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AMC Networks (AMCX)
Q2 2014 Earnings Call
August 07, 2014 11:00 am ET
Seth Zaslow - Senior Vice President of Investor Relations
Joshua W. Sapan - Chief Executive Officer and President
Sean S. Sullivan - Chief Financial Officer and Executive Vice President
Edward A. Carroll - Chief Operating Officer
Bryan Goldberg - BofA Merrill Lynch, Research Division
Todd Juenger - Sanford C. Bernstein & Co., LLC., Research Division
Anthony J. DiClemente - Nomura Securities Co. Ltd., Research Division
Ryan Fiftal - Morgan Stanley, Research Division
Michael C. Morris - Guggenheim Securities, LLC, Research Division
Vasily Karasyov - Sterne Agee & Leach Inc., Research Division
Benjamin E. Mogil - Stifel, Nicolaus & Company, Incorporated, Research Division
Previous Statements by AMCX
» AMC Networks' (AMCX) CEO Joshua Sapan on Q1 2014 Results - Earnings Call Transcript
» AMC Networks Management Discusses Q4 2013 Results - Earnings Call Transcript
» AMC Networks Management Discusses Q3 2013 Results - Earnings Call Transcript
Thank you. Good morning, and welcome to the AMC Networks Second Quarter 2014 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 second quarter 2014 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.
Joshua W. Sapan
Good morning, and thank you for joining us. I'll provide an update on the business and then turn it over to Sean Sullivan for some greater financial detail.
AMC Networks delivered solid financial results in the second quarter, with 38% growth in revenue and 13% growth in AOCF. For the first 6 months, revenues have increased 38%, and AOCF is up 12%. These amounts include the results for Chellomedia from the acquisition date, which was the end of January through June.
Today, we'd like to discuss developments that have driven our financial results in the second quarter and the performance of our business, domestically and internationally, as we continue to capitalize on the success of the content strategy we've executed and invested in over the past several years.
First, if we may, let's talk about the recently completed advertising upfront. There's much industry discussion right now about the lower dollars coming into this year's upfront. At AMC Networks, we are pleased with our performance. We increased both upfront pricing and volume, with the latter growing in the double digits, and are optimistic that the strength of our shows will draw additional dollars closer to air.
It's worth noting that historically, we've seen strong demand for our programming in the scatter market.
Last month, we received 35 Emmy nominations at AMC, SundanceTV and IFC. These awards are significant for us, not simply because they bring industry recognition. The added attention is also important in helping us break through the clutter, further raising our profile among viewers and elevating our brands.
The recognition enables us to continue to attract top-tier creative talent to our networks, and it helps us to build a stronger market and platform for our shows internationally.
Our fundamental strategy continues to be to develop the best original content for our networks. As we think about our strategy going forward, we continue to believe that by investing prudently in the best content, we will position ourselves for growth in an increasingly competitive environment, where there are more content options than ever before, new distribution options and obviously, a consolidating cable and satellite affiliate base.
I'd like to emphasize that our approach today and going forward differs a bit from our approach in the past. Our current strategy is to increasingly, where we can, own our content. There's more investment at the outset with this strategy, and you're seeing how that impacts our financials. However, the strategy enables us to constantly adapt to the changing ways people consume content. It allows us to maximize the return on our investment through new sources of distribution revenue and it allows us to widely exploit new markets internationally.
So that owning strategy is distinct from our approach when we first embarked on doing original programming. At that time, in the earlier days, we primarily licensed content from others, and therefore, there was limited upside with limited opportunities to capitalize on the content.
While we continue to invest across our networks, we are very mindful of how this accelerates expenses, and I do want to assure you that we examine this very carefully and calibrate all of our investments against their monetization potential. We also continue to look closely for increased efficiencies in our operations across the entire company to ensure that we are maximizing resources, all in the service of delivering the outstanding programming that has become the hallmark to viewers, distributors and advertisers.