AMC Networks Inc. Class A Aktie

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the AMC Global Media First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker host, Nick Seibert, SVP, Corporate Development and Investor Relations. Nick, you may begin.

Thank you. Good morning, and welcome to the AMC Global Media First Quarter 2026 Earnings Conference Call. Joining us this morning are Kristin Dolan, Chief Executive Officer; Kim Kelleher, President and Chief Commercial Officer; Dan McDermott, Chief Content Officer and President of AMC Studios; and Mike Sherin, Chief Accounting Officer. 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 our filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements made today. We'll discuss certain non-GAAP financial measures on this call. The required definitions and reconciliations can be found in the press release we issued this morning, which is available on our website at amcglobalmedia.com. And with that, I'd like to turn the call over to Kristin.

Thanks, Nick, and Good morning, everyone. We've had a busy start to the year with the first quarter representing yet another successful quarter of double-digit streaming revenue growth and robust free cash flow generation.

We saw a notable improvement in first quarter advertising revenue trends and remain encouraged by the progress we continue to see on that front. We also entered into a new long-term affiliation agreement with our partners, DISH and Sling TV. We're tracking to plan across all key metrics and are pleased to reiterate our financial outlook for the year.

As a reminder, our 2026 outlook contemplates consolidated revenue of approximately $2.25 billion, AOI of approximately $350 million and free cash flow of at least $200 million. You may have noticed we recently changed our company name to better reflect the business we operate today.

AMC Global Media is a studio-driven owner of world-class IP. We deliver programming in more than 100 countries and territories around the world on our own platforms and reach millions more through strategic licensing agreements. Our streaming business is the world's largest collection of targeted services, bringing superfans of specific genres, a level of depth and curation they can't find anywhere else. In the U.S., we're reaching streaming customers through direct subscriptions and hard bundle arrangements with partners like Charter and Philo.

To date, we've seen 1.8 million hard bundle activations. Later this year, DIRECTV will hard bundle the ad-supported version of AMC+ into its video service. We expect this universe to continue to grow as streaming and linear distribution converges and consumer awareness of this additional value rises.

These activations are in addition to our reported streaming subscribers of 10.1 million, which reflects our substantial retail customer base. We manage our business with a long-range perspective and focus on creating high-quality enduring content, generating free cash flow and driving shareholder value. Streaming revenue is growing and now represents our #1 source of domestic revenue. We expect stable domestic subscription revenue this year. While the quality and size of our streaming subscriber base remains important to us, over the past few years, we have focused on free cash flow in lieu of subscriber targets. Because of this, we will no longer report streaming subscribers quarterly, although we will provide meaningful updates from time to time. We continue to grow our strong presence on CTVs. FAST is a key component of our digital strategy and also provides promotional and marketing opportunities for our pay platforms.

We have more than 40 FAST channels today, and we'll launch a dozen more in the coming months. We're also growing internationally as we expand our FAST presence in the U.K., LATAM and Spain. As we said last quarter, the streaming rights for one of the most watched shows in history, -- The Walking Dead return to us early next year. We've aligned our rights to January 2027 and envision licensing the Walking Dead Universe, which spans 7 series and 352 episodes and counting co-exclusively.

We're seeing significant interest for this enduring franchise and are actively engaged in discussions with several major platforms. Last week, we had our annual upfront content showcase attended by our most important commercial and creative partners. It was great to come together to discuss new commercial opportunities and the content that will drive these relationships over the next year and beyond.

We made a number of announcements, including that we've Greenlit our next big original series for AMC and AMC+, a multigenerational racing drama produced in partnership with NASCAR called Thunder Road.

Dennis Quaid will play the lead character, and we are already seeing notable inbound interest from advertising partners on this series. We also renewed our sports docuseries Rise in partnership with the NFL and Skydance Sports. Building on the success of the first season, which featured the San Francisco 49ers, Rise of the Saints will focus on the New Orleans Saints and the team's historic run in the years following Hurricane Katrina.

Eli Manning and his father, Legendary Saints quarterback Archie Manning, are both partners and will appear on the show, which will premiere early next year. And we announced a new partnership with Meta to make a number of our streaming apps available on the Meta Quest headset starting with AMC+ later this year. We're excited to meet fans on this immersive new platform. This month marks Acorn TV's second annual Murder Mystery May. Last year, this programming event drove Acorn to its biggest month ever. This year's major title is the new Brooke Shields series, You're Killing Me, premiering May 18. We're also in production on a second season of Irish Blood, starring Alicia Silverstone, which last year became the strongest show in terms of acquisition in Acorn history.

All Reality, our newest targeted streaming service, is seeing strong initial growth driven by the Love after Lockup, Mama June and Bridezillas franchises. The service launched on Amazon late last year and is now also available through Roku and Apple. All Reality is a great example of how we continue to manage and adjust our streaming business to find and serve fans. A few recent content highlights to note. We launched the Audacity, AMC's newest prestige drama, and we go into production on the second season next month. We debuted a new season of our popular anthology series, -- The Terror, with The Terror: Devil in Silver. We've had a number of notable film releases over the last few weeks, including Forbidden Fruits, Faces of Death, and Over Your Dead Body, 3 very different titles that demonstrate strength and breadth of our film business.

We'll see the return of important franchises with Anne Rice's The Vampire Lestat, premiering on June 7 on AMC and AMC+ and the third season of -- The Walking Dead: Dead City, slated for later this summer. Lastly, the search for a new CFO is progressing. And while we aren't announcing anything today, we will update you when we have news to share. Our Chief Accounting Officer, Mike Sherin, is joining us on the call today.

Mike's skill and leadership reflect the depth of our finance team and the executive strength across our entire company. Mike will now review our financial performance for the quarter, our outlook and our continued focus on our capital structure, including the further debt reduction and planned additional share repurchases that we announced today. And with that, I'm pleased to turn the call over to Mike.

Thank you, Kristin. We are off to a solid start in 2026, and our first quarter results are consistent with the expectations we laid out when we issued our full year outlook earlier this year. First quarter consolidated net revenue declined 2% year-over-year to $542 million. Consolidated AOI declined 34% to $69 million with a 13% margin. We are pleased to report another quarter of healthy free cash flow generation with first quarter free cash flow totaling $65 million. We are on track to achieve our 2026 free cash flow outlook of at least $200 million for the full year. I'll now discuss our segment results. Domestic operations revenue decreased 3% to $471 million.

Subscription revenue decreased 3% year-over-year with streaming revenue growth of 11%, offset by a 16% decline in affiliate revenue. The decrease in affiliate revenue was primarily the result of continued subscriber declines. We anticipate that our affiliate revenue rate of decline will improve in the second half of the year as new agreements and contractual changes take effect. First quarter streaming revenue benefited from rate initiatives implemented across our services. We ended the quarter with 10.1 million reported streaming subscribers as compared to 10.2 million subscribers in the prior year period.

Retention in the first quarter was consistent with both the fourth quarter and first quarter of last year. Across our portfolio, subscribers remain active and engaged. In the first quarter, we saw a 5-year high in engagement, showing growth from both the prior quarter and prior year.

Moving to advertising. Domestic operations advertising revenue declined 5%, primarily due to lower marketplace pricing. In the first quarter, we saw increased ratings in our scripted series within key demos and continued healthy growth in digital and advanced advertising. First quarter content licensing revenue of $53 million reflected the timing and availability of deliveries in the period and was consistent with the $54 million of licensing revenue reported in the first quarter of 2025.

Regarding adjusted operating income for the quarter. Domestic operations AOI decreased 26% to $92 million, reflecting revenue flow-through and increased technical and operating expenses, including programming amortization.

Moving to international. International revenues increased 3% to $72 million for the first quarter. Excluding the favorable impact of foreign currency translation, international revenues decreased approximately 5%.

International subscription revenue, excluding FX, decreased 5%, reflecting the wind down of a joint venture that operated primarily in Poland and Africa.

International advertising revenue, excluding FX, decreased 5% due to lower ratings and digital advertising in the U.K. International AOI for the first quarter was $5 million with an 8% margin.

Turning to the balance sheet. We successfully retired our senior secured notes due 2029. During the quarter, we exchanged the majority of these notes for our existing 2032 notes, extending their maturity to 2032. Subsequent to quarter end, we redeemed the remaining unexchanged portion of the 2029 notes with cash. As announced in our earnings release, we continue to focus on reducing our gross debt, which will include the pay down of our remaining Term Loan A and termination of our credit facility next week. These transactions significantly extend our debt maturity profile with approximately three quarters of our total debt not due until July of 2032.

Additionally, today, we announced plans to repurchase approximately $30 million of our Class A common stock through an accelerated share repurchase, reflecting the redemption of our 2029 notes subsequent to the quarter end and the planned transactions announced today, including the Term Loan A pay down and additional share repurchase, -- our cash position remains healthy with approximately $428 million of balance sheet cash and pro forma net debt and finance leases of approximately $1.3 billion, representing pro forma net leverage of 3.5x.

Moving on to the reiteration of our 2026 financial outlook. Regarding our most important financial metric, free cash flow, we continue to expect to generate at least $200 million of free cash flow this year. Regarding full year revenue and AOI, we continue to expect consolidated revenue of approximately $2.25 billion and anticipate consolidated AOI of approximately $350 million. In terms of the cadence of AOI for the remainder of the year, we anticipate that AOI will continue to be back half weighted due to the timing of licensing revenue and streaming rate events.

It is also worth mentioning that second quarter AOI will represent the low point for the year due to the above-mentioned revenue dynamics and the timing of expenses, including increased marketing in the quarter related to new series premieres. With that, I'll hand the call back to Nick.

Thanks, Mike. Operator, please open the line for the Q&A session.

[Operator Instructions] And our first question coming from the line of Steven Cahall with Wells Fargo.

Kristin, can you update us on how you're thinking about re-licensing The Walking Dead? Does it make sense to do kind of one big beautiful deal? Or are the economics better to chop it up into small pieces like linear versus streaming partners or different territories or geos? And if we do start to see some headlines on a deal like this, any way to think about what the residual component of that and how much drops down to AOI and free cash flow?

And then, Mike, I just wanted to confirm, since I know that is a big piece of content that's potentially up to re-license, is that included in this year's AOI and free cash flow guidance? Or would it be in addition to? Since I know the timing is kind of unpredictable, I think it's not in the guidance, but just wanted to confirm.

Steven, thanks for the question. It's a multimillion- dollar question. It's a good one to be asking to kick off the call. We've been really excited about the inbound for discussion on the licensing rights for -- The Walking Dead. And we're really looking at every scenario, which there's a variety of ways to look at it. We definitely feel it's important to keep some of the content for ourselves co-exclusively. So we're emphasizing the fact that we're looking predominantly at co-exclusive deals.

But there are some very large and enthusiastic partners in the bidding process right now. And so we're really looking at any variety of construct, but the key thing for us is co-exclusivity and then we may chunk it up with may all go to one person, domestic versus international, like there's many, many ways to skin this cat. So there's been a lot of activity at the company in working with potential partners and really looking at different scenarios. So stay tuned. But as far as the residuals and the other stuff, I'll flip that to the finance guys.

Steve, this is Mike. I can tell you that for 2026, The Walking Dead rights would not be included in the estimated AOI of $350 million.

Great. And then just a quick follow-up on streaming. If I caught that right, Mike, I think you said that there could be a rate event coming. I guess big picture is, would you expect streaming revenue growth to accelerate in the back half of the year? I think it's decelerated a little bit the last couple of quarters.

Yes. Steve, it's Nick. Kind of as we look forward, the way I think about it is kind of looking at double digits kind of for the year, kind of building throughout the year, gets you to the kind of flat subscription revenue growth.

Our next question coming from the line of Sean Diffley with Morgan Stanley.

So another one on The Walking Dead rights. Just obviously, Netflix knows the value of this IP really well. Are there other considerations beyond just monetary that would factor into your analysis of where they go and how you chop them up? And then second question, obviously, it looks like advertising was a good amount better. What's going on there? Is there anything to call out that's driving the better results? And then on the flip side, affiliate was a bit worse than us in the quarter.

Obviously, sub declines in the ecosystem matter, but it looks like you're calling for an improvement in the back half. Maybe just some of the drivers there. I think you called out new agreements, but anything to assume on underlying cord-cutting trends in there as well?

Great. I think I'm going to kick all 3 of those questions over to Kim. Thanks, Sean.

Sure. Thanks for the questions. On your first question regarding The Walking Dead licensing, I would just say, of course, we consider the customer experience and discoverability when we're looking for what our co-exclusive partnerships are going to be going forward. We have several partners around the world for -- The Walking Dead right now, and we're engaged with all of them about the future.

On advertising, I have to say we're pleased with the ad revenue trend in Q1, and we're seeing this continue into Q2. So we've really embraced the viewership changes that have come with streaming and FAST in AVOD and have seen growth across all areas. The commercial revenue team continues to optimize their digital delivery and performance across all the platforms real time, really focusing on yield. And like I said, we're excited to see the momentum that started in really second half of '25 continue into '26.

In the first quarter, we saw strong digital growth, in particular, up 44% versus Q1 2025. And as Mike mentioned earlier in the script, on linear, we're seeing increased viewership, which reflects the strength of our programming, in particular, around increased ratings around our originals, specifically in key demos.

So in general, we're seeing a healthier ad market compared to this time last year, which is good to see as we go into the upfront marketplace. And lastly, on affiliate, I really -- what you're seeing is timing. Obviously, we've had some domestic subscription declines in Q1 reflected, but we see domestic subscription revenue to be overall stable for the year.

Yes. And Sean, there's a lot of kind of timing of different deals. Every deal is different with each partner and the renewal calendar and things like that. So what we're kind of looking at for the full year is kind of the rate of decline being similar to kind of what it was last year in affiliate revenue. So I wouldn't read too much into 1Q.

And our next question coming from the line of David Karnovsky from JPMorgan.

Maybe, as a follow-up to The Walking Dead commentary, it would be great to hear just about the health of the content licensing market generally at the moment. And then on the ASR, can you just speak to the backdrop of that decision, expected shares that will come back and kind of any read-throughs to long-term capital allocation?

Yes. David, this is Kristin. I'll start with the content licensing and let Kim add more color. I mean it's a key part of our revenue makeup. And we've been really opportunistic around the deep library that we have. And this year, we've actually advanced on the back end, our capability to really look through the content that we have the rights to and dig deeper into the library through just better management of the inventory through software that Stephanie has helped us create.

So when our teams are going out domestically and globally, they have a really good sort of suitcase of every single thing that we have available to license. And we've been able to make, I think, a bigger dent in the opportunity over the last 18 months because we know everything that we have and because Dan continues to make content that has strong IP and that's very attractive across the world. So content licensing is and will continue to be a really key important part of our future. But as to the specifics, I'll flip it over to Kim again.

All great points. And I would just say we're trying to be very thoughtful about how we window in our licensing agreements, not only domestically but around the world. And to your question very specifically, it's a very robust and competitive market right now. So it's a good time to be in market with this particular IP.

David, this is Mike. On the ASR question, I would say, first and foremost, our capital allocation priorities are to continue to invest in great content for the business. So we remain focused on free cash flow generation and manage the balance sheet with a focus towards debt reduction and maturity extensions. And then occasionally and opportunistically, we would return capital to shareholders.

Yes. And I'll just add to that, specifically in terms of the additional share repurchase and how we're affecting that. We've been in the market a couple of times over the past year or so in our equity. And given the lower float and volume limitations and things like that, it just becomes kind of a grind trying to get not a lot of dollars to work, but a lot of shares back. And this ASR structure just kind of gives us more certainty and ability to affect roughly $30 million of share repurchases.

Our next question is coming from the line of David Joyce with Seaport Research Partners.

Two questions, please. First, on distribution. There are still some linear services in the U.S. where you don't have a carriage right now like Hulu or Fubo. What is your desire to get on more linear domestically and internationally? What sort of gating factors are there? Or are you really just more focused on building the streaming side?

And then secondly, on advertising, I think you mentioned earlier that ad rates were down, but the revenue was pretty solid. What's driving that? Are you making more inventory available? Or is it a mix of the avails? Kind of what are those sort of puts and takes?

I'll take the distribution question, David. Yes, we are happy to have all of our products carried wherever we can have them carried, and they're equally important to us. Hulu is going to be interesting as they move down their evolutionary path. And then with Fubo, that was a strategic nonrenewal on our part last year. But I just want to emphasize that the linear channels are still very important to us as our streaming. And I think our secret sauce is our ability to work with all of the content that we have and make sure we can deliver it to our partners who can then deliver it to customers everywhere they want to watch the shows that we create.

And then on the ad front, I'd just reiterate, yes, a little bit of softness in rates, and that's really coming from the increased ratings and available inventory that we've seen come through in Q1. We've been able to capture those increases, in particular, across the original inventory and key demos with pricing opportunity. But because of the largeness of the ratings increases, we've seen a little bit of softness tied to the overall increase in inventory. But we're in very good shape, and we're very pleased with how the advertising performance went this Q1.

Our next question in queue coming from the line of Charles Wilber with Guggenheim Securities.

One on streaming subscribers and just the approach there. You called out the number of ad-supported AMC+ subscribers under the hard bundles agreement this quarter. I just wanted to see if you could talk a little bit about your strategy or your approach to subscriber acquisition and maybe the difference in monetization between the approaches between the direct subscribers in these hard bundle agreements.

Yes. Charles, it's Kristin. On streaming, because we're a smaller company, our goal is really to make the product available everywhere we can.

And with the hard bundles, we think it really does add value because we have broader relationships with these distribution partners. So longer-term deals where, over time, their audiences are moving from linear to streaming. And so we'd like being in both places. We don't necessarily articulate specific revenue with each different category of content.

We do overarching deals with our partners, and then we collaborate with them pretty extensively in Charter's case and in Philo's case to make sure that the products are represented well with the customers and they're available in whatever format. And the goal there is as these long-term relationships continue when the opportunities come up to reimagine the approach to revenue, then we may assign the revenue differently for streaming versus linear as the industry evolves.

But our overall strategy, as you know, as we've talked about for the last 4 years, is to optimize the availability of the content to keep creating great content and to work on the business so that we're very opportunistic with both how we license, where we license, who we distribute to, how we distribute and then -- and keep ourselves out in the marketplace as a small but mighty player. So it's really part of the overall evolution of the industry as well as our evolution as a company. And did you have the second half of that or that was the bulk of it?

No. I mean, I think you answered it well. I just wanted to see if you can provide any color in terms of the monetization flow-through of the 2, but it sounds like it's a bit of a holistic approach with your distribution partners. Is that fair to say?

You said it better than me. Thank you. Yes, it was predominantly blended, and we're going to keep looking again for. We love the hard bundle scenario because for us, embedded in that is all the ancillary marketing that we get from partners and then the opportunity for our content to really be seen and experienced by people all over the world.

Our next question coming from the line of Doug Creutz with TD Cowen.

Can you just give an update on what your plans for cash content spending are this year and if that's evolved at all since the last call?

Sure. We'll flip that one to Dan.

Thanks, Doug. Investing in our programming is clearly the most important and meaningful thing we do. We have an incredibly strong production team.

We're committed to engaging audiences with comparable volumes of high-quality content every year. We expect the same volume and quality of content in 2026 as in 2025. Generally, there's some variability between years due to the timing of programming commitments. But for this year, from the view we have today, we expect that from both a P&L perspective and a cash perspective, programming cash and amortization should be consistent, give or take, a little bit compared to last year.

Just to add to that, the team is really efficient and able to make a lot of great content with not a huge amount of spend. And what we're also focused on, which Dan's team has done a great job on is curating the right stuff, but then also moving efficiently towards greenlighting second season.

So for example, with the Audacity or with Irish Blood, like if we know something is good and generally, we've been -- it's -- sometimes it is lightning in a bottle, but a lot of times, it's just really skilled people making great choices and working with great partners, and we've continued to bolster the library over the past couple of years under Dan's leadership. So it gives us the opportunity because the shows are good to move quickly on additional seasons and keep the fan base engaged and happy, which I believe we're going to see a pretty strong fan base in June for the The Vampire Lestat, our third season of the Interview With The Vampire because it's getting pretty crazy out there. So if that's the last question, I think we'll tell everybody, make sure you tune in on June 7 to The Vampire Lestat, the next series in our Anne Rice group.

Thank you. And I'm showing no further questions at this time. I will now turn the call back over to Nick for any closing comments.

Thank you all for joining us today. We appreciate your interest in AMC Global Media. Have a nice day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Good day, and thank you for standing by. Welcome to the AMC Networks Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand it over to your first speaker, Nick Seibert, Senior Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to the AMC Networks Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining us today are Kristin Dolan, Chief Executive Officer; Patrick O'Connell, Chief Financial Officer; Kim Kelleher, Chief Commercial Officer; and Dan McDermott, Chief Content Officer and President of AMC Studios. We'll 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. On this call, we will discuss certain non-GAAP financial measures. The required definitions and reconciliations can be found in today's press release available on our website at amcnetworks.com.

And with that, I'd like to turn the call over to Kristin.

Thanks, Nick, and thanks, everyone, for joining us. AMC Networks had a successful 2025. We used our unique strengths and advantages to drive the company forward in a time of change. This year, we strengthened our balance sheet and achieved a meaningful inflection point in our business. Streaming is now our largest single source of domestic revenue. This is a validation of our strategy and an important milestone in our business transformation. We generated $272 million in free cash flow, a key priority for us, well ahead of our previously increased forecast.

We expect that 2026 will represent another solid year on this front and anticipate free cash flow of at least $200 million for the full year. Our streaming strategy is simple and distinct. We offer fans of specific genres, unmatched curation and depth through our targeted services. We window content efficiently, keep prices low and deliver clear value to our subscribers and wholesale partners through which we reach the vast majority of our viewers. We also operate all our services through unified technology that delivers an excellent viewing experience efficiently and with predictable costs.

In November, we launched our newest targeted streaming service called All Reality, bringing viewers the best in unscripted content, including our most popular reality franchises. It's currently available through Amazon Prime Video and Roku with more platforms coming soon. At last month's Sundance Film Festival, we relaunched Sundance Now as the definitive streaming home for independent film. The service features more than 1,000 hours of distinguished programming sourced from our independent film company, RLJE Films and Shudder. Building on decades of expertise and credibility, Sundance now gives fans the window into the world's most important film festivals and access to the most acclaimed titles.

Our anime service, HIDIVE, has achieved strong growth since we acquired it 4 years ago, the result of the increasing popularity of the genre and our team's expert curation. Acorn TV had a very active and successful 2025. We will continue the momentum with returning favorites and new originals, including your You're Killing Me, starring and executive produced by Brooke Shields. We will also bring fans second installments of two popular programming events, An Autumn to Die For and Murder Mystery May, which drove record viewership last year.

We have significantly reoriented our advertising business, embracing viewership changes and opportunities that have come with streaming, FAST and AVOD. In 2025, we saw growth in each of these areas. This is so important as the market shifts away from traditional reporting metrics and age-based demos to driving business outcomes. We'll be showcasing our advanced advertising capabilities and the unique value we deliver at a series of partner events in the coming months.

In the fourth quarter, we completed a transaction that gives us full ownership of RLJ Entertainment. This includes Acorn TV, ALLBLK, RLJE Films and a substantial investment in Agatha Christie Limited, which manages and monetizes Agatha Christie's valuable IP worldwide.

Content remains at the center of everything we do, and we're excited to bring a dynamic slate of strong programming to AMC and AMC+ this year. Our critically acclaimed sports docu-series, Rise of the 49ers was the most watched new AMC original since The Walking Dead: The Ones Who Live. It also drove the biggest day of sign-ups to AMC+ direct-to-consumer platform since the season 2 premiere of The Walking Dead: Dead City last spring. Dark Winds returns for its fourth season next week and was just renewed for Season 5. This remarkable series has established itself as one of the best neo-noir crime dramas in the history of television. It is also one of the most watched shows on AMC+.

We're very excited about a new prestige drama set in the world of Silicon Valley called The Audacity. It has all the elements of a classic AMC series, great story, unforgettable characters, a talented cast and something to say. We can't wait to preview it at South by Southwest next month and bring it to viewers on AMC and AMC+ on April 12. And we just kicked off a new partnership with TNA Wrestling, bringing a 2-hour block of live TV to our schedule every week. We have significantly expanded TNA's television audience. The Thursday Night show is also attracting younger viewers to AMC, who have a clear affinity for Walking Dead, Anne Rice and Shudder content, a connection we will leverage in the months ahead.

Industry consolidation is highlighting the value of studio assets and powerful IP. Our dynamic mix of content across a wide range of platforms underscores our strength as a studio-based programmer able to build franchises and engage fans. It's worth noting that the streaming rights to all 177 episodes of The Walking Dead, the biggest franchise in the history of cable television, returned to AMC Networks in less than a year. Still beloved, the original series generated nearly 0.5 billion hours of viewership on Netflix over the last 6 months of 2025.

Over the course of 2025, we successfully renewed more than 1/3 of our affiliate footprint in the U.S. and Canada on favorable terms, including long-term agreements with DIRECTV, NCTC, Philo and EastLink, among others. Many of these larger agreements include bringing video customers access to the ad-supported version of AMC+ at no additional cost. More than 1.1 million Spectrum TV customers have activated the ad-supported version of AMC+ that is now bundled into their video service. Charter's recent results included video subscriber growth for the first time in almost 6 years, which management directly connected to their strategy of bundling streaming value into their video product. We see this as a hopeful sign for the industry and the entire pay-TV ecosystem.

Three years into this role leading AMC Networks, I can say without reservation that I believe in our strategy, our people and the opportunities we see for this company. Our independence is a source of strength in a changing time. Our studio engages viewers by populating our platforms with high-quality and efficiently produced IP that we own. We have the strongest and most mutually beneficial partner relationships in the industry and advanced technology powers everything that we do. It's clear to me that we're only scratching the surface of what this company can achieve.

I'd like to take a moment to thank our CFO, Patrick O'Connell, who has been a great partner and colleague and will be stepping down next month to take on a new role outside our industry. We appreciate his contributions and we'll be cheering him on in his new endeavor.

And now I'd like to turn the call over to Patrick.

Thank you for the kind words, Kristin. It's been a pleasure to work with you and the entire team at AMC Networks. We've accomplished a lot over the past few years, and I'd like to thank the Dolan family and the Board of Directors for the opportunity. 2025 was a productive year for AMC Networks. We're proud of the progress we've made, including reconstituting our revenue mix towards streaming, investing in valuable IP, reorienting the business around free cash flow and the actions we've taken to strengthen our balance sheet. We generated healthy free cash flow, exceeding our increased outlook, and we once again delivered on our financial guidance. We believe our strong free cash flow outperformance in 2025 sets the stage for another year of robust cash generation. And for 2026, we expect to generate free cash flow of at least $200 million.

Moving on to our full year results. Consolidated revenue was $2.3 billion. Consolidated adjusted operating income was $412 million with a margin of 18%. We converted approximately 2/3 of our AOI to cash and delivered full year free cash flow of $272 million. On to our segment results. Domestic operations revenues decreased 5% to $2 billion for the full year and decreased 1% to $515 million for the fourth quarter. Subscription revenue meaningfully stabilized in 2025 with a decrease of less than 1% for the full year and flat in the fourth quarter.

In a first for AMC Networks, full year streaming revenue represented the largest single source of revenue in the segment. While affiliate revenue declined 13% for both the year and the fourth quarter, we are encouraged by the improvement in video results that we've seen so far from the major cable operators in this earnings cycle. For the full year, linear affiliate revenue headwinds were almost entirely offset by streaming growth of 12%. And in the fourth quarter, streaming growth of 14% more than fully offset linear declines.

We ended the year with 10.4 million streaming subs. Subscribers were flat as compared to the prior quarter and prior year period. In 2025, we repriced the entire subscriber base, and we are pleased with what we are seeing in terms of engagement and retention. 2025 represented the most watched year ever across our portfolio of streaming services in terms of total viewing hours. And in the fourth quarter, we also saw sequential improvement in retention. Content licensing revenue was $272 million for the full year and $75 million for the fourth quarter. Licensing revenue reflected the availability of deliveries.

Looking ahead, we see continued demand for our high-quality content. Domestic operations advertising revenue decreased 15% for the year and 10% for the fourth quarter, primarily due to linear ratings declines and lower marketplace pricing. Domestic Operations AOI of $490 million for the full year and $128 million for the quarter reflected continued linear revenue headwinds.

Moving to our International segment. Recall that in 2024, international revenue included advertising revenue related to retroactive adjustments reported by a third party of $21 million for the full year and $7 million for the fourth quarter. Excluding retroactive adjustments in the prior period and favorable FX in the current period, international revenue decreased 4% for both the year and the quarter.

On an apples-to-apples basis, advertising revenues grew 6% for the full year and 4% for the fourth quarter, primarily driven by strong advertising performance in the U.K. and Ireland. Subscription revenues, excluding FX, declined 8% for the full year and 6% for the quarter. The decrease in subscription revenue was related to a nonrenewal that occurred in the fourth quarter of last year. International AOI for the full year was $43 million and fourth quarter AOI was $7 million.

We remain focused on our balance sheet, and we're pleased with the results of our efforts over the last year. To recap, in 2025, we executed a series of transactions that reduced gross debt by almost $600 million, captured approximately $140 million of discount, extended the majority of our revolving credit facility in 2030 and opened a 2032 maturity window through the issuance of new longer-dated senior secured notes.

Overall, we've meaningfully extended our maturity profile now with only $83 million of remaining term loan due by April 2028 and no bond maturities until 2029. We ended 2025 with net debt of approximately $1.3 billion and a consolidated net leverage ratio of 3.1x. Despite lower AOI in 2025, our net leverage ratio remained relatively stable, increasing by less than 1/3 of a turn from the 2.8x we reported at the end of 2024.

As we look forward, our focus remains on further reducing gross debt and extending maturities. We've maintained a healthy cash position and ended the year with approximately $675 million of total liquidity. This includes approximately $500 million of cash on the balance sheet as well as our undrawn $175 million revolver. As a reminder, we believe it's prudent to capitalize the business with a minimum cash balance of approximately $200 million to $250 million.

In the fourth quarter, we repurchased approximately 850,000 shares of our Class A common stock for approximately $7.5 million. As of December 31, we had $117 million remaining on our share repurchase authorization. Additionally, as Kristin mentioned, in the fourth quarter, we acquired Bob Johnson's 17% stake in RLJ Entertainment for $75 million in cash. This transaction provides us with increased operating clarity and simplifies our business structure.

Moving on to capital allocation. Our philosophy remains consistent. First, we look to support the business by creating and acquiring compelling programming that resonates with our audiences while maintaining healthy levels of free cash flow generation. Second, we remain focused on reducing gross debt and extending debt maturities. And lastly, acquisitions and share repurchases will be opportunistic and measured. Moving on to our outlook. We expect consolidated revenue for 2026 to be approximately $2.25 billion. As it is still early in the year, the geography of certain items may shift as the year unfolds. Notwithstanding that, I'll now unpack the current assumptions that underpin our revenue outlook.

We anticipate that streaming revenue growth and linear subscription revenue headwinds will result in stable domestic operations subscription revenue as compared to 2025. We continue to be innovative, aggressive and strategic with regard to content licensing and anticipate approximately $260 million of domestic operations content licensing revenue for 2026, reflecting our current rate of production and market dynamics. We continue to make great strides in the evolution of our advertising business. That said, we anticipate that linear revenue declines will outpace digital growth in 2026 and expect that domestic advertising revenue would decrease in the low double-digit percent area as compared to 2025.

We anticipate that the underlying dynamics in the many international markets that we operate in will remain relatively consistent year-over-year and expect total international segment revenue for 2026 to be between $290 million and $300 million. Linear revenue headwinds continue to impact AOI. Therefore, for the full year 2026, we anticipate that consolidated AOI will be approximately $350 million. AOI will also be weighted towards the back half of the year due to the cadence of series deliveries, streaming rate events and the timing of expenses, including programming amortization.

Moving on to our most important financial metric, free cash flow. We continue to convert the majority of our AOI to free cash flow. And for 2026, we expect to generate free cash flow of at least $200 million. In closing, as an independent, nimble and innovative premium programmer, our commitment to creating high-quality content remains at the center of everything we do. We approach the marketplace a bit differently than others, including building out our library of powerful franchises and monetizing our content across an evolving distribution ecosystem. We'll continue to preserve capital with a focus on cash flow generation and the health of our balance sheet, and we'll balance appropriate levels of programming investment against the available monetization opportunities.

With that, I'll hand the call back to Nick.

Thanks, Patrick. Operator, let's open the session for Q&A, please. Thank you.

[Operator Instructions] Our first question will come from the line of Steven Cahall from Wells Fargo.

Patrick, we'll certainly miss having you on these calls. I wanted to kick off with an advertising question. It was a little worse in 2025 than it was in 2024. I think it came in a little below your expectations. So can you just help us think a little more about what's within the low double-digit guidance for 2026, the puts and takes? I know you've done a lot of work on the dynamic side of things. So I would love to frame your confidence in that outlook. And then The Walking Dead rights coming back is pretty exciting for the company. Just wondering when you start to think about having conversations in the market about what that could be worth and kind of what those bids look like. When we look at this, it could be $150 million opportunity. It could be 2x that or even bigger. So just trying to sort of frame expectations for what can happen to those rights as we get towards the end of the year.

Steven, it's Kristin. We'll miss Patrick, too. We've had -- I'm going to answer The Walking Dead question, then I'll let Kim speak to advertising. We've had a great relationship with Netflix for well over a decade since 2011 in carriage of The Walking Dead. The rights come back to us. As we said, it's a consistent top performer on streaming. And as you noted, the rights are very valuable. I can't say a lot right now, but we are in conversations now preparing for the rights coming back and for finding a home for them in the future. So there's more to report. We're just not ready to speak about it now, but we are in conversations, and we're very optimistic about the value of the content and our opportunity to monetize it going forward.

Steve, it's Kim. On your advertising question, I think the whole industry saw what we -- at the top half of '25, we saw a huge influx of digital inventory hit the marketplace driven by the shifting viewership. And I think that it drove down pricing, and we saw a lot of impact across the board for that. We reacted as quickly as we could and went into the upfront with a very streaming-first approach that I think we started seeing the impact from with the tides turning for us in Q3 and then continued momentum into Q4 with improvements. It really reflected the team's successful upfront strategy that we look to take into '26. We're growing in all the most important areas, streaming, FAST, AVOD and really looking to mitigate losses on the linear side.

Thanks for the question, Steve. Operator, we will go to the next question.

Our next question will come from the line of David Joyce from Seaport Research Partners.

Another kind of advertising question. Granted you still have the linear challenges there, but how should we think about the ad contribution from the streaming side and from FAST channels? Just wondering, are advertisers buying across all those platforms? Or are they kind of picking and choosing?

David, it's Patrick. I'll take a first crack at it, and Kim can add some color commentary. Listen, digital advertising is a meaningful portion of our business. It was a big part of the strength in the fourth quarter. Obviously, we're subject to some of the vicissitudes in the marketplace, which we saw at the top half of 2025. But as Kim mentioned, tactically, we're able to move quickly. Scatter was pretty strong in Q4. We demonstrated that we could sort of build brand sponsorships around certain events, including Best Christmas Ever, et cetera. So we're really nimble, we're really fast. The digital business was -- frankly, the industry broadly was challenged in the first half of 2025. That's now reversed field. That's a nice kind of growth area for us. It's not a majority of the revenue, but it's a substantial portion of our revenue. And so we feel good about continuing to grow that to offset the obvious linear headwinds.

The only thing I would add, David, is I would say we are seeing the industry embrace cross-platform buying more and more, and we are well set up to meet that need. We continue to grow our viewership across our digital distribution and have activated DAI across all of that. So it's a very seamless transaction for the advertiser, and that's been well met in the marketplace.

[Operator Instructions] Our next question will come from the line of Thomas Yeh from Morgan Stanley.

Patrick, you mentioned subscriber universe decline seeing an encouraging trend. I think there's also a slew of new skinny bundles that are getting launched that might possibly cause some fragmentation as well in terms of which networks get carried or not. Can you maybe just talk about your positioning there and how you see that shaking out relative to your view about the broader affiliate revenue outlook that you laid out? And then on cash spend on content, I noticed it declined a decent amount this year, possibly due to timing. Within the framework of your guide for EBITDA and free cash flow for next year, can you maybe just help us think through what you're thinking there from a cash spend perspective?

Thomas, so on the first, in terms of affiliate revenue, obviously, we're encouraged by some of the green shoots that we see across the broader landscape. It plays very well into AMC's partner-centric model, whereby we're cutting deals with Charter and frankly, others on innovative ways to avail a broader universe of broadband subscribers to either pay-TV in the traditional format or via apps of our ad-supported AMC+. So -- and it's nice to see sort of other large MSOs, PTV providers seemingly following in Charter's footstep. So we think that's an encouraging sign.

As it relates to sort of skinny bundles and whatnot, we have been extraordinarily successful in continuing to renew our affiliate agreements with full carriage across all of our channels. We continue to represent an incredibly strong value proposition for those distributors. And by extension, their viewers as well. So I think in that regard, the proof is in the pudding. And obviously, we're hopeful that these trends will continue. And so we feel very good about those affiliate relationships.

Secondly, in terms of cash content spend, it was down kind of slightly from 2024 levels. But we continue to invest extraordinarily heavily in premium programming. That is our signature. That is our focus, and that is the mandate that we have kind of from the Board and our Chairman to continue to invest in that manner and at those levels and at the same time, produce healthy levels of free cash flow. So we think we're doing both of those things at the same time. As we roll forward into 2026, I would expect that from both a P&L perspective and a cash perspective, those levels are going to remain fairly constant, meaning we're going to continue to invest heavily in that programming. I don't know, Dan, do you want to comment any further?

No, I think that's right. I think it's the most important and meaningful thing that we do. The one thing I would say is we have an extremely strong production team that takes advantage of tax incentives around the world and shooting in locations that get us the real bang for our buck, if you will. I mean we're very savvy about how we deliver the tent-pole series that we deliver on the cash that we have. And so that's been a real great situation in 2025, and we expect to continue that in 2026.

And I'll just finish up by saying that the caliber of the slate in 2025 and what we have planned for 2026 continues to either meet or outperform our expectations. So series like the 49ers, The Audacity that we spoke about. We had a Dark Winds premiere here in L.A. last night. It was amazing. So we're putting a really good slate out on AMC, but also on our streaming services as well. So we're not just being efficient. We're still producing the content that built the reputation that we have to this day. So we're psyched about what we have.

And with that, this concludes the question-and-answer session. I will now turn it back over to Nick for closing remarks.

Thank you for joining us today. We look forward to having a dialogue, and thank you for your interest in AMC Networks.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Good day, and thank you for standing by. Welcome to the AMC Networks Third Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Nick Seibert, SVP, Corporate Development and Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to the AMC Networks third quarter 2025 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.

And with that, I'd like to turn the call over to Kristin.

Thanks, Nick, and thanks, everyone, for joining us this morning. We're pleased with our performance in the third quarter and our progress in several key areas. We delivered another quarter of healthy free cash flow and are on track to achieve our increased guidance of $250 million in free cash for the full year. The results we reported today mark a key milestone in our transition from a cable networks business to a global streaming and technology-focused content company. Streaming revenue growth accelerated in the quarter and offset affiliate revenue declines, resulting in stable domestic subscription revenues. As we have previously discussed, we expect streaming to be our single largest source of revenue in our domestic segment this year. This is a first for us and a meaningful inflection point as we continue to manage the business for the long term.

As much larger companies spin off assets or split up to find clarity in a complicated time, we've built the components of a modern media business that is nimble, independent and well suited to today's environment and whatever comes next. We have a successful studio that produces programming and franchises that attract passionate and engaged viewers. We're home to the world's largest collection of targeted services, bringing fans of specific genres and unmatched level of curation and depth. We window our owned content across a full distribution ecosystem of domestic and international networks, streaming services, theaters and FAST channels. And we service all of this with a unified technology platform that allows us to deliver our content to viewers wherever they want to watch in a scalable way with predictable costs.

A few highlights before I turn things over to Patrick. As previewed on our last call, we renewed and expanded our branded content licensing agreement with Netflix, which has been beneficial for both companies. We reserve new seasons of our most important franchises for our own platforms and get the promotional benefits of making prior seasons available to Netflix's large base of U.S. subscribers. This new agreement also expands to select international markets with a combination of first and second window rights focused on our biggest franchises like Anne Rice, Dark Winds and The Walking Dead.

Turning to other key partnerships. We renewed a long-term distribution agreement with DirecTV, which expands the availability of our networks and programming across linear, FAST and streaming. Next year, DirecTV will hard bundle the ad-supported version of AMC+ in video packages that include AMC's linear network and will also add Shudder to one of their genre packages. We continue to work with Charter to raise awareness among Spectrum TV customers that ad-supported AMC+ is now included in their video package. More than 850,000 Spectrum customers have opted into AMC+ since its inclusion in the package earlier this year. We've also expanded our relationship with Cox. All 5 of our linear networks are now included in their streaming-only TV plan, Cox TV Lite. Just this week, we launched our first triple bundle with Amazon Prime Video offering AMC+, MGM+ and Starz a significant savings over stand-alone pricing. During last quarter's call, as we were finalizing our upfront negotiations, we noted a more than 25% increase in digital advertising commitments.

I'm pleased to say the final figure was an increase of 40%. This is meaningful growth in an increasingly important category as our digital presence expands and advertisers see the impact of reaching viewers across all platforms that feature our popular and critically acclaimed programming. Our FAST and AVOD business continues to grow. We recently renewed our distribution with CTV leaders, Samsung and Roku and expect to launch 4 new FAST channels by the end of the year. As discussed last quarter, we are also implementing this successful strategy internationally. We currently have FAST channels in the U.K., Canada, Germany, Spain and Latin America. Globally, as of the end of September, we have 33 FAST channels distributed across 22 platforms totaling 215 active channel feeds. Combined, our portfolio of streaming services delivered an all-time high in viewership during the quarter, including the highest ever viewership of AMC+.

Acorn TV, our streaming service focused on international crime dramas and mysteries, is having its best year ever. We're thrilled with the new talent, energy and momentum we're bringing to this beloved service now in its second decade and one of the world's first and most successful targeted streaming services. Irish Blood, the new series starring and executive produced by Alicia Silverstone, premiered in August and is already Acorn's #1 series ever and has been renewed for a second season. We're currently in production in Nova Scotia on a new series called You're Killing Me, starring and executive produced by Brooke Shields. We just completed another successful FearFest, one of our biggest programming events of the year, now spanning thousands of hours of programming across AMC, AMC+ and Shudder. Brand partnerships included an integrated show sponsorship with Hyundai, a Universal Studios promotion on Shudder for Black Phone 2 and multi-platform partnerships with Bacardi and Kraft Heinz, anchored by full week placements on Sphere as well as on our linear streaming and social platforms.

On AMC and AMC+, we just brought fans a third series in our popular Anne Rice Immortal Universe, Anne Rice's Talamasca: The Secret Order. The first episode has already been seen by 2 million viewers across all platforms and is pacing as the most watched series premiere since The Walking Dead: The Ones Who Live. Interview with the Vampire will return next year with a new season called The Vampire Lestat focused on the popular character Lestat as the world's first truly immortal rock star. We've completed production of a new series that will premiere next spring on AMC and AMC+ called The Audacity, written and produced by Better Call Saul and Succession writer, Jonathan Glatzer. It's a provocative, timely and darkly comedic series featuring an amazing cast, including Billy Magnussen, Sarah Goldberg, Zach Galifianakis, Rob Corddry and Simon Helberg.

Next year, we're planning to go into production on a new franchise, Great American Stories, the first season of which will be focused on John Steinbeck's The Grapes of Wrath. Our film group is experiencing one of the most successful years in its history with recent theatrical release, Good Boy joining this summer's Clown in a Cornfield to deliver 2 of the 3 highest grossing opening weekends we've ever had. Dangerous animals also saw solid box office results this summer. Just as important as the theatrical success is the impact these films have when they move to streaming on AMC+ and Shudder, extending the reach of our high-quality IP with minimal audience duplication.

Earlier, I spoke about the strategic components of our business and our commitment to remaining fast-moving and adaptable as our industry evolves. Our achievements are only possible because of our people, and I'm extremely proud of the work we're doing and the culture we have built together. To support our employees during this dynamic period in media and to advance our company with dedication and focus, we recently offered a voluntary buyout program to most of our U.S. workforce. This program did not have specific financial targets, rather its purpose was to strengthen our talent base and ensure we have the right skills for the future. The result of this initiative is a less than 5% reduction in our total employee base. We are thankful for the contributions of those who have chosen to pursue new opportunities and of course, those who are driving this new era of the company.

AMC Networks continues to differentiate itself during this changing time in media. As I said at the top of the call, when I look across our business, I see a company that has the pieces and the people necessary to succeed in this environment and to move quickly to find new and better ways to bring engaged fans to the content they love.

And now I'll turn the call over to Patrick.

Thank you, Kristin. We are pleased with our third quarter performance. And today, we are reiterating our outlook for the full year. We delivered another quarter of healthy cash flow generation with free cash flow totaling $42 million in the third quarter. We remain well positioned to achieve our 2025 outlook of approximately $250 million of free cash flow. Third quarter consolidated net revenue declined 6% year-over-year to $562 million. Favorability in foreign exchange rates resulted in an approximately 65 basis point tailwind to our consolidated revenue growth rate. Consolidated AOI declined 28% to $94 million with a 17% margin, and adjusted EPS was $0.18 per share.

I'll now review our segment results. Domestic Operations revenue decreased 8% to $486 million. Subscription revenue was flat year-over-year with streaming revenue growth of 14%, partly offset by a 13% decline in affiliate revenue. Streaming revenue growth in the quarter benefited from the implementation of rate initiatives as well as year-over-year streaming subscriber growth of 2%. We ended the third quarter with 10.4 million streaming subs. We've implemented price increases across all of our streaming services this year. Retention and engagement remain healthy across our portfolio of services, and we continue to anticipate an acceleration in our streaming revenue growth rate for the fourth quarter. As Kristin highlighted earlier, streaming revenue is expected to be our largest single source of revenue this year in this segment.

Moving to Advertising. For the third quarter, Domestic Operations advertising revenue decreased 17% due to linear ratings declines and lower marketplace pricing. The ad market remains challenging for everyone, but we are encouraged by our strong upfront performance, the strength of our programming and our significant advanced and digital advertising capabilities. As Kristin mentioned, we are pleased to have renewed and expanded our licensing agreement with Netflix in the third quarter. Recall that licensing revenues often vary quarter-to-quarter due to the timing of agreements and delivery schedules.

For the third quarter, content licensing revenue was $59 million, reflecting the timing and availability of deliveries in the period. Demand for our high-quality content remains healthy, and we now anticipate that Domestic Operations content licensing revenue will exceed $250 million for the full year. Domestic Operations AOI was $112 million for the quarter, representing a decrease of 25%. The decrease in AOI was largely driven by continued linear revenue headwinds.

Moving on to our International segment. Third quarter International revenues were $77 million. Excluding the favorable impact of foreign exchange in the current period, International revenues decreased approximately 50 basis points. Subscription revenue, excluding FX, decreased 6% due to the nonrenewal with Movistar in Spain, which occurred in the fourth quarter of 2024. Advertising revenue, excluding FX, increased 10% due to strong ad performance in the U.K. and Ireland. International AOI for the third quarter was $12 million with a 15% margin.

Turning to the balance sheet. We remain focused on continuing to reduce gross debt and extend maturities. We ended the quarter with net debt of approximately $1.2 billion, a consolidated net leverage ratio of 2.8x and approximately $900 million of total liquidity. We continue to believe that our securities will offer attractive opportunities to deploy cash across the capital structure to create meaningful equity value over time. In the third quarter, we repurchased $9 million of our unsecured senior notes due 2029 at an average price of $0.84 on the dollar. Subsequent to the end of the quarter, we also paid down approximately $166 million of our Term Loan A and amended our credit facility to push the maturity of the majority of our revolver availability to late 2030.

Regarding capital allocation, our philosophy remains consistent. First, we look to support the business by creating and acquiring compelling programming that resonates with our audiences while maintaining healthy levels of free cash flow generation. Second, we remain focused on reducing gross debt and extending debt maturities as evidenced by our third quarter open market repurchases and recent partial repayment and extension of our credit facility. Lastly, acquisitions and share repurchases will be opportunistic and measured.

Moving to our outlook. We are reiterating our 2025 outlook today. We remain confident in our ability to drive free cash flow and are on track to deliver approximately $250 million of free cash flow in 2025. With $232 million already generated in the first 9 months of the year, we are well on our way to achieving this goal. We continue to expect consolidated revenue of approximately $2.3 billion, reflecting continued linear headwinds, partially offset by streaming and content licensing strength. And we also expect consolidated AOI in the range of $400 million to $420 million for the full year. We are proud of the meaningful progress we've made in transitioning our business. We've built all the necessary components of a nimble and opportunistic modern media business.

All the while we've continued to create and curate the high-quality content that engages fans and builds valuable lasting franchises. We remain grounded in our consistent strategy of making great content, distributing that content broadly, generating meaningful free cash flow and being prudent in how we allocate our capital.

With that, I'll hand the call back to Nick.

Thank you, Patrick. Well, operator, we'll now open the line for questions, please.

[Operator Instructions] And our first question comes from the line of Charles Wilber of Guggenheim Securities.

Just wanted to ask, I was hoping you could talk about your partnership with the Sphere and promoting FearFest. How are you thinking about similar partnerships in the future for other promotions like Best Christmas Ever or content premieres? And then on AOI, margins decreased in the quarter to kind of mid-teens range. I believe in the past, you guys have talked about long-term margins in the mid- to high 20% range. Is that still how you're thinking about margin potential over the long term? And what steps do you need to take to drive margin expansion?

Great. Charles, it's Kristin. Thanks for the question on Sphere. As you know, we sell cross-platform all of our inventory, and we do it against specific audiences. And having the opportunity to integrate with the Exosphere capabilities in Vegas has been really attractive to a variety of advertisers, particularly those in packaged goods where we can work with Sphere Studios to create an interesting companion on the Sphere to their linear FAST and AVOD purchases with us. So Kim can you expand a little bit, I think, on who we work with and how that's come together.

Sure. I'd just add, it's an incredible way to mark the campaign in a marquee global way where the Exosphere goes global on social, and it really -- it marks that kind of signature moment for the advertisers. So most recently with FearFest, we did Bacardi and Kraft Heinz with -- and to a great deal of success. And we do have partnerships in discussion for Best Christmas Ever and into other signature time frames for '26.

Charles, on the margin question, I think what we've been -- what we've said in the past is that we're trying to do 2 things at once. We're trying to, on one hand, continue to invest heavily in premium programming and at the same time, drive significant free cash flow through the business. You have seen over the last couple of years that our free cash flow conversion has increased materially. It's quite high, over 60% in 2025. And that will continue to be the focus going forward. So I would pay particular attention to the free cash flow in the business. Obviously, in the last quarter, we actually increased the guide for the year, up from an implied $225 million to $250 million this year. And so that's really the watch where I focus on the free cash flow generation.

[Operator Instructions] Our next question comes from the line of Doug Creutz of TD Cowen.

Just as you become less of a linear business and more of a streaming business, how does that affect your overall cost structure? Are there ways that it's going to help you? Are there ways where it's going to hinder you? Can you talk how you -- about how you expect that to continue to evolve over the next couple of years?

Sure, Doug. I think we've got one of the most efficient models out there. When you think about how hard our programming dollars work against multiple distribution platforms, right? So when we program for AMC linear, it goes on AMC+ and the amount of incremental programming that's on AMC+ exclusively is relatively small from a dollar perspective. Certainly lots of episodes. There's a lot of Shudder content, et cetera, for subscribers there. So there's always something new with different and exclusive. But from a financial standpoint, the preponderance of our programming investment on AMC really does double duty across both linear and streaming.

And then secondly, I'd point out some of the other more targeted streaming businesses where like Acorn, for example, where the unit economics from a cost structure are quite advantageous. The cost of production on those series is much, much lower than on kind of other larger streaming services, the audiences are extremely kind of tuned in and we've got good engagement churn metrics, et cetera. So we feel really good about the efficiency from a cost perspective of the way we approach the streaming business. And I would say kind of broadly across the overall business, we continue to have levers to pull. But we are primarily focused on continuing to invest in premium programming across all of these businesses. And we think we do it well and that we get it to work hard for us.

I would just add, Doug, thanks for the question. On the operating side, we continue to remind people that our strategy is to be a wholesale streamer. And in doing that, a lot of the costs end up on the size of our distribution partners, whether it's for acquisition or for customer service or for promotion and bundling. And then the technology work that we've undertaken over the last 12 to 18 months is driving a very predictable approach, right? So digital, when you're doing streaming, we have all of our content is nicely tucked away with Comcast Technology Services and then that supported with their second location, cloud location. So we know that our content is safe, it's stored efficiently and successfully through CTS and then our distribution for streaming and for digital is on the back of that deal, which, as we always say, it's a deal that we know what it can -- what it will cost us to deliver and that is -- it is scalable for as large as we want to grow.

[Operator Instructions] Our next question comes from the line of David Joyce of Seaport Research Partners.

Thinking about advertising, with the components of the upfront commitments you mentioned and the 850,000 AMC+ sign-ons with Charter Spectrum, what would be the glide path do you think with this increased streaming presence to turning advertising into a growth business again, granted the advertising level because of linear is half of what it was like 8 or 9 years ago. But what can make this a growth revenue stream again?

Charles (sic) [ David], it's Kim. I would point to the number Kristin shared in our successful upfront tied to the 40% growth in our digital advertising, which really aligns actually -- aligns and includes that 850,000 ad-supported Charter subscribers. We continue to kind of expand the inventory we have through our partners of AMC+. So we really continue down the road of focusing on making our inventory digitally or dynamically ad inserted, which actually allows us an opportunity to cross-sell across all our platforms, including CTV, our streaming services that are ad-supported, which we continue to add to with Shudder ad-supported coming shortly. It's just -- it's growing that overall pool, and that will align over time.

[Operator Instructions] Our next question comes from the line of Steven Cahall of Wells Fargo.

I wanted to ask about advertising as well. So you talked about the growth in the FAST channels. I was wondering if you could give us the percentage of either domestic or total advertising revenue you're now recognizing from those FAST channels just so we get the relative size as it grows. And then just on the upfront, we've heard from some peers that at least entertainment linear pricing might have been down year-on-year. So I was wondering if you could give us any color there. And then finally, you talked about streaming revenue as your biggest revenue bucket. Can you just confirm if that's subscription and advertising? And if we compare streaming subscription and advertising to linear subscription and advertising, is streaming now bigger, which I think would be a big turning point.

Steven, it's Patrick. I'll do the third piece first, and I'll flip it over to Kim on the advertising side of the business. Our streaming revenue is streaming revenue only. There's not the digital advertising embedded in that. So that's -- you can call it kind of a clean or pure number. Obviously, we've got a number of products in the market from an ad-supported basis, but those dollars get captured in our advertising dollars, not the streaming dollars. So hopefully, that clears up.

And I would just mention, as Kristin pointed out in her comments, we do have -- we have 33 FAST channels now across 22 platforms with over 250 global feeds, and that's creating a great deal of streaming digital inventory for us. We don't break that out, Steven. That's included in the overall digital inventory that we sell cross-platform. But what I would add is this is not just an advertising venture for us. We look at the FAST and AVOD marketplaces as an opportunity for us to garner interest for our programming with early seasons that actually help drive awareness and promotion and marketing towards our streaming services. So the majority of the new FAST channels we've launched recently are channels that actually sample our targeted streaming services like Acorn Mysteries or Scares by Shudder or ALLBLK Gems. These services samples the -- sample content from our streaming services and give us an opportunity to drive that kind of noncord connected audience to our streaming services directly. So we're really seeing them beyond just an advertising generator, but more of a marketing and promotional opportunity for us in streaming.

And I would just add we have one partner right now who's trialing with us the opportunity to click through a FAST channel to purchase the corresponding TSVOD. So that's an interesting experiment for us. So it goes beyond just using FAST as a barker channel. It's actually an interactive mechanism to purchase the correlated streaming service. So we're excited about that and hoping for some positive results.

This concludes the question-and-answer session. I would like to turn it back to Nick Seibert for closing remarks.

Thank you, everyone, for joining us this morning. We appreciate you giving us the time and your continued interest in AMC Networks. Have a nice day.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the AMC Networks, Inc. Second Quarter 2025 Earnings Call. [Operator Instructions] 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, SVP, Corporate Development and Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to the AMC Networks Second Quarter 2025 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.

And with that, I'd like to turn the call over to Kristin.

Thank you, Nick, and good morning, everyone. We continue to execute our clear strategic plan focused on programming partnerships and profitability as we manage AMC Networks through this period of change in our industry. I'm pleased with the progress we've made in the first half of the year. In the second quarter, streaming revenue growth accelerated. We saw strong licensing performance and generated $96 million of free cash flow. In light of these positive results, we are raising our free cash flow outlook to approximately $250 million for the full year. In addition, we recently completed important financing transactions, which Patrick will discuss in more detail. We expect that the retirement of our debt at a significant discount will create meaningful shareholder value.

I'd like to spend a moment discussing a core competency that differentiates AMC Networks, which is our ability to build and grow fan communities around our high-quality content. This is the goal of every company in media, and our success in this regard spans our linear networks, programming franchises, targeted streaming services and film business.

Two weeks ago, we were at San Diego Comic Con, the biggest fan event in the world and a major annual priority for our company. Our Walking Dead and [ An rice ] universes and for the first time, our Shudder streaming service were well represented. Active fan relationships drive our company and also deliver meaningful value to our distribution and advertising partners.

It was powerful and affirming to see people lined up for hours to be terrified at our Shudder activation to watch Norman Reedus and Melissa McBride preview a new season of -- the Walking Dead: Daryl Dickson in Hall H or experienced the cast of interview with the Vampire entering ballroom 20 to defining applause. We've also approached streaming in a unique and fan forward way, building a suite of targeted services that allow us to efficiently serve passionate fans of specific genres while achieving very high levels of engagement and loyalty.

When Ohara fan finds Shudder or someone who loves Cozy Mysteries discovers Acorn TV, something very powerful happens. They don't just add another platform to the pile, they subscribe to a service that quickly becomes their favorite.

Our viewers first strategy is designed to meet viewers wherever they are on every possible platform. The benefits of this approach are cascading across our business and allowing us to expand audiences by finding new viewers across linear, streaming and CTV FAST. We have more than 20 domestic FAST channels today, which do more than just grow our digital ad business. They promote sampling and raise awareness and interest in our brands and franchises, they drive viewership on our linear networks and subscriptions on our streaming services.

We're also adapting our success in FAST internationally. We're already seeing a great response to the 3 FAST channels we've launched in the U.K. and are adding 3 more this month. Later this year, we'll launch channels in markets across Central and Northern Europe, Iberia and Latin America.

We've been focused on expanding awareness and subscriber interest in the Acorn servicing brand, one of the world's first targeted streaming services. In the quarter, we celebrated our first Murder Mystery May, a new event that delivered the biggest month for Acorn ownership ever and achieved a multiyear high in subscriber acquisition.

In addition to that effort, we developed a custom plan with a partner that successfully drove higher subscriber acquisition for the service, a new mystery series called [ Arc Detectives ], starring Stephen Moyer, premiered during the quarter and is now the #1 new series in Acorn history. Irish Blood, starring an executive produced by Alicia Silverstone, premieres next week, and a new Brookfield's mystery goes into production next month.

Shudder continues to cement its status as the premier brand for fans of [ apar ] and the Supernatural with the breakout success of Clown in a Cornfield. The film opens a critical acclaim in May and set a company record for opening weekend box office. We're looking forward to extending the film's momentum with its streaming debut today on AMC+ and Shudder. It's worth noting that during the quarter, we implemented rate events at both Acorn and Shudder and still saw year-over-year and sequential improvements in both our rate of churn and engagement across our streaming portfolio.

All of our streaming services are still priced below $10 a month, which is increasingly rare today. I'd also like to call out the strong growth of our HIDIVE streaming service. Anime is a popular genre with a passionate and highly engaged fan base. We see a lot of potential for continued growth at HIDIVE.

In terms of operational updates, we're very pleased with our performance in the current advertising upfront negotiations and the continued expansion of our digital ad business as more of our advertising partners embrace the power of reaching our viewers by buying across multiple platforms. We're tracking toward the same overall volume as last year, while driving a 25%-plus increase in digital commitments, capitalizing on the innovation we've invested in over the last few years.

Our commercial team leads the industry in key areas of innovation and attribution, and we see momentum as new currency opportunities are embraced by the marketplace.

We're in advanced discussions with Netflix to extend and expand the innovative branded AMC collection content relationship we launched a year ago. We expect to provide a more specific update in the coming weeks. Let me just say, both companies have been very happy with the results that came from making prior seasons of many of our shows, including our biggest franchises, available to this enormous base of subscribers in the U.S.

In terms of content licensing in general, we're seeing interest in our shows and franchises around the world. We saw strong performance in this category during the quarter, including continued demand for our content the sale of our music catalog as well as additional fees related to our development of Apple TV+ hit series Silo. This reinforces not only the value of our owned IP but also the versatility and breadth of AMC Studios assets and capabilities as we continue to develop premium content for our own platforms and opportunistically for other buyers.

AI has become a significant focus generally and in media. We recently entered into a partnership with a company called Runway, a leader in the use of generative AI in entertainment to leverage AI in our marketing and programming development. We've already begun using these tools to efficiently and quickly explore possibilities around certain storylines or locations, expanding the quality and volume of opportunity in these important areas. We'll have more to say on this and how we are using this new technology across marketing and programming development in the coming months.

Our work with Comcast Technology Solutions to standardize and streamline our back-office functions continues and crossed several important performance milestones in the last quarter. Just recently, we worked with CTS to expand the delivery of our content to an ever-increasing number of digital distribution partners.

On the linear side, we fully transitioned origination for our LatAm channels as well as disaster recovery services for our North American channels. This meaningful progress positions us well for the technical challenges associated with the rapidly evolving media distribution landscape.

We're looking forward to a third season of the Walking Dead: Darryl Dickson, which will premier in September and the arrival of a third series in our [ An rice ] universe, Telemasca, the secret order later this fall.

Our size, independence and unified organizational structure serve our company, our partners and of course, our view is extremely well in this changing time in media. We've done the hard internal work to ensure that our employees are empowered, focused and clear on our strategy, which gives us the ability to move quickly, intelligently and decisively to seize new opportunities. We are managing this business in a thoughtful and strategic way as we continue to build franchises and entertain fans.

And now I'll turn the call over to Patrick.

Thank you, Kristin. We are pleased to report another quarter of healthy free cash flow generation with second quarter free cash flow totaling $96 million. On the heels of the strong cash flow generation in the first half of the year, we've increased our outlook and now anticipate approximately $250 million of free cash flow for 2025. I'll have more to share on this when I reiterate the rest of our full-year outlook later in my remarks.

On to our consolidated results. Second quarter consolidated net revenue declined 4% year-over-year to $600 million. Favorability in foreign exchange rates resulted in an approximately 60 basis point tailwind to our consolidated revenue growth rate. Consolidated AOI declined 28% to $109 million with an 18% margin, and adjusted EPS was $0.69 per share.

I'll now review our segment results. Domestic operations revenue decreased 2% to $527 million. Subscription revenue decreased 1% due to a 12% decline in affiliate revenue, partly offset by streaming revenue growth of 12%. Streaming subscribers grew 2% year-over-year and sequentially, and we ended the second quarter with 10.4 million streaming subs.

Streaming revenue growth in the quarter benefited from the implementation of recent rating initiatives. Despite 2 price increases in the second quarter, we still saw year-over-year and sequential improvement in retention and engagement across our portfolio of streaming services.

In July, we implemented a $1 rate event at HIDIVE, and performance to date at this service is encouraging, with retention tracking in line with our expectations. With all planned [ red ] events for the year now in flight, we anticipate an acceleration in quarterly streaming revenue growth as the year progresses, and we continue to expect our full-year streaming revenue growth rate will be in the low to mid-teens.

For the second quarter, domestic operations advertising revenue decreased 18% year-over-year due to linear ratings declines and lower marketplace pricing, including lower digital CPMs. The ad market remains challenging for everyone, but we remain encouraged by our upfront performance, the strength of our programming and our significant advanced and digital advertising capabilities.

Content licensing revenue was $84 million for the quarter, reflecting the timing and availability of deliveries in the period. Our second quarter results reflected continued healthy demand for our high-quality content including the sale of our music catalog and executive producer fees related to the Apple TV+ Silo.

As you know, licensing revenues often vary quarter-to-quarter due to the timing of agreements and delivery schedules. Regarding the quarterly cadence of licensing revenue, we anticipate that the third quarter will represent the lowest licensing revenue quarter for the year, and that revenue will pick back up in the fourth quarter. This is typical timing variability, driven by the cadence of our delivery schedule. We continue to anticipate approximately $250 million of domestic operations content licensing revenue for the year.

Domestic operations AOI was $126 million for the quarter, representing a decrease of 19%. The decrease in AOI was largely driven by continued linear revenue headwinds. Streaming and content licensing revenue strength provided a partial offset in the second quarter.

Moving to our International segment. Second quarter international revenues were $76 million. Excluding prior period advertising revenues related to a retroactive adjustment and the favorable impact of foreign exchange in the current period, international revenues decreased 6%.

Subscription revenue, excluding FX, decreased 9% due to the nonrenewal with [ Movistar ] in Spain, which occurred in the fourth quarter of 2024. Advertising revenue, excluding the prior-period retroactive adjustment and the favorable FX impact in the current period, increased 2%.

The International AOI for the second quarter was $15 million with a 20% margin. Excluding the prior period adjustment and the beneficial FX impact in the current period, international AOI decreased 15%.

moving to the balance sheet, the strength of our balance sheet remains a focus as we reduce gross debt and extend maturities. Proactive and prudent management of our balance sheet provides improved flexibility today and in the future while allowing us to focus on the continued evolution of our business. We believe that our securities offer attractive opportunities to deploy cash opportunistically across the capital structure to create meaningful equity value.

So far this year, total debt reduction has exceeded $400 million. This includes the retirement of $699 million of our unsecured senior notes due 2029 at a significant discount to par and the early prepayment of $90 million of our Term Loan A. Through July, we've captured approximately $138 million of debt discount. Adjusting for transactions that closed in July, we ended the quarter with pro forma net debt of approximately $1.3 billion and a consolidated net leverage ratio of 2.7x, a reduction from 2.9x in the previous quarter. We have $875 million of total liquidity, including approximately $700 million of pro forma cash on the balance sheet and our undrawn $175 million revolver.

During the second quarter, we repurchased 1.6 million shares of our Class A common stock for approximately $10 million. As of June 30, we had $125 million remaining on our current authorization.

On the topic of capital allocation, our philosophy remains consistent. First, we look to support the business by creating and acquiring compelling programming that resonates with our audiences while maintaining healthy levels of cash flow generation. Second, we remain focused on reducing gross debt and extending debt maturities. Lastly, M&A, share repurchases and dividends will be opportunistic and measured and remain further down our priority list.

Moving to our 2025 outlook, we remain confident in our ability to drive free cash flow. As I mentioned earlier, we've raised our free cash flow outlook and now anticipate approximately $250 million of free cash flow for the year. Our increased outlook contemplates our strong year-to-date cash flow performance, efficiency in our pruning investments and cash tax savings largely related to full interest deductibility from the One Big Beautiful Bill.

We continue to expect consolidated revenue of approximately $2.3 billion, reflecting continued linear headwinds, partially offset by increasingly meaningful streaming growth and continue to expect consolidated AOI in the range of $400 million to $420 million. We continue to anticipate year-over-year increases in technical and operating expenses as well as increased SG&A expenses, largely driven by streaming-related marketing.

Regarding the quarterly cadence of AOI for the remainder of the year due to the timing of revenue, including content licensing, we anticipate the AOI in the third quarter represent the low point for the year. The fourth quarter will be the first full quarter reflecting all 2025 price increases that our streaming services.

We expect fourth quarter AOI will benefit from accelerating streaming revenue growth and the timing of content licensing revenues. As such, in absolute dollar terms, we expect fourth quarter AOI to be consistent with second quarter AOI.

While the operating environment remains ever changing, we remain highly focused on the variables within our control. We continue to execute our consistent strategy of making great content, distributing that content broadly, generating meaningful free cash flow and being prudent with how we allocate our capital.

We are well capitalized with a large cash balance, a long-term view of the business and a clear strategic plan. At the same time, we are nimble and opportunistic as we create and curate the high-quality content that engages fans and build valuable franchises.

With that, I'll hand the call back to Nick.

Thanks, Patrick. Operator, we'll now move to the Q&A portion of the call.

[Operator Instructions] one moment for our first question. which will come from Thomas of Morgan Stanley. Tom, your line is open.

Can you dig into the source of the free cash flow upside a little bit more relative to the reiteration of revenue and EBITDA? It sounded like Patrick, you mentioned cash tax savings is a driver. Any changes to cash spending in the roughly $1 billion zone and working capital to help us bridge the gap?

Thomas, thanks for the question. Yes, just unpacking the kind of increase in the free cash flow guide, a couple of factors. I would say the largest factor is the cash taxes. An offset to that was we did have some incremental cancellation of indebtedness income on which we pay tax on. But on a net basis, cash taxes is the largest component of guidance increase.

I would say, second to that would be savings across some of our programming. Those were modest in relation to the cash tax savings, but still important and sort of even more important than either of those two is the fact that the cash tax savings will sort of compound into '26 and '27 as we get sort of full interest deductibility going forward, obviously, given our capital structure, that was an important component of that legislation for us.

So not meaningful changes to the prior guidance in terms of cash programming spend. But in ranked order, it's the cash taxes versus the programming second.

Okay. That's super helpful. And if we benchmark relative to the original guidance across the revenue buckets at the beginning of the year, you reiterated content licensing and streaming. It seems like advertising is tracking a little worse and affiliate maybe a little bit better. As we think about the back half for those two, can you maybe just help us think about the trends on a year-over-year comparison basis and what we have been seeing recently continues? .

Yes. I mean we continue to feel good about the $2.3 billion total revenue guide I think the story remains sort of much the same as it has been for the last couple of quarters, in that content licensing revenue continues to be strong. The market is strong. Obviously, our content performs well on our services. It performs extraordinarily well on other platforms, in addition.

And so we continue to see strength in that sort of -- in those marketplaces, both domestically and internationally. So yes, on the margin, I would say, incremental strength on content licensing, a little bit of weakness on the advertising side. Affiliate, we continue to feel kind of really good about our relationships with our partners, and those deals continue to get signed as a matter of course.

And so that I don't expect any sort of material change from our initial guidance for the year. I would caution, however, we don't sort of typically give kind of quarter-by-quarter kind of reframes on kind of a revenue line item basis. So there are multiple ways up the mountain. So we feel good about the 2.3, and there's obviously a number of ways to get there. But as -- in terms of broad brush strokes, I think the trends you've seen in the past are going to kind of carry through for the balance of the year.

Understood. And if I can squeeze one more in just on the runway partnership and the puts and takes there, is it right to assume that you're allowing them to train off your content library and then in return, you can leverage these tools exclusively for yourself to empower you to do more efficient post production and preproduction? Maybe help us to frame through what the give and take is there.

Thomas, it's Kristin. So runway is just a facilitation for us. It's a tool that allows us to ideate, but if the content is ours and essentially, our goal is to put the best tools in the hands of our creative. So our teams are using runway for visualization of ideas, whether it's set design or interestingly shuts that we wouldn't necessarily be able to afford on our budget, so things like using an oil rig or an aerial shot of a ship rack.

But the relationship there is really to help facilitate our opportunities to expand our scope, ensure creative alignment, visualize more quickly. And so we've had some wins. Actually, Dan could probably give you an example or two, but runway is really just they're great partners, but we use them to facilitate our creative work. It's a technology play, it's not an integrated IP kind of play with any of our content or anything that we've created.

Yes, I'll just add to that, Thomas. I mean, I'd just say, look, the business has been integrating emerging technologies into the development and production of shows and film since the advent of the takes.

And as Kristin has mentioned and driven us over the last couple of years, we are an early adopter in the fast-moving space of deploying AI in the service of generative visualization. So we are using them to help us ideate, come up with concepts, ideas, help our showrunners visualize what they want to do, where they want to do it. And then in the realm of post production, we're able to save a considerable amount of money across our 30 to 50 episodes of television a year because generative AI is so good right now. It delivers 4K imagery, priced at anywhere from 20% to 40% of what traditional VFX is. And we're not displacing any of these people either.

I wanted to be really clear that all of our efforts live clearly and cleanly within the parameters established by all the guilds. We're committed to the principle that everything we do is in support of the people that make these great shows possible, and we're literally just giving them tools that will enhance their ability to do the great work they do.

Our next question will be coming from John Hodulik of UBS.

A couple of more details on the top line. First, given the strength you've seen in streaming, do you think subscription revenue growth can grow sustainably from here? And then any more details you can tell us on the sort of ad trends or the ad market? Specifically, what are you seeing in terms of pricing from the linear side and the CTV side? We've heard about some pressure on general entertainment advertising in both sides. And just any color that you're seeing and what you expect for the second part of the second half of the year would be great. .

Great. John, it's Patrick. I'll take the streaming and Kim will take the advertising.

Listen, we feel really good about the acceleration on the streaming side, both in terms of price and units, right? And so we've had some amazing success with some of the recent programming both on Acorn and on HIDIVE that really resonate with audiences. And so we're seeing kind of attractive upticks and kind of subscribers there could always do better. But we like what we see, particularly the last couple of quarters on those two platforms.

In terms of the economics of the business, really important to note that we've done a handful of price increases across our platform with really attractive sort of net results, and we're seeing sort of a very, very modest impact to sort of gross adds, churn, et cetera.

So the metrics continue to hold up really well. We've got some nice pricing power here. You're going to see that compound through the balance of the year into Q3 and Q4, obviously, beyond. So we feel really good about that, and we expect that, that streaming revenue will continue to accelerate into the back half of the year.

And John, just to note, I think it was in our remarks, but just to reiterate that streaming revenue will be our largest single revenue component this year. So it's going where we need it to go. And then, Kim, on appetizing?

Sure. I think that it would be helpful to reiterate Kristin's comments about the strength of our upfront this year, which is probably the most leading indicator you've heard from others and us on where advertising is going to see nearly flat year-over-year volume while driving over a 25% increase in our digital revenue, it's all signs pointing in the right direction as we look forward.

Obviously, that upfront begins in October of this year and fourth quarter and flows through next year. So that's leading. I would also add that we continue to be -- our teams, our leaders in the national linear addressable space. And what that really does, John, is that increases the value of our inventory by increasing the value it delivers to our advertisers through best-in-class targeting.

And we continue to push as much of our inventory directionally, whether that's from the virtual MVPDs, the traditional MVPDs and obviously, the CTV space. We sell cross-platform to our partners, and that value increases with the layered targeting enhancements in the audience plus programming -- the audience plus tool we introduced actually almost 2 years ago.

And our next question will be coming from Charles Wilber of Guggenheim Securities.

Thank you for the question. I appreciate the detail on the upfront there. Just wanted to ask, could you share any kind of incremental color on particular areas of success, whether verticals or particular shows or content style or platforms or audience segments that are kind of working best for you?

And then secondly, on the international FAST expansions, any cost or limitations on how quickly you can roll these out? And then how you're thinking about the return profiles and the contribution timing from these?

I would just -- it's Kim again. I'd just throw in. We saw real health in our QSR and FAST casual category. Financial is good and retail is up. So those all bounced up in Q2 of this year, and we'll continue to watch the categories going forward.

On the downside, automotive has been a tough 1 for consecutive quarters for many. So we continue to actually work hard in that space. In the areas of of opportunity. We continue to expand that digital inventory, like I talked about in my last response. And we see that as the future because of the nature of the targeting abilities in that space, which do lend to higher CPMs. And so we're setting ourselves up for the future.

Great. And then on the SaaS front, we've said it before, but now we're up to 28 FAST channels on 21 platforms around the world, so that's 190 global fees at FAST. And we've been doing more and more partnership both with the OEMs with the CTV folks, as well as with our other distribution partners. So like with TCL, there in -- we launched 11 FAST channels there in May. We domestically introduced 2 new channels in the marketplace. Acorn TV Mysteries and Love After Lockup with select partners and more to come.

And then internationally, one of the big ones is we want launched the Walking Dead by AMC as channel in LatAm, including Brazil, which is the world's largest -- third largest FAST market. So we see a lot of opportunity here, particularly because as Kim points out, we retained the sales rights and so our digital inventory stack gets bigger and broader as we launch more fast channels.

On the tech side, what I love about this is as we've continued the migration over to CTS. We now have all of our assets sitting on servers in one place with -- obviously, with a backup in another area, but 2 sets of cloud storage, one primary and one for disaster recovery, but everything can be fed from the same place.

So as we ideate different channels, all of the files are there, and then our teams can put them together into a FAST channel that could either be a pop-up or persistent channel is something super effective like the Walking Dead, seasonal opportunities, regional opportunities.

And so FAST is just a great embodiment of sort of digital platform being so fast. And then for us, the opportunity to continue to mine the library of everything that we have across all of our IP to create some really interesting and hopefully compelling content across the world.

Thank you. And our next question will be coming from David Joyce of Seaport Research Partners.

A little bit more detail, please, on the contribution to the streaming subs and advertising from, I guess, the renewals that you inked with your distributors in the past year, where they're kind of making your streaming service is more available. What's that then for the subscriber and advertising trends?

David, I'm sorry, did you mean advertising revenue? Or are you just asking about success so far with the Silo and the spectrum constructs?

Yes, both what those new relationships have done for the advertising trajectory, what they're doing for advertising for you and how they supported your subscriber growth?

Okay. So just on the subscription side, we've always loved the charter model, the spectrum model. We've worked really closely with the team there on making sure that subscribers who are entitled to AMC+ as part of their TV select package are activating. And we're seeing -- we're definitely in keeping -- is not outperforming some of the other folks that are available to spectrum subscribers. So working very closely.

And Charter has done an excellent job on a subscriber. I get a lot of information reminding me what I have -- what my entitlements are. So we've been very, very pleased with the volume and take rate and engagement of those subscribers as well as with Silo, where we're also embedded AMC+ with our core linear channels.

And then on the advertising front, these are ad-supported versions of AMC+, but it's still pretty early as far as like the total footprint for these bundled subscribers on the advertising front. But Kim, I don't know if you want to add anything to that?

I think that we will see. It accrues over time, absolutely in an additive way, but it is a multi-revenue opportunity for growth.

Our last question will be coming from Steven Kao of Wells Fargo. .

Yes. So I'm sure you all have noticed that some of the media peers have been looking to split up their cable distribution assets from their content assets. And I imagine this is a question that you all have taken internally as well. You have a very successful studio, as we see from your sensing revenue. And then there's a lot of pressure on your revenue and AOI from the linear distribution part.

So I guess, how are you thinking about that opportunity? You've been active in the debt market as well. So would just love any color there. And then maybe just back to capital allocation. So you bought back some stock in the quarter. Patrick, I think you said that your priorities haven't changed, which is still content or buybacks. So there's always scope to invest in more content to drive future value. How should we think about when buybacks come into the picture?

Great. Steven, it's Patrick. I'll take them in reverse order. So first, on capital allocation, as you mentioned, the philosophy remains unchanged. I would look at the very modest $10 million buyback in the context of the other kind of capital markets activity we undertook over the course of the last couple of quarters, including reducing net leverage by 0.25 turn, given the discount that we captured in the and the recent activity.

More importantly, obviously, still, we're extending duration of our balance sheet, including the new $400 million kind of secured issue due 2032. So we feel really good about the work we've done to set the company up for a long-term sort of financial success here via the balance sheet. So I would view the capital allocation in the context of those recent activities.

But when you look up and you see that the free cash flow yield on the stock is 90%, it does look screamingly cheap. We also see potential opportunities across the capital structure we've taken advantage of some of them, as I mentioned, by actually some discount. And there may be more opportunities in the future, and we will be mindful of those.

On your first question in terms of kind of the asset composition of the business, I think it's worth highlighting because I don't think it's sort of as well sort of understood, given the fact that we've got a number of other kind of spin cos kind of coming out, which are kind of cable networks business is at the core, AMC is very different. We have a studio, we have a big streaming business. Streaming revenue is going to be our largest revenue source in 2025. There's a lot of IP housed within this company.

And so we've also got an amazing portfolio of streaming products that work really hard alone, and they work even harder together. And I think that's sort of thematically how we think about the business as a whole. All the pieces kind of work together in a sort of strength compound strength.

So I think we see continued opportunity to sell across our platform, as Kim has mentioned, and to use the IP to drive our business and also assist others and monetize it around the world. So at this point, we'd like to [indiscernible]. We think we've got a great set of assets, and we think that we're really working hard together.

And I'm showing no further questions. I would now like to turn the call back to Kristian for closing remarks.

Great. Thank you, operator. I'd like to close by saying it's a changing and sometimes challenging time in media. But as we discussed this morning, we're finding strength and opportunity in a clear strategic plan focused on programming partnerships and profitability.

I'm pleased with our results this quarter and our prospects for the remainder of the year, including a higher reforecast for free cash flow, which is, as everyone knows, one of our major ongoing priorities. So between that and the return of the Walking Dead: Daryl Dixon next month, the expansion of our Arise universe later this year and our continued strong activity at Acorn, Shudder high diving across the portfolio of targeted streaming services, we think we're in pretty good shape. So we want to thank everybody again for joining us and for your continued interest in AMC Networks. And with that, we'll end the call.

Thank you. And this concludes today's conference call. Thank you for participating. You may now disconnect.