strong double-digit year-over-year increase in non-affiliate revenues due principally to increases in revenues related to the licensing of our scripted original programs: most notably, The Walking Dead on various ancillary platforms as well as several of our scripted dramas on digital platforms; namely AMC's TURN as well as Sundance's Rectify and The Red Road.

Moving to expenses, expenses in the quarter increased 14% or $39 million versus the prior-year period. Excluding the impact of BBC America, expenses increased in the mid single digits as compared to the first quarter of 2014. Technical and operating expenses increased 16% or $27 million compared to the prior-year period, to $197 million.

In the quarter, we recorded $10 million in charges primarily related to our decision not to move forward with a pilot, White city, at AMC. This amount compares to write-offs of $4 million in the first quarter of 2014. The remainder of the year-over-year variance principally related to the impact of BBC America activity as well as our continued investment in original programming across all of our networks.

SG&A expenses were $118 million in the quarter, an increase of 12% or $13 million versus the prior-year period. The increase primarily related to the consolidation of BBC America. Marketing costs were relatively flat year-over-year due to the timing of originals across our portfolio of networks.

With respect to the International and Other segment, revenues for the first quarter increased $30 million to $106 million. AOCF for the first quarter increased $17 million to a total of $6 million versus the prior year.

The increase in revenues primarily reflected the consolidation of the Chellomedia business. As a reminder, we recorded three full months of Chello activity in 2015 compared to two months in the first quarter of 2014.

As for AOCF, the results in the first quarter benefited from the extra month of Chello, as well as the absence of $14 million in professional fees that were recorded in the first quarter of 2014 related to the acquisition. Foreign exchange fluctuations were a modest headwind in the quarter; the impact on revenue and AOCF was approximately $10 million and $2 million, respectively.

Moving to net income, total Company net income from continuing operations for the first quarter was $121 million or $1.66 per diluted share, compared to $72 million or $0.99 per diluted share in the prior-year period. Adjusted EPS for the first quarter of 2015 was $1.76 per diluted share, excluding the impact of amortization of acquisition-related intangibles. EPS and adjusted EPS for the first quarter of 2015 included $1 million in restructuring charges and $10 million in miscellaneous expense related to unrealized foreign currency transaction losses.

In terms of free cash flow, the Company reported $62 million of free cash flow for the three months ended March 2015. For the first quarter of 2015, cash interest was $37 million, tax payments were $13 million, and capital expenditures were $18 million.

Program rights amortization for the three-month period was $170 million, and program rights payments were $178 million, resulting in a use of cash of $8 million. This compares to the use of cash for programming of $36 million for the prior-year period.

The Company made a mandatory payment of $18.5 million on its credit facility in the first quarter. As we previously disclosed in various filings, we are required to make similar quarterly payments throughout the remainder of 2015.

Turning to the balance sheet, as of March 31 AMC Networks had a net debt position of $2.6 billion. Our leverage ratio based on LTM AOCF of $752 million was 3.5 times. When adjusted for consolidated entities that are less than 100% owned, such as BBC America, this ratio increases slightly, about 10 basis points. Consistent with our past communications, we expect to continue to delever through a combination of AOCF growth and free cash flow generation.

Looking to the remainder of 2015, we are optimistic about the outlook for the Company's performance. As we discussed in our last call, for the full year at our National Networks we continue to expect advertising and nonaffiliate revenues to be growth drivers and anticipate managing the National Networks business to a margin that is broadly stable with 2014.

With regard to affiliate revenues, we wanted to expand a little on our expectations. We continue to expect growth in the mid to high single-digit range. However, for the remainder of 2015, we expect to continue to see normalized growth -- that is, excluding the impact of BBC America -- in the double digits. Looking beyond 2015, we expect affiliate fee growth to temper as we cycle through the rate resets.

At our International and Other segment, we expect results for the remaining nine months of the year to be impacted by foreign currency headwinds.

With regard to our quarterly performance, we anticipate continued variability as a consequence of the specific timing of our investment in content and the airing of our shows. Looking ahead to the second quarter, we expect some unfavorable comparisons to the prior year.

At the National Networks we anticipate advertising growth, excluding the impact of BBC America, to be more modest given the programming lineup. On the cost side we expect expenses to increase year-over-year, most notably due to the inclusion of BBC America in our reported results as well as our continued investment in content.

At our International and Other segment, second-quarter revenue and AOCF are expected to be down year-over-year due primarily to foreign currency rates and the timing of various operational items.

These factors in aggregate are expected to result in total Company AOCF growth on a reported basis for the second quarter as relatively modest compared to the prior-year period. As for the second half of the year, we will have more to say on that on our next call, but we do expect comparisons to be more favorable and as a result anticipate stronger performance.

In terms of capital allocation, there has been no change in our strategy. Our primary focus continues to be investing in our core business. We believe this will continue to allow us to grow AOCF on a sustainable basis and will generate the greatest return for our shareholders over the long term.

With that we'd like to move to the question-and-answer portion of the call. Operator, if you would please open the call to questions.

(Operator Instructions) Bryan Goldberg, Bank of America.

Hi, thanks. I've got two quick ones. First, on the Hulu deal, thanks for the color earlier on the strategy. I am just wondering, with this deal now in place, could you give us any more color on just the current health of the SVOD marketplace, how competitive the process was to secure your output rights?

And then how should we be thinking about the per-show economics for you guys in the SVOD window? How have they changed? How has the rate card changed since 2011?

And then I've got a quick follow-up.

Sure, Bryan. I think that you are well aware of the subscriber growth in SVOD domestically, the stated numbers of Netflix and Hulu specifically. So I think it's been on a pure subscriber growth basis quite strong.

I think that there has been an increase broadly in the amount of original programming that the main services are doing. But while that is occurring there still is a very strong interest in what I might call syndicated content -- and particularly in content from companies like ours, that is scripted, that is sequential, and that builds interest over time. So happily we see very strong interest for the type of material that our channels do.

In terms of -- from multiple entities. In terms of the economics, we are not at liberty, of course, to give out the specifics; but I would simply say it's a pretty vital market. The competition is strong. The consumption across the multiple services is strong, and our content is very particularly that which is desired.

Thanks. Just a follow-up. On Fear The Walking Dead, I guess it's more of a logistical question; but how will be show's season one advertising be sold? Will it be sold in the current upfront, or will it be more of a scatter process?

Then on the international licensing opportunity, I guess you called out 122 territories for AMC global. But how much of the world does that represent? What's the third-party sales opportunity roughly for the show?

Hey, Bryan; this is Ed. On Fear The Walking Dead, that will be sold as part of the upfront domestic. And in terms of its international, we've rebranded the MGM channels and AMC Global is now in about 120 countries, give or take. So Fear will be on most or all of those channels, but that does leave major territories across the globe where AMC does not have meaningful distribution at this time; and we will indeed be selling that off to other platforms in markets where we are not actively distributed.

Okay. Thank you very much.

Michael Morris, Guggenheim Partners.

Thank you. Good morning, guys. Two questions. First, Josh, in your prepared remarks you made a comment with respect to the decision to go into partnership with Hulu about -- one of the factors was the impact on the experience on the linear network. I'm hoping you could share a little more about what you meant by that -- I don't know how much detail you can go into -- but what the different potential partners brought to the table with respect to impacting that experience.

Then second of all, Sean, and I know you have deflected the question a little bit about capital allocation. I understand that the priority is to invest in the business. But you are deleveraging fairly rapidly.

Can you talk, even philosophically, about how you view return of capital? Whether you would return capital to shareholders in the case that you didn't have an investment opportunity that you thought had the right return profile; and if you have a preference for share repurchases or dividends or anything like that. Thanks.

Sure, Michael. I think the exact impact and interplay of what we do, which I will call it delayed SVOD window, round numbers close to a year, has we think different effects on different types of shows. It can have the effect of introducing new people to it, who sample it and then catch up and find it urgent and watch on linear. And among some shows it also -- that are not as urgent -- it can have a potentially diminishing effect on linear consumption that we are paid on.

So it is not one size fits all. It really, as best we understand it, bifurcates around content type.

So one of the considerations that we mentioned in the prepared remarks was what impact services that might have 10 million versus 30 million or 40 million US accounts could have on our business. I don't think it's a precise science, but we certainly took it into account; and it was reflected at least in part in the outcome.

Mike; this is Sean. In terms of your second question, yes; no change in strategy. Again, philosophically, we continue to look to do what's best for long-term growth for this business. So as we've said it consistently, we'll evaluate opportunities both internal and external as we execute against the plan.

We are obviously significantly investing in original content across the business. And as we go forward, we will look to be opportunistic in a disciplined fashion, and I think return of capital is just one component of that as we look to achieve the best long-term growth of the business.

Great. Just, Josh, back to your original comment, you've spoken about the importance of the ability of the public to sample and then come to the shows. So I guess if I think about you choosing to partner with a less well -- or a less-distributed partner, does that imply that you felt that there was more cannibalization of the audience with the larger platform?

No, not specifically. First, if I may, I will just say, Michael, that it really is an imprecise science and the exact relationship on a show-by-show basis I don't believe is fully understood necessarily by anyone. I just was broadly indicating that we've seen a couple of different patterns.

And it's a factor, only a factor, that we take into account and, frankly, something that is changing and emerging as we speak, as those numbers all differ and as technology emerges. So it simply was a factor. I wouldn't read anything more into it than that.

Great, thank you.

Anthony DiClemente, Nomura.

Hi, thanks. I have a couple. Just on this notion of distributing your content to digital platforms and the effect that can have on linear viewership, I think in your deals with the MVPDs you stuck to this concept on VOD of the rolling five episodes. As we talk to investors, I think there is a view out there that that has to change; that ultimately the value is increasing for the VOD piece, but perhaps diminishing for the linear piece.

And that as you sign new distribution deals, I am thinking of Apple TV, that you need to just do more full-season stacking rights. So I just wonder if that is a misplaced notion or if that is the way the world is going, and what are the considerations there? Do you guys -- are you philosophically really opposed to providing in-season stacking rights, depending upon the economics?

Just wanted to hear, Josh, your view on that. I do have a follow-up. Thank you.

Sure, Anthony. You know, I think that I'll first say that we think that our relationship with and distribution of our services on MVPDs is essential, critical, and of profound importance. And we are very supportive in every way we can be of their efforts to make their platforms more vital, and more progressive and functional and operational on different machines in the home, tablets, phones, etc.

I think we're undergoing an evolution on the specifics of how those arrangements proceed and exactly what rights are granted and under what terms and circumstances. So that each time we engage with an MVPD we have a robust conversation about what goes in the mix, what rights are granted, and how that is all deployed. There's a lot of variables in the mix.

So I think I can answer your question best by saying we think our health is tied to their health. We would like and do support what they do; of course, we balance economics in that mix. But we think our health is tied to their health.

Okay, thanks, and one other one, Josh. I think it's interesting that HBO has acquired Vice Media content. It's an example of an established media company going out there and finding alternative content to bring back into the traditional ecosystem.

As you look at how quickly and rapidly the ecosystem is changing, are there forms of alternative content out there that make sense for you guys to capture or claim from the digital world and bring back into your world, into the linear ecosystem? Just wondering what -- (technical difficulty) and I know a couple things that you guys have looked at.

But in terms of that I just wonder if there is anything that is top of mind for you in terms of alternative content. Thanks.

Sure. We have in several instances developed TV shows from what was or what were Web TV -- Web incarnations. We have had our eye out -- I think many others have as well -- on the Web writ large as a sort of training ground and/or farm club, if you want to call it that way, or development opportunity for what goes on linear television.

So we keep our eye on it in a keen manner. We think that it is rich with content creators doing very interesting things in short and long form. And we've had instances, several, where we have both developed TV shows and aired TV shows.

So we think it's a rich place to look. It's a rich place to work with. We have had experiences of expanding length and formalizing what were smaller pieces into more complete shows.

By the way, Fred Armisen and Carrie Brownstein, the people behind Portlandia, to name one, actually worked together very first on the Web doing shorter pieces, and through a series of developments that became Portlandia. I could name a whole series of others, but I think you get the point.

Thanks very much.

Ryan Fiftal, Morgan Stanley.

Great. Thank you. Two: one clarification for Sean and then one for Josh if I can. First for Sean, can you clarify a little more on the affiliate fee guidance you gave? I think you said continuing at double digits this year; but then you said also -- it sounded like reiterating the medium-term mid to high single digit guide. Does that mean that we should see affiliate fees then temper to the lower end of that range to get back to that guidance?

Thanks, Ryan, yes. No, again, just to reiterate, maybe less clarification, is we had enjoyed some meaningful resets that you are seeing come through, really just signaling and gesturing for the rest of the year that as those cycle through you will see that. By no means am I saying that after 2015 that we're at the lower end of the range.

I think the mid to high single digits is what we've said historically, and I just wanted to call out this intervening period.

Okay. That's helpful. Thank you. And then, Josh, a question on the International side. You've been going through the rebranding at MGM network and sounds like you secured the rights for both Fear of the Walking Dead and Badlands. Do you see those two shows as a significant catalyst to potentially reset affiliate fees on those networks?

And if so, how long do you think that cycle would take? Any thoughts on your outlook for international affiliate fees would be great. Thank you.

Hey, Ryan; it's Ed. Yes, so I won't shed too much light on specific affiliate deals; but I will say: yes, we do see, as we continue to invest in our content overseas and we bring Fear of the Walking Dead and Badlands and other shows on, as our affiliate deals come open, we anticipate higher revenues, mainly on the affiliate side; also on the ad sales side, where is we are continuing to gain momentum.

There are -- as contrast to the US, Ryan -- there are many, many platforms. There are many, many distributors of all different shapes and sizes. So in terms of when those deals come up, they are a bit all over the map.

But as they come up, we do feel we will see a payoff on the investment in content.

All right, thank you.

Todd Juenger, Bernstein.

Hi, this is Dave Beckel in for Todd it. A couple questions about the 2016 pipeline for AMC. Between Mad Men, Hell on Wheels, and -- it's too early to tell -- but if TURN were to roll off, I estimate that would be about 24 hours to replace. Maybe it's too early; but broadly speaking, should we expect programming hours to be roughly comparable in 2016 as they were in 2015?

Is there anything you are particularly excited about in the development queue right now? Then also lastly, any commentary about the ownership mix you could make would be helpful. Thanks.

Sure. We actually -- we really don't look at the hours as the first variable. I know, of course, it matters. We look at the material in the shows as what we make decisions upon, because that is what leads to vitality and success.

So we have much to look forward to in 2015, Fear of The Walking Dead, Into the Badlands, many other shows, so -- Humans. An awful lot to look forward to and a lot of it new.

So there will be decisions made on both real consumer performance and our own judgment about vitality. It's frankly a little premature to attempt to handicap quantitatively what happens in 2016.

To the second part of your question, I would say that we -- what drives us most singularly is great stuff, is shows that work. We have a bias to own where we can because it gives us greater control. That's the case with The Walking Dead and related material.

But we will also license very happily Better Call Saul from somebody where they hold those rights. So we will end up, I think, with a mix the exact components of which will be determined by the material.

Great. Thanks.

Michael Nathanson, MoffettNathanson.

Thanks for it I have a couple for Josh and then one for Sean. Josh, sticking on the topic du jour which is Hulu versus Netflix, one of the things we've heard from other programmers is that Hulu does a good job of promoting the networks' content, the networks' original content; then they also help promote a new season ahead.

Can you talk a bit? Was marketing a factor that Hulu may be a different type of marketing partner than Netflix was for you?

You know, I think Hulu is a great partner and they do do a great job of promoting and, frankly, an ever-better job promoting. We were very attracted to their structure and their capabilities. So sure, it was a factor that went into the mix, that was in our consideration set, Michael.

I don't think it was the factor. And we, frankly, think highly of Netflix as well. But it certainly was a nice quality of Hulu's.

Okay. Josh, another question there would be: one of the things we learned early on was that Netflix controlled a lot of the data about (technical difficulty) usage. Is there any change on the data that you see from Hulu?

No, our relationship with Hulu is just beginning, and I think each of the companies has an approach to what they share and don't that we think is respectable and sensible for who they are. So that didn't figure significantly in our consideration.

Okay. Then can I turn it on to Sean? Sean, you've helped with giving us a sense of the affiliate fee growth this year and next year. Can you give us an update, now that you have those resets, what percentage of your domestic affiliate fee footprint is now under wraps for the next three years?

Yes, Michael, again I will resist commenting specifically about what deals are coming up. I think that we have said in past calls over the last year and a half or two I think you have a fairly good sense of the deals that have been renewed. We certainly talked that the deals are longer, not shorter.

And we've also said we have a great deal of visibility and comfort as it relates to that stream. So I would just reiterate those macro points for you.

Okay. Thanks, Sean.

Vasily Karasyov, CLSA.

Thank you. Good morning. I have one question for Sean and one for Josh. Sean, do you mind -- I'm sorry if I missed it but did you break out the AOCF contribution from Chellomedia and BBC for the quarter?

No, we did not.

Would you?

No, I don't think so. I mean again, specifically on BBC America I think it's going according to plan; it's going well. We are integrating it. We are working together very well, and I think we've made prior comments about the nature and size and scope of that channel.

As it relates to Chello that's now been rebranded AMC Networks International. I think the entire organization is working very closely together, is integrating itself and that's -- it's almost hard to break it out. I guess I, Vasily, would direct you to the Q that -- when we file later today, to the extent you're looking for more information than that.

Thank you. Josh, you were talking about premiering Orphan Black across multiple networks. I was wondering why you chose that show to do that. For example, you mentioned that you wanted more awareness for TURN. Why not do the same for TURN? What made Orphan Black so special in that regard?

Orphan Black had aired exclusively on BBC America, and it really had not had the benefit of promotion across sister channels. So this was a new opportunity for BBC America.

Frankly, the timing was good. We're in advance of the upfront. We wanted to emphasize to Madison Avenue that BBCA is now part of the AMC Network family and that we will be moving together in this upfront.

So what we call the clone [capture] gave us the opportunity to do that, and it did seem to succeed in bringing new eyeballs to the franchise, which is not easy to do by the time you get to season three.

Just on TURN, I think Ed just described sort of perfect circumstances that invited the roadblock for Orphan Black. It is interesting because we do think TURN is a very, very strong show and, as we mentioned in the prepared remarks, we would like to see it grow.

We don't think it's quite as editorially sympathetic and flexible as Orphan Black was. For instance for WE tv, we thought Orphan Black was -- WE tv was a good home for Orphan Black. Tatiana Maslany, obviously, the star, a woman, and the nature, character, and pacing of it was suitable.

Just specifically about roadblocking TURN, we think it's less immediately hospitable on all five of our channels. But we are very interested in finding ways to increase the sampling, because we have very good anecdotal and analytical diagnostics on it. So we do think it has more audience potential.

Thank you very much.

Operator, why don't we take one last question, please?

Ben Mogil, Stifel.

Great. Thanks for letting me cut in the queue. Two questions. So on SVOD abroad, obviously, Netflix offers a one-stop-shop for all, most major international markets. Do you think the SVOD market internationally is yet enough developed that you can piece together through other providers a deal that makes sense for you only using Netflix, say, in certain markets?

Yes, it's a very interesting time for SVOD abroad. You do have Netflix aggressively increasing their footprint. You have Amazon in a few big markets and perhaps looking to expand. And then you have the entrenched MVPDs looking to be, frankly, more aggressive and launching SVOD platforms, and being willing to pay competitive rates for content in mature markets.

So it is a good time to have good content. And one of the things that we do is look to maximize the revenue from our shows against the different windows, and it really varies market to market.

Have you sold Fear of the Walking Dead internationally for SVOD yet?

We have not.

Okay. Then following up on International around Fear of the Walking Dead, I'm assuming that in a lot of the situations Fear will not be on the same channel abroad that The Walking Dead will be. Any concern about how that impacts ratings?

No, the footprint is large and getting larger. We think that the anticipation of the show throughout the world is big, and so we're feeling pretty good about having Fear reunited with the AMC brand across the globe.

That's great. Thanks a lot, Ed.

All right. Thank you, everyone, for joining us on today's call. Operator, you can conclude the call now.

Thank you. This does conclude today's AMC Networks conference call. You may now disconnect.