0001514991--12-312020Q3falseus-gaap:AccountingStandardsUpdate201613Memberus-gaap:AccountingStandardsUpdate201613MemberP3Y00015149912020-01-012020-09-30xbrli:shares0001514991us-gaap:CommonClassAMember2020-10-230001514991us-gaap:CommonClassBMember2020-10-23iso4217:USD00015149912020-09-3000015149912019-12-31iso4217:USDxbrli:shares0001514991us-gaap:CommonClassAMember2019-12-310001514991us-gaap:CommonClassAMember2020-09-300001514991us-gaap:CommonClassBMember2019-12-310001514991us-gaap:CommonClassBMember2020-09-3000015149912020-07-012020-09-3000015149912019-07-012019-09-3000015149912019-01-012019-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-06-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-06-300001514991us-gaap:AdditionalPaidInCapitalMember2020-06-300001514991us-gaap:RetainedEarningsMember2020-06-300001514991us-gaap:TreasuryStockMember2020-06-300001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001514991us-gaap:ParentMember2020-06-300001514991us-gaap:NoncontrollingInterestMember2020-06-3000015149912020-06-300001514991us-gaap:RetainedEarningsMember2020-07-012020-09-300001514991us-gaap:ParentMember2020-07-012020-09-300001514991us-gaap:NoncontrollingInterestMember2020-07-012020-09-300001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001514991us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-09-300001514991us-gaap:AdditionalPaidInCapitalMember2020-09-300001514991us-gaap:RetainedEarningsMember2020-09-300001514991us-gaap:TreasuryStockMember2020-09-300001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001514991us-gaap:ParentMember2020-09-300001514991us-gaap:NoncontrollingInterestMember2020-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-12-310001514991us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-12-310001514991us-gaap:AdditionalPaidInCapitalMember2019-12-310001514991us-gaap:RetainedEarningsMember2019-12-310001514991us-gaap:TreasuryStockMember2019-12-310001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001514991us-gaap:ParentMember2019-12-310001514991us-gaap:NoncontrollingInterestMember2019-12-310001514991us-gaap:RetainedEarningsMember2020-01-012020-09-300001514991us-gaap:ParentMember2020-01-012020-09-300001514991us-gaap:NoncontrollingInterestMember2020-01-012020-09-300001514991us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310001514991us-gaap:ParentMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310001514991srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300001514991us-gaap:AdditionalPaidInCapitalMember2020-01-012020-09-300001514991us-gaap:TreasuryStockMember2020-01-012020-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-01-012020-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-06-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-06-300001514991us-gaap:AdditionalPaidInCapitalMember2019-06-300001514991us-gaap:RetainedEarningsMember2019-06-300001514991us-gaap:TreasuryStockMember2019-06-300001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300001514991us-gaap:ParentMember2019-06-300001514991us-gaap:NoncontrollingInterestMember2019-06-3000015149912019-06-300001514991us-gaap:RetainedEarningsMember2019-07-012019-09-300001514991us-gaap:ParentMember2019-07-012019-09-300001514991us-gaap:NoncontrollingInterestMember2019-07-012019-09-300001514991us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001514991us-gaap:TreasuryStockMember2019-07-012019-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-09-300001514991us-gaap:AdditionalPaidInCapitalMember2019-09-300001514991us-gaap:RetainedEarningsMember2019-09-300001514991us-gaap:TreasuryStockMember2019-09-300001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001514991us-gaap:ParentMember2019-09-300001514991us-gaap:NoncontrollingInterestMember2019-09-3000015149912019-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassAMember2018-12-310001514991us-gaap:CommonStockMemberus-gaap:CommonClassBMember2018-12-310001514991us-gaap:AdditionalPaidInCapitalMember2018-12-310001514991us-gaap:RetainedEarningsMember2018-12-310001514991us-gaap:TreasuryStockMember2018-12-310001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001514991us-gaap:ParentMember2018-12-310001514991us-gaap:NoncontrollingInterestMember2018-12-3100015149912018-12-310001514991us-gaap:RetainedEarningsMember2019-01-012019-09-300001514991us-gaap:ParentMember2019-01-012019-09-300001514991us-gaap:NoncontrollingInterestMember2019-01-012019-09-300001514991us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-09-300001514991us-gaap:AdditionalPaidInCapitalMember2019-01-012019-09-300001514991us-gaap:TreasuryStockMember2019-01-012019-09-300001514991us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-01-012019-09-30amcx:segmentamcx:network00015149912020-01-012020-01-010001514991us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001514991us-gaap:EmployeeStockOptionMember2019-07-012019-09-300001514991us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001514991us-gaap:EmployeeStockOptionMember2019-01-012019-09-300001514991us-gaap:RestrictedStockUnitsRSUMember2020-07-012020-09-300001514991us-gaap:RestrictedStockUnitsRSUMember2019-07-012019-09-300001514991us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001514991us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300001514991us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001514991us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300001514991us-gaap:CommonClassAMember2020-01-012020-09-300001514991us-gaap:CommonClassAMember2020-09-16xbrli:pure0001514991us-gaap:CommonClassAMembersrt:MaximumMember2020-09-160001514991us-gaap:CommonClassAMembersrt:MinimumMember2020-09-160001514991us-gaap:SubsequentEventMemberus-gaap:CommonClassAMember2020-10-212020-10-210001514991us-gaap:SubsequentEventMember2020-10-212020-10-210001514991us-gaap:SubsequentEventMember2020-10-210001514991amcx:NationalNetworksMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001514991amcx:NationalNetworksMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001514991amcx:NationalNetworksMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001514991amcx:NationalNetworksMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001514991us-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMember2020-07-012020-09-300001514991us-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMember2019-07-012019-09-300001514991us-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMember2020-01-012020-09-300001514991us-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMember2019-01-012019-09-300001514991us-gaap:IntersegmentEliminationMember2020-07-012020-09-300001514991us-gaap:IntersegmentEliminationMember2019-07-012019-09-300001514991us-gaap:IntersegmentEliminationMember2020-01-012020-09-300001514991us-gaap:IntersegmentEliminationMember2019-01-012019-09-300001514991us-gaap:EmployeeSeveranceMember2019-12-310001514991us-gaap:OtherRestructuringMember2019-12-310001514991us-gaap:EmployeeSeveranceMember2020-01-012020-09-300001514991us-gaap:OtherRestructuringMember2020-01-012020-09-300001514991us-gaap:EmployeeSeveranceMember2020-09-300001514991us-gaap:OtherRestructuringMember2020-09-300001514991amcx:ReclassifiedFromNonMarketableSecurityToMarketableSecurityMember2020-04-300001514991amcx:NationalNetworksMember2019-12-310001514991amcx:InternationalAndOtherMember2019-12-310001514991amcx:NationalNetworksMember2020-01-012020-09-300001514991amcx:InternationalAndOtherMember2020-01-012020-09-300001514991amcx:NationalNetworksMember2020-09-300001514991amcx:InternationalAndOtherMember2020-09-300001514991amcx:AMCNIMember2020-01-012020-09-300001514991us-gaap:CustomerRelationshipsMember2020-09-300001514991srt:MinimumMemberus-gaap:CustomerRelationshipsMember2020-01-012020-09-300001514991us-gaap:CustomerRelationshipsMembersrt:MaximumMember2020-01-012020-09-300001514991amcx:AdvertiserRelationshipsMember2020-09-300001514991amcx:AdvertiserRelationshipsMember2020-01-012020-09-300001514991amcx:TradeNamesAndOtherMember2020-09-300001514991srt:MinimumMemberamcx:TradeNamesAndOtherMember2020-01-012020-09-300001514991amcx:TradeNamesAndOtherMembersrt:MaximumMember2020-01-012020-09-300001514991us-gaap:CustomerRelationshipsMember2019-12-310001514991amcx:AdvertiserRelationshipsMember2019-12-310001514991amcx:TradeNamesAndOtherMember2019-12-310001514991amcx:TermAFacilityMemberus-gaap:SecuredDebtMember2020-09-300001514991amcx:TermAFacilityMemberus-gaap:SecuredDebtMember2019-12-310001514991amcx:A4.75SeniorNotesDue2025Member2020-09-300001514991us-gaap:SeniorNotesMemberamcx:A4.75SeniorNotesDue2025Member2020-09-300001514991us-gaap:SeniorNotesMemberamcx:A4.75SeniorNotesDue2025Member2019-12-310001514991amcx:A5.00SeniorNotesMember2020-09-300001514991us-gaap:SeniorNotesMemberamcx:A5.00SeniorNotesMember2020-09-300001514991us-gaap:SeniorNotesMemberamcx:A5.00SeniorNotesMember2019-12-310001514991amcx:A475SeniorNotesMember2020-09-300001514991amcx:A475SeniorNotesMemberus-gaap:SeniorNotesMember2020-09-300001514991amcx:A475SeniorNotesMemberus-gaap:SeniorNotesMember2019-12-310001514991amcx:OtherDebtMemberus-gaap:SeniorNotesMember2020-09-300001514991amcx:OtherDebtMemberus-gaap:SeniorNotesMember2019-12-310001514991us-gaap:RevolvingCreditFacilityMember2020-09-300001514991us-gaap:LineOfCreditMemberamcx:SubsidiaryCreditFacilitiesMember2020-09-300001514991us-gaap:LineOfCreditMemberamcx:SubsidiaryCreditFacilitiesMembersrt:MinimumMember2020-09-300001514991us-gaap:LineOfCreditMemberamcx:SubsidiaryCreditFacilitiesMemberus-gaap:PrimeRateMember2020-01-012020-09-300001514991us-gaap:SeniorNotesMemberamcx:A475SeniorNotesDue2022Member2020-09-300001514991us-gaap:SeniorNotesMemberamcx:A475SeniorNotesDue2022Member2020-06-300001514991us-gaap:SeniorNotesMemberamcx:A475SeniorNotesDue2022Member2020-01-012020-09-300001514991us-gaap:FairValueInputsLevel1Member2020-09-300001514991us-gaap:FairValueInputsLevel2Member2020-09-300001514991us-gaap:FairValueInputsLevel3Member2020-09-300001514991us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateSwapMember2020-09-300001514991us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Member2020-09-300001514991us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel3Member2020-09-300001514991us-gaap:InterestRateSwapMember2020-09-300001514991us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel1Member2020-09-300001514991us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel2Member2020-09-300001514991us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel3Member2020-09-300001514991us-gaap:ForeignExchangeForwardMember2020-09-300001514991us-gaap:FairValueInputsLevel1Member2019-12-310001514991us-gaap:FairValueInputsLevel2Member2019-12-310001514991us-gaap:FairValueInputsLevel3Member2019-12-310001514991us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateSwapMember2019-12-310001514991us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Member2019-12-310001514991us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel3Member2019-12-310001514991us-gaap:InterestRateSwapMember2019-12-310001514991us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel1Member2019-12-310001514991us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel2Member2019-12-310001514991us-gaap:ForeignExchangeForwardMemberus-gaap:FairValueInputsLevel3Member2019-12-310001514991us-gaap:ForeignExchangeForwardMember2019-12-310001514991amcx:TermAFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-09-300001514991amcx:TermAFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-09-300001514991us-gaap:CarryingReportedAmountFairValueDisclosureMemberamcx:A4.75SeniorNotesDue2025Member2020-09-300001514991amcx:A4.75SeniorNotesDue2025Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-09-300001514991us-gaap:CarryingReportedAmountFairValueDisclosureMemberamcx:A5.00SeniorNotesMember2020-09-300001514991us-gaap:EstimateOfFairValueFairValueDisclosureMemberamcx:A5.00SeniorNotesMember2020-09-300001514991amcx:A475SeniorNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-09-300001514991amcx:A475SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-09-300001514991us-gaap:CarryingReportedAmountFairValueDisclosureMemberamcx:OtherDebtMember2020-09-300001514991amcx:OtherDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-09-300001514991us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-09-300001514991us-gaap:EstimateOfFairValueFairValueDisclosureMember2020-09-300001514991amcx:TermAFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310001514991amcx:TermAFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310001514991us-gaap:CarryingReportedAmountFairValueDisclosureMemberamcx:A4.75SeniorNotesDue2025Member2019-12-310001514991amcx:A4.75SeniorNotesDue2025Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310001514991us-gaap:CarryingReportedAmountFairValueDisclosureMemberamcx:A5.00SeniorNotesMember2019-12-310001514991us-gaap:EstimateOfFairValueFairValueDisclosureMemberamcx:A5.00SeniorNotesMember2019-12-310001514991amcx:A475SeniorNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310001514991amcx:A475SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310001514991us-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310001514991us-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310001514991us-gaap:NondesignatedMemberus-gaap:AccruedLiabilitiesMemberus-gaap:InterestRateSwapMember2020-09-300001514991us-gaap:NondesignatedMemberus-gaap:AccruedLiabilitiesMemberus-gaap:InterestRateSwapMember2019-12-310001514991us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-09-300001514991us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-12-310001514991us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMember2020-09-300001514991us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherAssetsMember2019-12-310001514991us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:AccruedLiabilitiesMember2020-09-300001514991us-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:AccruedLiabilitiesMember2019-12-310001514991us-gaap:OtherLiabilitiesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-09-300001514991us-gaap:OtherLiabilitiesMemberus-gaap:ForeignExchangeForwardMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-12-310001514991us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2020-07-012020-09-300001514991us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2019-07-012019-09-300001514991us-gaap:InterestExpenseMemberus-gaap:CashFlowHedgingMember2020-07-012020-09-300001514991us-gaap:InterestExpenseMemberus-gaap:CashFlowHedgingMember2019-07-012019-09-300001514991us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2020-01-012020-09-300001514991us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2019-01-012019-09-300001514991us-gaap:InterestExpenseMemberus-gaap:CashFlowHedgingMember2020-01-012020-09-300001514991us-gaap:InterestExpenseMemberus-gaap:CashFlowHedgingMember2019-01-012019-09-300001514991us-gaap:OtherNonoperatingIncomeExpenseMemberus-gaap:ForeignExchangeForwardMember2020-07-012020-09-300001514991us-gaap:OtherNonoperatingIncomeExpenseMemberus-gaap:ForeignExchangeForwardMember2019-07-012019-09-300001514991us-gaap:OtherNonoperatingIncomeExpenseMemberus-gaap:ForeignExchangeForwardMember2020-01-012020-09-300001514991us-gaap:OtherNonoperatingIncomeExpenseMemberus-gaap:ForeignExchangeForwardMember2019-01-012019-09-300001514991srt:MinimumMember2020-01-012020-09-300001514991us-gaap:ThreatenedLitigationMember2020-01-012020-09-300001514991us-gaap:RestrictedStockUnitsRSUMemberamcx:A2011StockPlanforNonEmployeeDirectorsMember2020-06-012020-06-300001514991us-gaap:RestrictedStockUnitsRSUMemberamcx:A2016EmployeeStockPlanMember2020-03-012020-03-310001514991us-gaap:RestrictedStockUnitsRSUMemberamcx:A2016EmployeeStockPlanMember2020-01-012020-09-300001514991us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:RestrictedStockUnitsRSUMemberamcx:A2016EmployeeStockPlanMember2020-03-012020-03-310001514991us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2020-01-012020-09-300001514991us-gaap:CommonClassAMemberus-gaap:PerformanceSharesMember2020-01-012020-09-300001514991us-gaap:PerformanceSharesMember2020-01-012020-09-300001514991us-gaap:RestrictedStockUnitsRSUMember2020-09-300001514991amcx:NationalNetworksMemberus-gaap:OperatingSegmentsMemberus-gaap:AdvertisingMember2020-07-012020-09-300001514991us-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMemberus-gaap:AdvertisingMember2020-07-012020-09-300001514991us-gaap:IntersegmentEliminationMemberus-gaap:AdvertisingMember2020-07-012020-09-300001514991us-gaap:AdvertisingMember2020-07-012020-09-300001514991amcx:NationalNetworksMemberus-gaap:EntertainmentMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001514991us-gaap:EntertainmentMemberus-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMember2020-07-012020-09-300001514991us-gaap:IntersegmentEliminationMemberus-gaap:EntertainmentMember2020-07-012020-09-300001514991us-gaap:EntertainmentMember2020-07-012020-09-300001514991amcx:NationalNetworksMemberus-gaap:OperatingSegmentsMemberus-gaap:AdvertisingMember2019-07-012019-09-300001514991us-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMemberus-gaap:AdvertisingMember2019-07-012019-09-300001514991us-gaap:IntersegmentEliminationMemberus-gaap:AdvertisingMember2019-07-012019-09-300001514991us-gaap:AdvertisingMember2019-07-012019-09-300001514991amcx:NationalNetworksMemberus-gaap:EntertainmentMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001514991us-gaap:EntertainmentMemberus-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMember2019-07-012019-09-300001514991us-gaap:IntersegmentEliminationMemberus-gaap:EntertainmentMember2019-07-012019-09-300001514991us-gaap:EntertainmentMember2019-07-012019-09-300001514991amcx:NationalNetworksMemberus-gaap:OperatingSegmentsMemberus-gaap:AdvertisingMember2020-01-012020-09-300001514991us-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMemberus-gaap:AdvertisingMember2020-01-012020-09-300001514991us-gaap:IntersegmentEliminationMemberus-gaap:AdvertisingMember2020-01-012020-09-300001514991us-gaap:AdvertisingMember2020-01-012020-09-300001514991amcx:NationalNetworksMemberus-gaap:EntertainmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001514991us-gaap:EntertainmentMemberus-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMember2020-01-012020-09-300001514991us-gaap:IntersegmentEliminationMemberus-gaap:EntertainmentMember2020-01-012020-09-300001514991us-gaap:EntertainmentMember2020-01-012020-09-300001514991amcx:NationalNetworksMemberus-gaap:OperatingSegmentsMemberus-gaap:AdvertisingMember2019-01-012019-09-300001514991us-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMemberus-gaap:AdvertisingMember2019-01-012019-09-300001514991us-gaap:IntersegmentEliminationMemberus-gaap:AdvertisingMember2019-01-012019-09-300001514991us-gaap:AdvertisingMember2019-01-012019-09-300001514991amcx:NationalNetworksMemberus-gaap:EntertainmentMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001514991us-gaap:EntertainmentMemberus-gaap:OperatingSegmentsMemberamcx:InternationalAndOtherMember2019-01-012019-09-300001514991us-gaap:IntersegmentEliminationMemberus-gaap:EntertainmentMember2019-01-012019-09-300001514991us-gaap:EntertainmentMember2019-01-012019-09-300001514991amcx:NationalNetworksMemberus-gaap:IntersegmentEliminationMember2020-07-012020-09-300001514991amcx:NationalNetworksMemberus-gaap:IntersegmentEliminationMember2019-07-012019-09-300001514991amcx:NationalNetworksMemberus-gaap:IntersegmentEliminationMember2020-01-012020-09-300001514991amcx:NationalNetworksMemberus-gaap:IntersegmentEliminationMember2019-01-012019-09-300001514991us-gaap:IntersegmentEliminationMemberamcx:InternationalAndOtherMember2020-07-012020-09-300001514991us-gaap:IntersegmentEliminationMemberamcx:InternationalAndOtherMember2019-07-012019-09-300001514991us-gaap:IntersegmentEliminationMemberamcx:InternationalAndOtherMember2020-01-012020-09-300001514991us-gaap:IntersegmentEliminationMemberamcx:InternationalAndOtherMember2019-01-012019-09-300001514991srt:NorthAmericaMember2020-07-012020-09-300001514991srt:NorthAmericaMember2019-07-012019-09-300001514991srt:NorthAmericaMember2020-01-012020-09-300001514991srt:NorthAmericaMember2019-01-012019-09-300001514991srt:EuropeMember2020-07-012020-09-300001514991srt:EuropeMember2019-07-012019-09-300001514991srt:EuropeMember2020-01-012020-09-300001514991srt:EuropeMember2019-01-012019-09-300001514991amcx:OtherGeographicLocationsMember2020-07-012020-09-300001514991amcx:OtherGeographicLocationsMember2019-07-012019-09-300001514991amcx:OtherGeographicLocationsMember2020-01-012020-09-300001514991amcx:OtherGeographicLocationsMember2019-01-012019-09-300001514991srt:NorthAmericaMember2020-09-300001514991srt:NorthAmericaMember2019-12-310001514991srt:EuropeMember2020-09-300001514991srt:EuropeMember2019-12-310001514991amcx:OtherGeographicLocationsMember2020-09-300001514991amcx:OtherGeographicLocationsMember2019-12-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
|
|
|
|
|
☑ |
Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 |
For the quarterly period ended September 30, 2020
or
|
|
|
|
|
|
☐ |
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 |
For the transition period from to
Commission File Number: 1-35106
AMC Networks Inc.
(Exact name of registrant as specified in its charter)
|
|
|
|
|
|
|
|
|
Delaware |
27-5403694 |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
|
|
11 Penn Plaza, |
|
New York, |
NY |
10001 |
(Address of principal executive offices) |
(Zip Code) |
(212) 324-8500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Class A Common Stock, par value $0.01 per share |
AMCX |
The |
NASDAQ |
Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past
90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit
and post such
files). Yes þ No ¨
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company or an emerging growth company (as defined
in Exchange Act Rule 12b-2).
|
|
|
|
|
|
|
|
|
|
|
|
Large accelerated filer |
þ |
Accelerated filer |
¨ |
|
|
|
|
Non-accelerated filer |
¨ |
Smaller reporting company |
☐ |
|
|
|
|
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
¨
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No þ
The number of shares of common stock outstanding as of
October 23, 2020:
|
|
|
|
|
|
Class A Common Stock par value $0.01 per share |
29,754,780 |
Class B Common Stock par value $0.01 per share |
11,484,408 |
AMC NETWORKS INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial
Statements.
AMC NETWORKS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
|
December 31, 2019 |
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
1,071,860 |
|
|
$ |
816,170 |
|
Accounts receivable, trade (less allowance for doubtful accounts of
$9,345 and $5,733)
|
768,506 |
|
|
857,143 |
|
Current portion of program rights, net |
17,933 |
|
|
426,624 |
|
Prepaid expenses and other current assets |
174,682 |
|
|
230,360 |
|
Total current assets |
2,032,981 |
|
|
2,330,297 |
|
Property and equipment, net of accumulated depreciation of $254,312
and $347,302
|
255,729 |
|
|
283,752 |
|
Program rights, net |
1,336,612 |
|
|
1,038,060 |
|
Intangible assets, net |
417,778 |
|
|
524,531 |
|
Goodwill |
673,810 |
|
|
701,980 |
|
Deferred tax asset, net |
39,778 |
|
|
51,545 |
|
Operating lease right-of-use asset |
151,801 |
|
|
170,056 |
|
Other assets |
477,938 |
|
|
496,465 |
|
Total assets |
$ |
5,386,427 |
|
|
$ |
5,596,686 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
80,967 |
|
|
$ |
94,306 |
|
Accrued liabilities |
281,023 |
|
|
251,214 |
|
Current portion of program rights obligations |
302,061 |
|
|
304,692 |
|
Deferred revenue |
61,557 |
|
|
63,921 |
|
Current portion of long-term debt |
76,000 |
|
|
56,250 |
|
Current portion of lease obligations |
33,519 |
|
|
33,959 |
|
Total current liabilities |
835,127 |
|
|
804,342 |
|
Program rights obligations |
198,197 |
|
|
239,813 |
|
Long-term debt |
2,791,091 |
|
|
3,039,979 |
|
Lease obligations |
209,549 |
|
|
211,047 |
|
Deferred tax liability, net |
135,476 |
|
|
136,911 |
|
Other liabilities |
130,244 |
|
|
163,638 |
|
Total liabilities |
4,299,684 |
|
|
4,595,730 |
|
Commitments and contingencies |
|
|
|
Redeemable noncontrolling interests |
314,397 |
|
|
309,451 |
|
Stockholders' equity: |
|
|
|
Class A Common Stock, $0.01 par value, 360,000 shares
authorized, 63,348 and 63,886 shares issued and 40,557 and 44,078
shares outstanding, respectively
|
643 |
|
|
639 |
|
Class B Common Stock, $0.01 par value, 90,000 shares authorized,
11,484 shares issued and outstanding
|
115 |
|
|
115 |
|
Preferred stock, $0.01 par value, 45,000 shares authorized; none
issued
|
— |
|
|
— |
|
Paid-in capital |
320,681 |
|
|
286,491 |
|
Accumulated earnings |
1,752,740 |
|
|
1,609,428 |
|
Treasury stock, at cost (23,790 and 19,808 shares Class A
Common Stock, respectively)
|
(1,166,119) |
|
|
(1,063,181) |
|
Accumulated other comprehensive loss |
(160,457) |
|
|
(167,711) |
|
Total AMC Networks stockholders' equity |
747,603 |
|
|
665,781 |
|
Non-redeemable noncontrolling interests |
24,743 |
|
|
25,724 |
|
Total stockholders' equity |
772,346 |
|
|
691,505 |
|
Total liabilities and stockholders' equity |
$ |
5,386,427 |
|
|
$ |
5,596,686 |
|
See accompanying notes to condensed consolidated financial
statements.
AMC NETWORKS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues, net
|
$ |
654,015 |
|
|
$ |
718,597 |
|
|
$ |
2,034,681 |
|
|
$ |
2,275,117 |
|
Operating expenses: |
|
|
|
|
|
|
|
Technical and operating (excluding depreciation and
amortization)
|
333,816 |
|
|
354,992 |
|
|
960,379 |
|
|
1,080,763 |
|
Selling, general and administrative
|
148,769 |
|
|
159,357 |
|
|
488,581 |
|
|
505,233 |
|
Depreciation and amortization |
27,547 |
|
|
25,619 |
|
|
80,182 |
|
|
75,568 |
|
Impairment charges |
— |
|
|
— |
|
|
130,411 |
|
|
— |
|
Restructuring and other related charges |
4,406 |
|
|
10,191 |
|
|
13,879 |
|
|
29,995 |
|
Total operating expenses |
514,538 |
|
|
550,159 |
|
|
1,673,432 |
|
|
1,691,559 |
|
Operating income |
139,477 |
|
|
168,438 |
|
|
361,249 |
|
|
583,558 |
|
Other income (expense): |
|
|
|
|
|
|
|
Interest expense |
(33,418) |
|
|
(39,621) |
|
|
(105,283) |
|
|
(118,982) |
|
Interest income |
2,994 |
|
|
4,626 |
|
|
11,276 |
|
|
13,571 |
|
Loss on extinguishment of debt |
— |
|
|
— |
|
|
(2,908) |
|
|
— |
|
Miscellaneous, net |
11,138 |
|
|
(1,490) |
|
|
(10,088) |
|
|
(16,972) |
|
Total other (expense) income |
(19,286) |
|
|
(36,485) |
|
|
(107,003) |
|
|
(122,383) |
|
Income from operations before income taxes |
120,191 |
|
|
131,953 |
|
|
254,246 |
|
|
461,175 |
|
Income tax expense |
(52,195) |
|
|
(8,727) |
|
|
(95,490) |
|
|
(53,807) |
|
Net income including noncontrolling interests |
67,996 |
|
|
123,226 |
|
|
158,756 |
|
|
407,368 |
|
Net income attributable to noncontrolling interests |
(6,356) |
|
|
(6,303) |
|
|
(13,488) |
|
|
(18,305) |
|
Net income attributable to AMC Networks' stockholders |
$ |
61,640 |
|
|
$ |
116,923 |
|
|
$ |
145,268 |
|
|
$ |
389,063 |
|
|
|
|
|
|
|
|
|
Net income per share attributable to AMC Networks'
stockholders:
|
Basic |
$ |
1.18 |
|
|
$ |
2.09 |
|
|
$ |
2.72 |
|
|
$ |
6.91 |
|
Diluted |
$ |
1.17 |
|
|
$ |
2.07 |
|
|
$ |
2.69 |
|
|
$ |
6.80 |
|
|
|
|
|
|
|
|
|
Weighted average common shares: |
|
|
|
|
|
|
|
Basic |
52,346 |
|
|
55,847 |
|
|
53,374 |
|
|
56,339 |
|
Diluted |
52,904 |
|
|
56,605 |
|
|
53,917 |
|
|
57,218 |
|
See accompanying notes to condensed consolidated financial
statements.
AMC NETWORKS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income including noncontrolling interests |
$ |
67,996 |
|
|
$ |
123,226 |
|
|
$ |
158,756 |
|
|
$ |
407,368 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
Foreign currency translation adjustment |
21,475 |
|
|
(33,281) |
|
|
7,383 |
|
|
(38,490) |
|
Unrealized gain (loss) on interest rate swaps |
615 |
|
|
(187) |
|
|
(1,041) |
|
|
(2,076) |
|
Other comprehensive income (loss), before income taxes |
22,090 |
|
|
(33,468) |
|
|
6,342 |
|
|
(40,566) |
|
Income tax (expense) benefit |
(144) |
|
|
335 |
|
|
242 |
|
|
483 |
|
Other comprehensive income (loss), net of income taxes |
21,946 |
|
|
(33,133) |
|
|
6,584 |
|
|
(40,083) |
|
Comprehensive income |
89,942 |
|
|
90,093 |
|
|
165,340 |
|
|
367,285 |
|
Comprehensive income attributable to noncontrolling
interests
|
(6,648) |
|
|
(5,217) |
|
|
(12,818) |
|
|
(17,048) |
|
Comprehensive income attributable to AMC Networks'
stockholders
|
$ |
83,294 |
|
|
$ |
84,876 |
|
|
$ |
152,522 |
|
|
$ |
350,237 |
|
See accompanying notes to condensed consolidated financial
statements.
AMC NETWORKS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Common
Stock |
|
Class B
Common
Stock |
|
Paid-in
Capital |
|
Accumulated Earnings |
|
Treasury
Stock |
|
Accumulated
Other
Comprehensive
Loss |
|
AMC Networks Stockholders’
Equity |
|
Noncontrolling Interests |
|
Total Stockholders' Equity |
Balance, June 30, 2020 |
$ |
643 |
|
|
$ |
115 |
|
|
$ |
308,288 |
|
|
$ |
1,691,100 |
|
|
$ |
(1,166,119) |
|
|
$ |
(182,111) |
|
|
$ |
651,916 |
|
|
$ |
23,229 |
|
|
$ |
675,145 |
|
Net income attributable to AMC Networks’ stockholders |
— |
|
|
— |
|
|
— |
|
|
61,640 |
|
|
— |
|
|
— |
|
|
61,640 |
|
|
— |
|
|
61,640 |
|
Net income attributable to non-redeemable noncontrolling
interests |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,785 |
|
|
1,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to noncontrolling member |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(563) |
|
|
(563) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
21,654 |
|
|
21,654 |
|
|
292 |
|
|
21,946 |
|
Share-based compensation expense |
— |
|
|
— |
|
|
12,393 |
|
|
— |
|
|
— |
|
|
— |
|
|
12,393 |
|
|
— |
|
|
12,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2020 |
$ |
643 |
|
|
$ |
115 |
|
|
$ |
320,681 |
|
|
$ |
1,752,740 |
|
|
$ |
(1,166,119) |
|
|
$ |
(160,457) |
|
|
$ |
747,603 |
|
|
$ |
24,743 |
|
|
$ |
772,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Common
Stock |
|
Class B
Common
Stock |
|
Paid-in
Capital |
|
Accumulated Earnings |
|
Treasury
Stock |
|
Accumulated
Other
Comprehensive
Loss |
|
AMC Networks Stockholders’
Equity |
|
Noncontrolling Interests |
|
Total Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019 |
$ |
639 |
|
|
$ |
115 |
|
|
$ |
286,491 |
|
|
$ |
1,609,428 |
|
|
$ |
(1,063,181) |
|
|
$ |
(167,711) |
|
|
$ |
665,781 |
|
|
$ |
25,724 |
|
|
$ |
691,505 |
|
Net income attributable to AMC Networks’ stockholders |
— |
|
|
— |
|
|
— |
|
|
145,268 |
|
|
— |
|
|
— |
|
|
145,268 |
|
|
— |
|
|
145,268 |
|
Net income attributable to non-redeemable noncontrolling
interests |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
700 |
|
|
700 |
|
Adoption of
ASU 2016-13, credit losses
|
— |
|
|
— |
|
|
— |
|
|
(1,956) |
|
|
— |
|
|
— |
|
|
(1,956) |
|
|
— |
|
|
(1,956) |
|
Distributions to noncontrolling member |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,011) |
|
|
(1,011) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7,254 |
|
|
7,254 |
|
|
(670) |
|
|
6,584 |
|
Share-based compensation expense |
— |
|
|
— |
|
|
43,141 |
|
|
— |
|
|
— |
|
|
— |
|
|
43,141 |
|
|
— |
|
|
43,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury stock acquired |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(102,938) |
|
|
— |
|
|
(102,938) |
|
|
— |
|
|
(102,938) |
|
Restricted stock units converted to shares |
4 |
|
|
— |
|
|
(8,951) |
|
|
— |
|
|
— |
|
|
— |
|
|
(8,947) |
|
|
— |
|
|
(8,947) |
|
Balance, September 30, 2020 |
$ |
643 |
|
|
$ |
115 |
|
|
$ |
320,681 |
|
|
$ |
1,752,740 |
|
|
$ |
(1,166,119) |
|
|
$ |
(160,457) |
|
|
$ |
747,603 |
|
|
$ |
24,743 |
|
|
$ |
772,346 |
|
See accompanying notes to consolidated financial
statements.
AMC NETWORKS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Common
Stock |
|
Class B
Common
Stock |
|
Paid-in
Capital |
|
Accumulated Earnings |
|
Treasury
Stock |
|
Accumulated
Other
Comprehensive
Loss |
|
AMC Networks Stockholders’
Equity |
|
Noncontrolling Interests |
|
Total Stockholders' Equity |
Balance, June 30, 2019 |
$ |
639 |
|
|
$ |
115 |
|
|
$ |
258,150 |
|
|
$ |
1,501,082 |
|
|
$ |
(1,051,022) |
|
|
$ |
(167,144) |
|
|
$ |
541,820 |
|
|
$ |
26,693 |
|
|
$ |
568,513 |
|
Net income attributable to AMC Networks’ stockholders |
— |
|
|
— |
|
|
— |
|
|
116,923 |
|
|
— |
|
|
— |
|
|
116,923 |
|
|
— |
|
|
116,923 |
|
Net income attributable to non-redeemable noncontrolling
interests |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,772 |
|
|
1,772 |
|
Distributions to noncontrolling member |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(705) |
|
|
(705) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement of treasury stock |
— |
|
|
— |
|
|
832 |
|
|
— |
|
|
— |
|
|
— |
|
|
832 |
|
|
— |
|
|
832 |
|
Other comprehensive loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(33,133) |
|
|
(33,133) |
|
|
(1,085) |
|
|
(34,218) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense |
— |
|
|
— |
|
|
13,841 |
|
|
— |
|
|
— |
|
|
— |
|
|
13,841 |
|
|
— |
|
|
13,841 |
|
Treasury stock acquired |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(12,159) |
|
|
— |
|
|
(12,159) |
|
|
— |
|
|
(12,159) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2019 |
$ |
639 |
|
|
$ |
115 |
|
|
$ |
272,823 |
|
|
$ |
1,618,005 |
|
|
$ |
(1,063,181) |
|
|
$ |
(200,277) |
|
|
$ |
628,124 |
|
|
$ |
26,675 |
|
|
$ |
654,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Common
Stock |
|
Class B
Common
Stock |
|
Paid-in
Capital |
|
Accumulated Earnings |
|
Treasury
Stock |
|
Accumulated
Other
Comprehensive
Loss |
|
AMC Networks Stockholders’
Equity |
|
Noncontrolling Interests |
|
Total Stockholders' Equity |
Balance, December 31, 2018 |
$ |
633 |
|
|
$ |
115 |
|
|
$ |
239,767 |
|
|
$ |
1,228,942 |
|
|
$ |
(992,583) |
|
|
$ |
(160,194) |
|
|
$ |
316,680 |
|
|
$ |
28,528 |
|
|
$ |
345,208 |
|
Net income attributable to AMC Networks’ stockholders |
— |
|
|
— |
|
|
— |
|
|
389,063 |
|
|
— |
|
|
— |
|
|
389,063 |
|
|
— |
|
|
389,063 |
|
Net income attributable to non-redeemable noncontrolling
interests |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,842 |
|
|
2,842 |
|
Distributions to noncontrolling member |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,439) |
|
|
(3,439) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(40,083) |
|
|
(40,083) |
|
|
(1,256) |
|
|
(41,339) |
|
Share-based compensation expense |
— |
|
|
— |
|
|
50,465 |
|
|
— |
|
|
— |
|
|
— |
|
|
50,465 |
|
|
— |
|
|
50,465 |
|
Proceeds from the exercise of stock options |
— |
|
|
— |
|
|
4,630 |
|
|
— |
|
|
— |
|
|
— |
|
|
4,630 |
|
|
— |
|
|
4,630 |
|
Treasury stock acquired |
— |
|
|
— |
|
|
985 |
|
|
— |
|
|
(70,598) |
|
|
— |
|
|
(69,613) |
|
|
— |
|
|
(69,613) |
|
Restricted stock units converted to shares |
6 |
|
|
— |
|
|
(23,024) |
|
|
— |
|
|
— |
|
|
— |
|
|
(23,018) |
|
|
— |
|
|
(23,018) |
|
Balance, September 30, 2019 |
$ |
639 |
|
|
$ |
115 |
|
|
$ |
272,823 |
|
|
$ |
1,618,005 |
|
|
$ |
(1,063,181) |
|
|
$ |
(200,277) |
|
|
$ |
628,124 |
|
|
$ |
26,675 |
|
|
$ |
654,799 |
|
See accompanying notes to consolidated financial
statements.
AMC NETWORKS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
Cash flows from operating activities: |
|
|
|
Net income including noncontrolling interests |
$ |
158,756 |
|
|
$ |
407,368 |
|
Adjustments to reconcile net income to net cash from operating
activities:
|
|
|
|
Depreciation and amortization |
80,182 |
|
|
75,568 |
|
Impairment charges |
130,411 |
|
|
— |
|
Share-based compensation expense related to equity classified
awards |
43,141 |
|
|
50,465 |
|
Non-cash restructuring and other related charges |
6,126 |
|
|
14,026 |
|
Amortization and write-off of program rights |
622,204 |
|
|
696,326 |
|
Amortization of deferred carriage fees |
21,088 |
|
|
14,624 |
|
Unrealized foreign currency transaction loss |
9,242 |
|
|
489 |
|
Amortization of deferred financing costs and discounts on
indebtedness |
6,039 |
|
|
5,970 |
|
Loss on extinguishment of debt |
2,908 |
|
|
— |
|
Bad debt expense |
340 |
|
|
3,628 |
|
Deferred income taxes |
12,403 |
|
|
(65,245) |
|
Write-down of non-marketable equity securities and note
receivable |
5,103 |
|
|
20,206 |
|
Other, net |
(10,696) |
|
|
(8,481) |
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable, trade (including amounts due from related
parties, net) |
92,328 |
|
|
6,993 |
|
Prepaid expenses and other assets |
79,098 |
|
|
(121,375) |
|
Program rights and obligations, net |
(565,267) |
|
|
(676,718) |
|
Income taxes payable |
17,265 |
|
|
3,101 |
|
Deferred revenue |
(2,234) |
|
|
10,395 |
|
Deferred carriage fees, net |
(15,057) |
|
|
(14,409) |
|
Accounts payable, accrued liabilities and other
liabilities |
(49,293) |
|
|
(22,534) |
|
Net cash provided by operating activities |
644,087 |
|
|
400,397 |
|
Cash flows from investing activities: |
|
|
|
Capital expenditures |
(34,990) |
|
|
(69,096) |
|
Return of capital from investees |
924 |
|
|
9,232 |
|
Acquisition of investment securities |
(4,111) |
|
|
— |
|
Principal payment received on loan to investee |
3,750 |
|
|
— |
|
Proceeds from sale of investments |
10,000 |
|
|
— |
|
Net cash used in investing activities |
(24,427) |
|
|
(59,864) |
|
Cash flows from financing activities: |
|
|
|
Proceeds from the issuance of long-term debt |
6,000 |
|
|
1,521 |
|
Principal payments on long-term debt |
(242,500) |
|
|
(12,613) |
|
Deemed repurchases of restricted stock units |
(8,947) |
|
|
(23,019) |
|
Purchase of treasury stock |
(102,938) |
|
|
(70,598) |
|
Proceeds from stock option exercises |
— |
|
|
4,630 |
|
Principal payments on finance lease obligations |
(2,404) |
|
|
(4,059) |
|
Distributions to noncontrolling interests |
(13,955) |
|
|
(13,545) |
|
Net cash used in financing activities |
(364,744) |
|
|
(117,683) |
|
Net increase in cash and cash equivalents |
254,916 |
|
|
222,850 |
|
Effect of exchange rate changes on cash and cash
equivalents |
774 |
|
|
(4,350) |
|
Cash and cash equivalents at beginning of period |
816,170 |
|
|
554,886 |
|
Cash and cash equivalents at end of period |
$ |
1,071,860 |
|
|
$ |
773,386 |
|
See accompanying notes to condensed consolidated financial
statements.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Description of Business and Basis of
Presentation
Description of Business
AMC Networks Inc. ("AMC Networks") and its subsidiaries
(collectively referred to as the "Company") own and operate
entertainment businesses and assets. The Company is comprised of
two operating segments:
•National
Networks:
Includes activities of our five national programming networks, AMC
Studios operations and AMC Broadcasting & Technology. Our
national programming networks are AMC, WE tv, BBC AMERICA, IFC and
SundanceTV and also include our AMC Premiere service. Our AMC
Studios operations produces original programming for our
programming networks and also licenses such program rights
worldwide. AMC Networks Broadcasting & Technology is our
technical services business, which primarily services most of the
national programming networks.
•International
and Other:
Includes AMC Networks International ("AMCNI"), our international
programming businesses consisting of a portfolio of channels around
the world; AMC Networks SVOD, consisting of our targeted
subscription streaming services (Acorn TV, Shudder, Sundance Now,
UMC),
AMC+ and other
subscription video on demand ("SVOD") initiatives; Levity, our
production services and comedy venues business; and IFC Films, our
independent film distribution business.
Basis of Presentation
Principles of Consolidation
The consolidated financial statements include the accounts of AMC
Networks and its subsidiaries in which a controlling voting
interest is maintained or variable interest entities ("VIEs") in
which the Company has determined it is the primary beneficiary. All
intercompany transactions and balances have been eliminated in
consolidation.
Investments in business entities in which the Company lacks control
but does have the ability to exercise significant influence over
operating and financial policies are accounted for using the equity
method of accounting.
Unaudited Interim Financial Statements
These condensed consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") for interim financial information and Article
10 of Regulation S-X of the Securities and Exchange Commission
("SEC"), and should be read in conjunction with the Company's
consolidated financial statements and notes thereto for the year
ended December 31, 2019 contained in the Company's Annual
Report on Form 10-K ("2019 Form 10-K") filed with the SEC. The
condensed consolidated financial statements presented in this
Quarterly Report on Form 10-Q are unaudited; however, in the
opinion of management, such financial statements reflect all
adjustments, consisting solely of normal recurring adjustments,
necessary for a fair presentation of the results for the interim
periods presented.
The results of operations for interim periods are not necessarily
indicative of the results that might be expected for future interim
periods or for the full year ending December 31,
2020.
Risks and Uncertainties
In March 2020, the World Health Organization characterized the
novel coronavirus ("COVID-19") a pandemic, and the President of the
United States declared the COVID-19 outbreak a national emergency.
The rapid spread of the pandemic and the continuously evolving
responses to combat it have had a negative impact on the global
economy.
The impact of COVID-19 and measures to prevent its spread are
affecting our businesses in a number of ways. Beginning in
mid-March, the Company has experienced adverse advertising sales
impacts, suspended content production, which has led to
delays in the creation and availability of substantially all of its
programming, and the temporary closure of its comedy venues. In the
third quarter of 2020, the
Company commenced production activities, however substantially all
Company employees continue to work remotely, and the Company
continues to restrict business travel. If significant portions of
our workforce, including key personnel, are unable to work
effectively because of illness, government actions or other
restrictions in connection with the COVID-19 pandemic, the impact
of the pandemic on our businesses could be
exacerbated.
The Company has evaluated and continues to evaluate the potential
impact of the COVID-19 pandemic on its consolidated financial
statements, including the impairment of goodwill (see Note 7) and
indefinite-lived intangible assets and the fair value and
collectability of receivables. The COVID-19 pandemic has had a
material impact on the Company's operations since mid-March 2020.
The Company cannot reasonably predict the ultimate impact of the
COVID-19 pandemic, including the extent of any adverse impact on
our business, results of operations and financial condition, which
will depend on, among other things, the duration and spread of the
pandemic, the impact of governmental regulations that have been,
and may
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
continue to be, imposed in response to the pandemic, the
effectiveness of actions taken to contain or mitigate the outbreak,
the availability, safety and efficacy of a vaccine, and global
economic conditions. The Company does not expect the COVID-19
pandemic and its related economic impact to affect its liquidity
position or its ongoing ability to meet the covenants in its debt
instruments.
Use of Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements; and
the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
Significant estimates and judgments inherent in the preparation of
the consolidated financial statements include the useful lives and
methodologies used to amortize and assess recoverability of program
rights, the estimated useful lives of intangible assets and the
valuation and recoverability of goodwill and intangible
assets.
Recently Adopted Accounting Standards
Effective January 1, 2020, the Company adopted Financial Accounting
Standard Board (“FASB”)
Accounting Standards Update (“ASU”) 2016-13,
Measurement of Credit Losses on Financial
Instruments,
which changed the impairment model for most financial assets and
certain other instruments, including trade and other receivables,
held-to-maturity debt securities and loans, and requires entities
to use a new forward-looking "expected loss" model that would
generally result in the earlier recognition of allowances for
losses. The Company adopted the standard using the modified
retrospective approach and recorded a decrease to opening retained
earnings of $2.0 million, after taxes, for the
cumulative-effect of the adoption.
Effective January 1, 2020, the Company adopted FASB ASU No.
2018-13,
Fair Value Measurement (Topic 820).
The standard changed the disclosure requirements related to
transfers between Level I and II assets, as well as several aspects
surrounding the valuation process and unrealized gains and losses
related to Level III assets. The adoption of the standard did not
have any effect on the Company's consolidated financial
statements.
Effective January 1, 2020, the Company adopted FASB ASU No.
2018-15,
Customer's Accounting for Implementation Costs Incurred in a Cloud
Computing Arrangement that is a Service Contract.
The standard amended prior guidance to align the accounting for
costs incurred in a hosting arrangement that is a service contract
with the requirements for capitalizing costs associated with
developing or obtaining internal-use software. Capitalized
implementation costs must be expensed over the term of the hosting
arrangement and presented in the same line item in the income
statement as the fees associated with the hosting element (service)
of the arrangement. The adoption of the standard did not have a
material effect on the Company's consolidated financial
statements.
Effective January 1, 2020, the Company adopted FASB ASU No.
2019-02,
Improvements to Accounting for Costs of Films and License
Agreements for Program Materials.
The standard aligns the accounting for production costs of episodic
television series with the accounting for production costs of
films. In addition, the standard modifies certain aspects of the
capitalization, impairment, presentation and disclosure
requirements in Accounting Standards Codification (“ASC”) 926-20
and the impairment, presentation and disclosure requirements in ASC
920-350. The Company adopted the standard on a prospective basis.
See Note 5 for further information.
Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12,
Simplifying the Accounting for Income Taxes.
ASU 2019-12 removes certain exceptions to the general principles in
Topic 740 - Income Taxes. These changes are effective for the first
quarter of 2021, with early adoption permitted. The Company is
currently evaluating the impact the adoption and does not expect it
to have material impact on its consolidated financial
statements.
Note 2. Revenue Recognition
Transaction Price Allocated to Future Performance
Obligations
As of September 30, 2020, other than contracts for which the
Company has applied the practical expedients, the aggregate amount
of transaction price allocated to future performance obligations
was not material to our consolidated revenues.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
Contract Balances from Contracts with Customers
The following table provides information about receivables,
contract assets, and contract liabilities from contracts with
customers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
September 30, 2020 |
|
December 31, 2019 |
Balances from contracts with customers: |
|
|
|
|
Accounts receivable (including
long-term, included in Other assets) |
|
$ |
1,014,956 |
|
|
$ |
1,121,834 |
|
Contract assets, short-term (included
in Other current assets) |
|
4,373 |
|
|
7,283 |
|
Contract assets, long-term (included
in Other assets) |
|
3,225 |
|
|
9,964 |
|
Contract liabilities (Deferred
revenue) |
|
61,557 |
|
|
63,921 |
|
Revenue recognized for the nine months ended September 30,
2020 relating to the contract liability at December 31, 2019
was $37.0 million.
Note 3. Net Income per Share
The following is a reconciliation between basic and diluted
weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
2020 |
|
2019 |
|
2020 |
|
2019 |
Basic weighted average common shares outstanding |
52,346 |
|
|
55,847 |
|
|
53,374 |
|
|
56,339 |
|
Effect of dilution: |
|
|
|
|
|
|
|
Stock options |
— |
|
|
7 |
|
|
— |
|
|
18 |
|
Restricted stock units |
558 |
|
|
751 |
|
|
543 |
|
|
861 |
|
Diluted weighted average common shares outstanding |
52,904 |
|
|
56,605 |
|
|
53,917 |
|
|
57,218 |
|
Approximately
1.1 million
and 1.5 million restricted stock units outstanding as of
September 30, 2020 and September 30, 2019, respectively,
have been excluded from diluted weighted average common shares
outstanding since a performance condition for these awards had not
been met in each of the respective periods. As of
September 30, 2020 and September 30, 2019,
0.7 million
and 0.3 million, respectively, of restricted stock units and
stock options have been excluded from diluted weighted average
common shares outstanding, as their impact would have been
anti-dilutive.
Stock Repurchase Program
The Company's Board of Directors has authorized a program to
repurchase up to
$1.5 billion
of its outstanding shares of common stock (the "Stock Repurchase
Program"). The Stock Repurchase Program has no pre-established
closing date and may be suspended or discontinued at any time. For
the nine months ended September 30, 2020, the Company
repurchased
4.0 million
shares of its Class A Common Stock at an average purchase price of
approximately
$25.85
per share. As of September 30, 2020, the Company had
$385.9 million
of authorization remaining for repurchase under the Stock
Repurchase Program.
On September 16, 2020, the Company commenced a modified "Dutch
auction" tender offer (the "Tender Offer") to purchase up to
$250 million in value of shares of its Class A Common Stock,
plus up to an additional 2% of the outstanding shares of Class A
Common Stock, at a price not greater than $26.50 nor less than
$22.50 per share. The Tender Offer expired on October 14, 2020. On
October 21, 2020, the Company accepted for purchase 10.8 million
shares of its Class A Common Stock, at a price of $23.20 per share,
for an aggregate cost of $250.6 million. The cost of these
shares, and the fees relating to the Tender Offer, will be
classified in Treasury stock in the consolidated balance sheet. The
settlement of the Tender Offer reduced the availability under the
Stock Repurchase Program to $135.3 million.
Note 4. Restructuring and Other Related Charges
Restructuring and other related charges of $4.4 million and
$13.9 million for the three and nine months ended
September 30, 2020, respectively, related to restructuring
costs associated with termination of distribution in certain
territories as well as severance and other personnel related costs
associated with restructuring activities.
Restructuring and other related charges of $10.2 million and
$30.0 million for the three and nine months ended
September 30, 2019, respectively, primarily related to the AMC
Networks SVOD re-organization as well as severance and other
personnel related costs incurred at AMCNI associated with the
termination of distribution in certain territories.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
The following table summarizes the restructuring and other related
charges recognized by operating segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
2020 |
|
2019 |
|
2020 |
|
|
2019 |
National Networks |
$ |
5,991 |
|
|
$ |
6,199 |
|
|
$ |
8,714 |
|
|
|
$ |
6,776 |
|
International & Other |
(1,585) |
|
|
3,992 |
|
|
5,165 |
|
|
|
23,915 |
|
Inter-segment eliminations |
— |
|
|
— |
|
|
— |
|
|
|
(696) |
|
Total restructuring and other related charges |
$ |
4,406 |
|
|
$ |
10,191 |
|
|
$ |
13,879 |
|
|
|
$ |
29,995 |
|
The following table summarizes the accrued restructuring
costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Severance and employee-related costs |
|
Other exit costs |
|
Total |
December 31, 2019 |
$ |
27,407 |
|
|
$ |
221 |
|
|
$ |
27,628 |
|
Charges |
9,563 |
|
|
4,316 |
|
|
13,879 |
|
Cash payments |
(26,763) |
|
|
(191) |
|
|
(26,954) |
|
Non-cash adjustments |
(1,810) |
|
|
(4,316) |
|
|
(6,126) |
|
Currency translation |
1 |
|
|
— |
|
|
1 |
|
Balance, September 30, 2020 |
$ |
8,398 |
|
|
$ |
30 |
|
|
$ |
8,428 |
|
Accrued restructuring costs of $8.4 million are included in
accrued liabilities in the condensed consolidated balance sheet at
September 30, 2020.
Note 5. Program Rights
Effective January 1, 2020, the Company adopted FASB ASU No.
2019-02,
Improvements to Accounting for Costs of Films and License
Agreements for Program Materials.
The new guidance impacts the Company as follows:
•Allows
for the classification of acquired/licensed program rights as
long-term assets. Previously, the Company reported a portion of
these rights in current assets. Advances for live programming
rights made prior to the live event and acquired/licensed program
rights with license terms of less than one year continue to be
reported in current assets.
•Aligns
the capitalization of production costs for episodic television
programs with the capitalization of production costs for theatrical
content. Previously, theatrical content production costs could be
fully capitalized while episodic television production costs were
generally limited to the amount of contracted
revenues.
•Introduces
the concept of “predominant monetization strategy” to classify
capitalized program rights for purposes of amortization and
impairment as follows:
◦Individual
program rights - programming value is predominantly derived from
third-party revenues that are directly attributable to the specific
film or television title (e.g., theatrical revenues, significant
in-show advertising on the Company’s programming networks or
specific content licensing revenues).
◦Group
program rights - programming value is predominantly derived from
third-party revenues that are not directly attributable to a
specific film or television title (e.g., library of program rights
for purpose of the Company’s programming networks or subscription
revenue for AMC Networks SVOD).
The determination of the predominant monetization strategy is made
at commencement of production and is based on the means by which we
derive third-party revenues from use of the programming. The
classification of program rights as individual or group only
changes if there is a significant change to the title’s
monetization strategy relative to its initial
assessment.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
Total capitalized produced and licensed content by predominant
monetization strategy is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
(In thousands) |
Predominantly Monetized Individually |
|
Predominantly Monetized as a Group |
|
Total |
Owned original program rights, net: |
|
|
|
|
|
Completed |
$ |
288,705 |
|
|
$ |
33,288 |
|
|
$ |
321,993 |
|
In-production and in-development |
145,228 |
|
|
14,209 |
|
|
159,437 |
|
Total owned original program rights, net |
$ |
433,933 |
|
|
$ |
47,497 |
|
|
$ |
481,430 |
|
|
|
|
|
|
|
Licensed program rights, net: |
|
|
|
|
|
Licensed film and acquired series |
$ |
8,080 |
|
|
$ |
581,253 |
|
|
$ |
589,333 |
|
Licensed originals |
235,149 |
|
|
— |
|
|
235,149 |
|
Advances and content versioning costs |
— |
|
|
48,633 |
|
|
48,633 |
|
Total licensed program rights, net |
243,229 |
|
|
629,886 |
|
|
873,115 |
|
Program rights, net |
$ |
677,162 |
|
|
$ |
677,383 |
|
|
$ |
1,354,545 |
|
|
|
|
|
|
|
Current portion of program rights, net |
|
|
|
|
$ |
17,933 |
|
Program rights, net (long-term) |
|
|
|
|
1,336,612 |
|
|
|
|
|
|
$ |
1,354,545 |
|
|
|
|
|
|
|
Amortization, including write-offs, of owned and licensed program
rights is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
(In thousands) |
Predominantly Monetized Individually |
|
Predominantly Monetized as a Group |
|
Total |
|
Predominantly Monetized Individually |
|
Predominantly Monetized as a Group |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
Owned original program rights |
$ |
74,597 |
|
|
$ |
11,854 |
|
|
$ |
86,451 |
|
|
$ |
235,868 |
|
|
$ |
27,831 |
|
|
$ |
263,699 |
|
Licensed program rights |
20,479 |
|
|
100,019 |
|
|
120,498 |
|
|
61,741 |
|
|
296,764 |
|
|
358,505 |
|
Program rights amortization |
$ |
95,076 |
|
|
$ |
111,873 |
|
|
$ |
206,949 |
|
|
$ |
297,609 |
|
|
$ |
324,595 |
|
|
$ |
622,204 |
|
Rights to programming, including feature films and episodic series,
acquired under license agreements are stated at the lower of
unamortized cost or fair value. Such licensed rights along with the
related obligations are recorded at the contract value when a
license agreement is executed, unless there is uncertainty with
respect to either cost, acceptability or availability. If such
uncertainty exists, those rights and obligations are recorded at
the earlier of when the uncertainty is resolved or the license
period begins. Costs are amortized to technical and operating
expense on a straight-line or accelerated basis, based on the
expected exploitation strategy of the rights, over a period not to
exceed the respective license periods.
Owned original programming costs, including estimated participation
and residual costs, qualifying for capitalization as program rights
are amortized to technical and operating expense over their
estimated useful lives, commencing upon the first airing, based on
attributable revenue for airings to date as a percentage of total
projected attributable revenue, or ultimate revenue
(individual-film-forecast-computation method). Projected
attributable revenue is based on previously generated revenues for
similar content in established markets, primarily consisting of
distribution and advertising revenues, and projected program usage.
Projected program usage is based on the Company's current
expectation of future exhibitions taking into
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
account historical usage of similar content. Projected attributable
revenue can change based upon programming market acceptance, levels
of distribution and advertising revenue and decisions regarding
planned program usage. These calculations require management to
make assumptions and to apply judgment regarding revenue and
planned usage. Accordingly, the Company periodically reviews
revenue estimates and planned usage and revises its assumptions if
necessary, which could impact the timing of amortization expense or
result in a write-down to fair value. Any capitalized development
costs for programs that the Company determines will not be produced
are written off.
The Company periodically reviews the programming usefulness of its
licensed and owned original program rights based on several
factors, including expected future revenue generation from airings
on the Company's networks and other exploitation opportunities,
ratings, type and quality of program material, standards and
practices, and fitness for exhibition through various forms of
distribution. If it is determined that film or other program rights
have limited, or no, future programming usefulness, the useful life
is updated, which generally results in a write-off of the
unamortized cost to technical and operating expense in the
consolidated statements
of income. Program rights write-offs, included in technical and
operating expense, were $24.8 million and $36.9 million
for
the three and nine months ended September 30, 2020,
respectively, and
$1.6 million and $15.2 million for
the three and nine months ended September 30, 2019,
respectively.
Note 6. Investments
The Company holds several investments and loans in non-consolidated
entities which are included in Other assets in the condensed
consolidated balance sheet. Equity method investments were
$69.6 million
at September 30, 2020 and $69.1 million at December 31,
2019.
Marketable Equity Securities
The Company classifies publicly traded investments with readily
determinable fair values that are not accounted for under the
equity method as marketable equity securities. Marketable equity
securities are recorded at cost and adjusted to fair value at each
reporting period. The changes in fair value between measurement
dates are recorded in miscellaneous, net in the condensed
consolidated statement of income. In April 2020, one of our
investments with a cost of $25.0 million, previously
classified as a non-marketable equity security, became a publicly
traded company. Accordingly, the investment is now classified
within marketable equity securities. Investments in marketable
equity securities were
$39.7 million
at September 30, 2020 and $4.4 million at December 31,
2019. For the three and nine months ended September 30, 2020,
unrealized gains and losses on marketable equity securities were a
loss of $3.7 million and a gain of $10.3 million,
respectively, included in miscellaneous, net in the condensed
consolidated statement of income.
Non-marketable Equity Securities
The Company classifies investments without readily determinable
fair values that are not accounted for under the equity method as
non-marketable equity securities. The accounting guidance requires
non-marketable equity securities to be recorded at cost and
adjusted to fair value at each reporting period. However, the
guidance allows for a measurement alternative, which is to record
the investments at cost, less impairment, if any, and subsequently
adjust for observable price changes of identical or similar
investments of the same issuer. The Company applies this
measurement alternative to its non-marketable equity
securities. When an observable event occurs, the Company estimates
the fair values of its non-marketable equity securities based on
Level 2 inputs that are derived from observable price changes of
similar securities adjusted for insignificant differences in rights
and obligations. The changes in value are recorded in
miscellaneous, net in the condensed consolidated statement of
income.
Investments in non-marketable equity securities were
$34.5 million at
September 30, 2020 and $61.8 million at December 31,
2019. For the nine months ended September 30, 2020 and
September 30, 2019, the Company recognized impairment charges
of $20.0 million and $20.2 million, respectively, related to
the write-down of certain non-marketable equity securities and a
note receivable, included in miscellaneous, net in the condensed
consolidated statements of income. Additionally, in September 2020,
an observable price change occurred with respect to one of the
Company's non-marketable equity securities, resulting in an
unrealized gain of $14.9 million, included in miscellaneous,
net in the condensed consolidated statement of income.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
Note 7. Goodwill and Other Intangible Assets
The carrying amount of goodwill, by operating segment is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
National Networks |
|
International
and Other |
|
Total |
December 31, 2019 |
$ |
237,103 |
|
|
$ |
464,877 |
|
|
$ |
701,980 |
|
Impairment charge |
— |
|
|
(25,062) |
|
|
(25,062) |
|
Amortization of "second component" goodwill |
(996) |
|
|
— |
|
|
(996) |
|
Foreign currency translation |
— |
|
|
(2,112) |
|
|
(2,112) |
|
September 30, 2020 |
$ |
236,107 |
|
|
$ |
437,703 |
|
|
$ |
673,810 |
|
As of September 30, 2020 and December 31, 2019,
accumulated impairment charges in the International and Other
segment totaled
$123.1 million
and $98.0 million, respectively.
The reduction of
$1.0 million in
the carrying amount of goodwill for National Networks is due to the
realization of a tax benefit for the amortization of "second
component" goodwill at SundanceTV. Second component goodwill is the
amount of tax deductible goodwill in excess of goodwill for
financial reporting purposes. In accordance with the authoritative
guidance at the time of the SundanceTV acquisition, the tax
benefits associated with this excess are applied to first reduce
the amount of goodwill, and then other intangible assets for
financial reporting purposes, if and when such tax benefits are
realized in the Company's tax returns.
The Company performs its annual goodwill impairment test as of
December 1 each year. In addition to the annual impairment test,
the Company is required to regularly assess whether a triggering
event has occurred which would require an interim impairment test.
As a result of the continuing impact of the COVID-19 pandemic, the
Company qualitatively assessed whether it was more likely than not
that goodwill and long-lived assets were impaired as of June 30,
2020. The Company considered the current and expected future
economic and market conditions surrounding the COVID-19 pandemic
and its impact on each of its reporting units. Further, the Company
assessed the current forecasts (including significant assumptions
about revenue growth rates, long-term growth rates and enterprise
specific discount rates) and the amount of excess fair value over
carrying value for each of its reporting units in the 2019
impairment test. In connection with the preparation of the second
quarter financial information, the Company determined that a
triggering event had occurred with respect to its AMCNI reporting
unit, which required an interim impairment test to be performed as
of June 30, 2020. As such, the Company performed a quantitative
assessment for its AMCNI reporting unit. The fair value was
determined using a combination of an income approach, using a
discounted cash flow (DCF) model, and a market comparables
approach. The DCF model includes significant assumptions about
revenue growth rates, long-term growth rates and enterprise
specific discount rates. Additionally, the market comparables
approach is determined using guideline company financial multiples.
Given the uncertainty in determining assumptions underlying the DCF
approach, actual results may differ from those used in the
valuations.
Based on the valuations performed, in response to current and
expected trends across the International television broadcasting
markets, the fair value of the Company's AMCNI reporting unit
declined below its carrying amount. As a result, in June 2020, the
Company recognized an impairment charge of $25.1 million
related to the AMCNI reporting unit, included in impairment charges
in the condensed consolidated income statement.
No impairment charge was required for any of the Company's other
reporting units.
The determination of fair value of the Company's AMCNI reporting
unit represents a Level 3 fair value measurement in the fair value
hierarchy due to its use of internal projections and unobservable
measurement inputs. Changes in significant judgments and estimates
could significantly impact the concluded fair value of the
reporting unit or the valuation of intangible assets. Changes to
assumptions that would decrease the fair value of the reporting
unit would result in corresponding increases to the impairment of
goodwill at the reporting unit.
We are unable to predict how long the COVID-19 pandemic conditions
will persist, what additional measures may be introduced by
governments or private parties or what effect any such additional
measures may have on our business. If these estimates or related
assumptions change in the future, we may be required to record
additional impairment charges related to goodwill.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
The following tables summarize information relating to the
Company's identifiable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
September 30, 2020 |
|
|
Gross |
|
Accumulated Amortization |
|
Net |
|
Estimated Useful Lives |
Amortizable intangible assets: |
|
|
|
|
|
|
|
Affiliate and customer relationships |
$ |
617,178 |
|
|
$ |
(317,770) |
|
|
$ |
299,408 |
|
|
6 to 25 years
|
Advertiser relationships |
46,282 |
|
|
(24,976) |
|
|
21,306 |
|
|
11 years
|
Trade names and other amortizable intangible assets |
114,869 |
|
|
(37,705) |
|
|
77,164 |
|
|
3 to 20 years
|
|
|
|
|
|
|
|
|
Total amortizable intangible assets |
778,329 |
|
|
(380,451) |
|
|
397,878 |
|
|
|
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
Trademarks |
19,900 |
|
|
— |
|
|
19,900 |
|
|
|
Total intangible assets |
$ |
798,229 |
|
|
$ |
(380,451) |
|
|
$ |
417,778 |
|
|
|
(In thousands) |
December 31, 2019 |
|
|
Gross |
|
Accumulated Amortization |
|
Net |
|
|
Amortizable intangible assets: |
|
|
|
|
|
|
|
Affiliate and customer relationships |
$ |
616,197 |
|
|
$ |
(232,193) |
|
|
$ |
384,004 |
|
|
|
Advertiser relationships |
46,282 |
|
|
(21,820) |
|
|
24,462 |
|
|
|
Trade names and other amortizable intangible assets |
115,873 |
|
|
(19,708) |
|
|
96,165 |
|
|
|
|
|
|
|
|
|
|
|
Total amortizable intangible assets |
778,352 |
|
|
(273,721) |
|
|
504,631 |
|
|
|
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
Trademarks |
19,900 |
|
|
— |
|
|
19,900 |
|
|
|
Total intangible assets |
$ |
798,252 |
|
|
$ |
(273,721) |
|
|
$ |
524,531 |
|
|
|
Aggregate amortization expense for amortizable intangible assets
for the nine months ended September 30, 2020 and 2019
was
$32.6 million
and $34.2 million, respectively. Estimated aggregate amortization
expense for intangible assets subject to amortization for each of
the following five years is:
|
|
|
|
|
|
(In thousands) |
|
Years Ending December 31, |
|
2020 |
$ |
42,325 |
|
2021 |
37,808 |
|
2022 |
37,763 |
|
2023 |
37,687 |
|
2024 |
37,618 |
|
Impairment Test of Long-Lived Assets
In June 2020, given the continuing and expected future economic and
market conditions surrounding the COVID-19 pandemic and its impact,
the Company revised its outlook for the AMCNI business, resulting
in lower expected future cash flows. As a result, the Company
determined that sufficient indicators of potential impairment of
long-lived assets existed and the Company performed a
recoverability test of the long-lived asset groups within the AMCNI
business. Based on the recoverability tests performed, the Company
determined that certain long-lived assets were not recoverable and
recognized an impairment charge of $105.3 million related
primarily to certain identifiable intangible assets, as well as
property and equipment, and operating lease right-of-use assets,
which is included in impairment charges in the condensed
consolidated statement of income.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
Note 8. Accrued Liabilities
Accrued liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
September 30, 2020 |
|
December 31, 2019 |
Employee related costs |
81,830 |
|
|
$ |
89,753 |
|
Participations and residuals |
91,411 |
|
|
70,682 |
|
Interest |
37,089 |
|
|
29,767 |
|
Other accrued expenses |
70,693 |
|
|
61,012 |
|
Total accrued liabilities |
$ |
281,023 |
|
|
$ |
251,214 |
|
Note 9. Long-term Debt
The Company's long-term debt consists of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
September 30, 2020 |
|
December 31, 2019 |
Senior Secured Credit Facility:
(a)
|
|
|
|
Term Loan A Facility |
$ |
693,750 |
|
|
$ |
731,250 |
|
Senior Notes: |
|
|
|
4.75% Notes due August 2025
|
800,000 |
|
|
800,000 |
|
5.00% Notes due April 2024
|
1,000,000 |
|
|
1,000,000 |
|
4.75% Notes due December 2022
|
400,000 |
|
|
600,000 |
|
Other debt
(b)
|
1,000 |
|
|
— |
|
Total long-term debt |
2,894,750 |
|
|
3,131,250 |
|
Unamortized discount |
(19,527) |
|
|
(24,351) |
|
Unamortized deferred financing costs |
(8,132) |
|
|
(10,670) |
|
Long-term debt, net |
2,867,091 |
|
|
3,096,229 |
|
Current portion of long-term debt |
76,000 |
|
|
56,250 |
|
Noncurrent portion of long-term debt |
$ |
2,791,091 |
|
|
$ |
3,039,979 |
|
(a)The
Company's $500 million revolving credit facility remains undrawn at
September 30, 2020. Total undrawn revolver commitments are
available to be drawn for general corporate purposes of the
Company.
(b)A
majority owned subsidiary of the Company has credit facilities
totaling $7.0 million, which bear interest at the greater of
3.5% or the prime rate plus 1% and mature on November
23,
2020. As
of September 30, 2020, there was $1.0 million of
outstanding borrowings on the credit facilities.
4.75% Notes due December 2022
In March 2020, the Company redeemed $200 million principal
amount of the outstanding $600 million principal amount of its
4.75% Notes due December 2022. In connection with the redemption,
the Company incurred a loss on extinguishment of debt for the nine
months ended September 30, 2020 of $2.9 million
representing the redemption premium and the write-off of a portion
of the unamortized discount and deferred financing
costs.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
Note 10. Leases
The following table summarizes the leases included in the condensed
consolidated balance sheets as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Balance Sheet Location |
|
September 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
|
Operating |
Operating lease right-of-use asset |
|
$ |
151,801 |
|
|
$ |
170,056 |
|
Finance |
Property and equipment, net |
|
13,453 |
|
|
15,713 |
|
Total lease assets |
|
|
$ |
165,254 |
|
|
$ |
185,769 |
|
Liabilities |
|
|
|
|
|
Current: |
|
|
|
|
|
Operating |
Current portion of lease obligations |
|
$ |
30,011 |
|
|
$ |
30,171 |
|
Finance |
Current portion of lease obligations |
|
3,508 |
|
|
3,788 |
|
|
|
|
$ |
33,519 |
|
|
33,959 |
|
Noncurrent: |
|
|
|
|
|
Operating |
Lease obligations |
|
$ |
181,032 |
|
|
193,570 |
|
Finance |
Lease obligations |
|
28,517 |
|
|
17,477 |
|
|
|
|
209,549 |
|
|
211,047 |
|
|
|
|
|
|
|
Total lease liabilities |
|
|
$ |
243,068 |
|
|
$ |
245,006 |
|
For the nine months ended September 30, 2020, impairment
charges were recorded related to certain operating lease
right-of-use assets at the AMCNI business. See Note 7 for
additional details regarding the impairment test of long-lived
assets.
Note 11. Fair Value Measurement
The fair value hierarchy is based on inputs to valuation techniques
that are used to measure fair value that are either observable or
unobservable. Observable inputs reflect assumptions market
participants would use in pricing an asset or liability based on
market data obtained from independent sources while unobservable
inputs reflect a reporting entity's pricing based upon their own
market assumptions. The fair value hierarchy consists of the
following three levels:
•Level
I - Quoted prices for identical instruments in active
markets.
•Level
II - Quoted prices for similar instruments in active markets;
quoted prices for identical or similar instruments in markets that
are not active; and model-derived valuations whose inputs are
observable or whose significant value drivers are
observable.
•Level
III - Instruments whose significant value drivers are
unobservable.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
The following table presents for each of these hierarchy levels,
the Company's financial assets and liabilities that are measured at
fair value on a recurring basis at September 30, 2020 and
December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Level I |
|
Level II |
|
Level III |
|
Total |
At September 30, 2020: |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Cash equivalents |
|
$ |
295,051 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
295,051 |
|
Marketable securities |
|
39,699 |
|
|
— |
|
|
— |
|
|
39,699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency derivatives |
|
— |
|
|
1,366 |
|
|
— |
|
|
1,366 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Interest rate swap contracts |
|
$ |
— |
|
|
$ |
3,007 |
|
|
$ |
— |
|
|
$ |
3,007 |
|
Foreign currency derivatives |
|
— |
|
|
3,568 |
|
|
— |
|
|
3,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2019: |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$ |
191,214 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
191,214 |
|
Marketable securities
|
|
4,448 |
|
|
— |
|
|
— |
|
|
4,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency derivatives
|
|
— |
|
|
1,884 |
|
|
— |
|
|
1,884 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Interest rate swap contracts |
|
$ |
— |
|
|
$ |
1,966 |
|
|
$ |
— |
|
|
$ |
1,966 |
|
Foreign currency derivatives |
|
— |
|
|
1,888 |
|
|
— |
|
|
1,888 |
|
The Company's cash equivalents and marketable securities are
classified within Level I of the fair value hierarchy because they
are valued using quoted market prices.
The Company's interest rate swap contracts and foreign currency
derivatives are classified within Level II of the fair value
hierarchy as their fair values are determined based on a market
approach valuation technique that uses readily observable market
parameters and the consideration of counterparty risk.
At September 30, 2020 and December 31, 2019, the Company
did not have any assets or liabilities measured at fair value on a
recurring basis that would be considered Level III.
Fair value measurements are also used in nonrecurring valuations
performed in connection with acquisition accounting and impairment
testing. These nonrecurring valuations primarily include the
valuation of intangible assets and property and equipment. All of
our nonrecurring valuations use significant unobservable inputs and
therefore fall under Level III of the fair value
hierarchy.
Credit Facility Debt and Senior Notes
The fair values of each of the Company's debt instruments are based
on quoted market prices for the same or similar issues or on the
current rates offered to the Company for instruments of the same
remaining maturities.
The carrying values and estimated fair values of the Company's
financial instruments, excluding those that are carried at fair
value in the condensed consolidated balance sheets, are summarized
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
September 30, 2020 |
Carrying
Amount |
|
Estimated
Fair Value |
Debt instruments: |
|
|
|
Term loan A facility |
$ |
687,991 |
|
|
$ |
679,875 |
|
4.75% Notes due August 2025
|
789,648 |
|
|
828,160 |
|
5.00% Notes due April 2024
|
990,436 |
|
|
1,019,700 |
|
4.75% Notes due December 2022
|
398,016 |
|
|
400,000 |
|
Other debt |
1,000 |
|
|
1,000 |
|
|
$ |
2,867,091 |
|
|
$ |
2,928,735 |
|
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
December 31, 2019 |
Carrying
Amount |
|
Estimated
Fair Value |
Debt instruments: |
|
|
|
Term loan A facility |
$ |
723,560 |
|
|
$ |
724,303 |
|
4.75% Notes due August 2025 |
788,247 |
|
|
803,000 |
|
5.00% Notes due April 2024 |
988,609 |
|
|
1,020,000 |
|
4.75% Notes due December 2022 |
595,813 |
|
|
605,250 |
|
|
|
|
|
|
$ |
3,096,229 |
|
|
$ |
3,152,553 |
|
Fair value estimates related to the Company's debt instruments
presented above are made at a specific point in time, based on
relevant market information and information about the financial
instrument. These estimates are subjective in nature and involve
uncertainties and matters of significant judgments and therefore
cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
Note 12. Derivative Financial Instruments
Interest Rate Risk
To manage interest rate risk, the Company enters into interest rate
swap contracts to adjust the amount of total debt that is subject
to variable interest rates.
As of September 30, 2020, the Company had interest rate swap
contracts outstanding with notional amounts aggregating
$100.0 million that are designated as hedging instruments. The
Company's outstanding interest rate swap contracts mature in
December 2021.
Foreign Currency Exchange Rate Risk
We are exposed to foreign currency risk to the extent that we enter
into transactions denominated in currencies other than our or our
subsidiaries' respective functional currencies (non-functional
currency risk), such as affiliation agreements, programming
contracts, certain accounts payable and trade receivables
(including intercompany amounts) that are denominated in a currency
other than the applicable functional currency.
The fair values of the Company's derivative financial instruments
included in the condensed consolidated balance sheets are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Balance Sheet
Location |
|
September 30, 2020 |
|
December 31, 2019 |
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Interest rate swap contracts |
Accrued liabilities |
|
$ |
3,007 |
|
|
$ |
1,966 |
|
Derivatives not designated as hedging instruments: |
|
|
|
|
|
Assets: |
|
|
|
|
|
Foreign currency derivatives |
Prepaid expenses and other current assets |
|
$ |
775 |
|
|
$ |
891 |
|
Foreign currency derivatives |
Other assets |
|
591 |
|
|
993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency derivatives |
Accrued liabilities |
|
$ |
906 |
|
|
$ |
687 |
|
Foreign currency derivatives |
Other liabilities |
|
2,662 |
|
|
1,202 |
|
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
The amounts of gains and losses related to the Company's derivative
financial instruments designated as hedging instruments are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Gain or (Loss) on Derivatives
Recognized in OCI |
|
Location of Gain or (Loss) in Earnings |
|
Gain or (Loss) Reclassified
from Accumulated OCI
into Earnings |
Three Months Ended September 30, |
|
|
|
Three Months Ended September 30, |
2020 |
|
2019 |
|
|
|
2020 |
|
2019 |
Derivatives in cash flow hedging relationships: |
|
|
|
|
|
|
|
|
|
Interest rate swap contracts |
$ |
9 |
|
|
$ |
(265) |
|
|
Interest expense |
|
$ |
606 |
|
|
$ |
78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Gain or (Loss) on Derivatives
Recognized in OCI |
|
Location of Gain or (Loss) in Earnings |
|
Gain or (Loss) Reclassified
from Accumulated OCI
into Earnings |
Nine Months Ended September 30, |
|
|
|
Nine Months Ended September 30, |
2020 |
|
2019 |
|
|
|
2020 |
|
2019 |
Derivatives in cash flow hedging relationships: |
|
|
|
|
|
|
|
|
|
Interest rate swap contracts |
$ |
(2,401) |
|
|
$ |
(2,190) |
|
|
Interest expense |
|
$ |
1,360 |
|
|
$ |
113 |
|
The amounts of gains and losses related to the Company's derivative
financial instruments not designated as hedging instruments are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Location of Gain or (Loss) Recognized in Earnings
on Derivatives |
|
Amount of Gain or (Loss) Recognized in Earnings on
Derivatives |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
Foreign currency derivatives |
Miscellaneous, net |
|
$ |
(1,300) |
|
|
$ |
510 |
|
|
$ |
(2,018) |
|
|
$ |
556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 13. Income Taxes
For the three and nine months ended September 30, 2020, income
tax expense was $52.2 million and $95.5 million, respectively,
representing an effective tax rate of 43% and 38%, respectively, as
compared to the federal statutory rate of 21%. For the three and
nine months ended September 30, 2020, the effective tax rate
differs from the federal statutory rate due primarily to tax
expense of $20.0 million and $25.6 million resulting from
an increase in valuation allowances for foreign taxes and U.S.
foreign tax credits, tax expense from foreign operations of
$0.4 million and $9.8 million, state and local income tax
expense of $3.5 million and $9.1 million, tax expense of
$1.7 million and $4.7 million related to non-deductible
compensation and tax expense of $2.7 million and tax benefit
of $6.0 million relating to uncertain tax positions (including
accrued interest), respectively. The tax benefit relating to
uncertain tax positions for the nine months ended September 30,
2020 is primarily due to audit settlements and the filing of state
income tax returns under voluntary disclosure agreements. The
increase in valuation allowance is primarily due to a change in
judgement about the realizability of foreign net operating losses
and other deferred tax assets. Management considers the scheduled
reversal of deferred tax liabilities (including the effect in
available carryback and carryforward periods), projected taxable
income, and tax-planning strategies in making this
assessment.
For the three and nine months ended September 30, 2019, income tax
expense was $8.7 million and $53.8 million, respectively,
representing an effective tax rate of 7% and 12%, respectively, as
compared to the federal statutory rate of 21%. For the three months
ended September 30, 2019, the effective tax rate differs from the
federal statutory rate due primarily to a tax benefit of
$13.6 million from foreign operations and a tax benefit of
$11.5 million from a deferred tax adjustment to record the
impact of an investment tax credit under the deferral method of
accounting, partially offset by state and local income tax expense
of $4.3 million and tax expense of $2.0 million resulting
from a net increase in valuation allowances for foreign tax assets.
For the nine months ended September 30, 2019, the effective tax
rate differs from the federal statutory rate primarily due to a tax
benefit of $21.5 million resulting from a net decrease in
valuation allowances for foreign tax assets, a tax benefit
of
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
$15.6 million from foreign operations, a tax benefit of
$11.5 million from a deferred tax adjustment to record the
impact of an investment tax credit under the deferral method of
accounting, and a tax benefit of $5.6 million relating to
uncertain tax positions (including accrued interest), partially
offset by state and local income tax expense of $11.6 million.
The decrease in the valuation allowance is primarily due to the
expected utilization of foreign net operating loss carryforwards
and the benefit of foreign operations is due to a deferred tax
benefit resulting from the reorganization of intellectual property
amongst the Company's international subsidiaries in the nine months
ended September 30, 2019. The tax benefit relating to uncertain tax
positions is primarily due to an audit settlement and the filing of
state income tax returns under a voluntary disclosure
agreement.
At September 30, 2020, the Company had foreign tax credit
carry forwards of approximately $33.2 million, expiring on various
dates from 2022 through 2030. These carryforwards have been reduced
by a valuation allowance of $31.8 million as it is more likely than
not that these carry forwards will not be realized. For the nine
months ended September 30, 2020, $1.0 million relating to
amortization of tax deductible second component goodwill was
realized as a reduction in tax liability (as determined on a
'with-and-without' approach).
Note 14. Commitments and Contingencies
Commitments
As of September 30, 2020, the Company's contractual
obligations not reflected on the Company's condensed consolidated
balance sheet increased $129.1 million, as compared to December 31,
2019, to
$1,063.0 million. The increase primarily relates to additional
commitments for program rights and marketing
commitments.
Legal Matters
On December 17, 2013, Frank Darabont ("Darabont"), Ferenc, Inc.,
Darkwoods Productions, Inc., and Creative Artists Agency, LLC
(together, the "2013 Plaintiffs"), filed a complaint in New York
Supreme Court in connection with Darabont's rendering services as a
writer, director and producer of the television series
entitled
The Walking Dead
and the agreement between the parties related thereto. The
Plaintiffs asserted claims for breach of contract, breach of the
covenant of good faith and fair dealing, for an accounting and for
declaratory relief. On August 19, 2015, Plaintiffs filed their
First Amended Complaint (the "Amended Complaint"), in which they
retracted their claims for wrongful termination and failure to
apply production tax credits in calculating Plaintiffs' contingent
compensation. Plaintiffs also added a claim that Darabont is
entitled to a larger share, on a percentage basis, of contingent
compensation than he is currently being accorded. On September 26,
2016, Plaintiffs filed their note of issue and certificate of
readiness for trial, which included a claim for damages of no less
than $280 million. The parties each filed motions for summary
judgment. Oral arguments of the summary judgment motions took place
on September 15, 2017. On April 19, 2018, the Court granted the
Company’s motion for leave to submit supplemental summary judgment
briefing. A hearing on the supplemental summary judgment
submissions was held on June 13, 2018. On December 10, 2018, the
Court denied Plaintiffs' motion for partial summary judgment and
granted in part Defendants' motion for summary judgment, dismissing
four of Plaintiffs' causes of action. The Company believes that the
remaining claims are without merit, denies the allegations and
continues to defend the case vigorously. At this time, no
determination can be made as to the ultimate outcome of this
litigation or the potential liability, if any, on the part of the
Company.
On January 18, 2018, the 2013 Plaintiffs filed a second action in
New York Supreme Court in connection with Darabont’s services
on
The Walking Dead
television series and agreements between the parties related
thereto. The claims in the action allegedly arise from Plaintiffs'
audit of their participation statements covering the accounting
period from inception of
The Walking Dead
through September 30, 2014. Plaintiffs seek no less than
$20 million in damages on claims for breach of contract,
breach of the covenant of good faith and fair dealing, and
declaratory relief. The Company filed an Answer to the Complaint on
April 16, 2018. On August 30, 2018, Plaintiff's filed an Amended
Complaint, and on September 19, 2018, the Company answered. The
parties have agreed to consolidate this action for a joint trial
with the action Plaintiffs filed in the New York Supreme Court on
December 17, 2013. Following the conclusion of discovery, the
Company filed a motion for summary judgment seeking the dismissal
of the second action, which was denied on April 13, 2020. Due to
the continued impact of the Coronavirus pandemic on the New York
State courts, the joint trial, originally scheduled to begin on
June 1, 2020, has been further delayed and is currently scheduled
to begin on April 26, 2021. The Company believes that the asserted
claims are without merit, denies the allegations and will defend
the case vigorously. At this time, no determination can be made as
to the ultimate outcome of this litigation or the potential
liability, if any, on the part of the Company.
On August 14, 2017, Robert Kirkman, Robert Kirkman, LLC, Glen
Mazzara, 44 Strong Productions, Inc., David Alpert, Circle of
Confusion Productions, LLC, New Circle of Confusion Productions,
Inc., Gale Anne Hurd, and Valhalla Entertainment, Inc. f/k/a
Valhalla Motion Pictures, Inc. (together, the "California
Plaintiffs") filed a complaint in California Superior Court in
connection with California Plaintiffs’ rendering of services as
writers and producers of the television series entitled
The Walking Dead,
as well as
Fear the Walking Dead
and/or
Talking Dead,
and the agreements between the parties
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
related thereto (the "California Action"). The California
Plaintiffs asserted that the Company has been improperly
underpaying the California Plaintiffs under their contracts with
the Company and they assert claims for breach of contract, breach
of the covenant of good faith and fair dealing, inducing breach of
contract, and liability for violation of Cal. Bus. & Prof. Code
§ 17200. On August 15, 2017, two of the California Plaintiffs, Gale
Anne Hurd and David Alpert (and their associated loan-out
companies), along with Charles Eglee and his loan-out company,
United Bongo Drum, Inc., filed a complaint in New York Supreme
Court alleging nearly identical claims as the California Action
(the "New York Action"). Hurd, Alpert, and Eglee filed the New York
Action in connection with their contract claims involving
The Walking Dead
because their agreements contained exclusive New York jurisdiction
provisions. On October 23, 2017, the parties stipulated to
discontinuing the New York Action without prejudice and
consolidating all of the claims in the California Action. The
California Plaintiffs seek compensatory and punitive damages and
restitution. The Company filed an Answer on April 30, 2018 and
believes that the asserted claims are without merit and will
vigorously defend against them. On August 8, 2019, the judge in the
California Action ordered a trial to resolve certain issues of
contract interpretation only.
The trial commenced on February 10, 2020 and concluded on March 10,
2020 after eight days of trial. On July 22, 2020, the judge in the
California Action issued a Statement of Decision finding in the
Company's favor on all seven matters of contract interpretation
before the court in this first phase trial. On October 30, 2020,
the judge in the California Action set a tentative trial date of
September 8, 2021 with regard to claims not addressed in the first
phase trial. At this time, no determination can be made as to the
ultimate outcome of this litigation or the potential liability, if
any, on
the part of the Company.
The Company is party to various lawsuits and claims in the ordinary
course of business, including the matters described above. Although
the outcome of these matters cannot be predicted with certainty and
while the impact of these matters on the Company's results of
operations in any particular subsequent reporting period could be
material, management does not believe that the resolution of these
matters will have a material adverse effect on the financial
position of the Company or the ability of the Company to meet its
financial obligations as they become due.
Note 15. Equity Plans
In June 2020, AMC Networks granted 54,535 restricted stock units
("RSUs") under the 2011 Stock Plan for Non-Employee Directors to
non-employee directors that vested on the date of
grant.
In March 2020, AMC Networks granted 1,171,956 RSUs to certain
executive officers and employees under the AMC Networks Inc. 2016
Employee Stock Plan. The RSUs vest ratably over a
three-year period and the vesting criteria for 380,142 RSUs
include the achievement of certain performance targets by the
Company.
During the nine months ended September 30, 2020,
477,764 RSUs and 325,836 PRSUs
of AMC Networks Class A Common Stock previously issued to
employees of the Company vested. On the vesting
date,
199,377 RSUs and 142,882
PRSUs were surrendered to the Company to cover the required
statutory tax withholding obligations and
278,387 RSU and 182,954 PRSU
new shares of AMC Networks Class A Common Stock were issued. The
units surrendered to satisfy the employees' statutory
minimum
tax withholding obligations for the applicable income and other
employment tax had an aggregate value of $8.9 million,
which has been reflected as a financing activity in the condensed
consolidated statement of cash flows for the nine months
ended September 30, 2020.
Share-based compensation expense included in selling, general and
administrative expense was
$12.4 million and $43.1 million
for the three and nine months ended September 30, 2020,
respectively, and $13.8 million and $50.5 million the for three and
nine months ended September 30, 2019,
respectively.
As of September 30, 2020, there was
$47.4 million
of total unrecognized share-based compensation cost related to
outstanding unvested share-based awards. The unrecognized
compensation cost is expected to be recognized over a
weighted-average remaining period of approximately
1.7 years.
Note 16. Redeemable Noncontrolling Interests
The following table summarizes activity related to redeemable
noncontrolling interest for the nine months ended
September 30, 2020.
|
|
|
|
|
|
(In thousands) |
Nine Months Ended September 30, 2020 |
December 31, 2019 |
$ |
309,451 |
|
Net earnings |
12,788 |
|
Distributions |
(12,945) |
|
Other |
5,103 |
|
September 30, 2020 |
$ |
314,397 |
|
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
Note 17. Related Party Transactions
The Company and its related parties routinely enter into
transactions with each other in the ordinary course of business.
Revenues, net from related parties amounted to $1.2 million and
$1.2 million for the three months ended September 30, 2020 and
2019, respectively, and $3.6 million and $3.5 million for the nine
months ended September 30, 2020 and 2019, respectively.
Amounts charged to the Company, included in selling, general and
administrative expenses, pursuant to transactions with its related
parties amounted to $0.5 million and $0.2 million for the three
months ended September 30, 2020 and 2019, respectively, and
$0.6 million and $1.0 million for the nine months ended
September 30, 2020 and 2019, respectively.
Note 18. Cash Flows
The Company's non-cash investing and financing activities and other
supplemental data are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Nine Months Ended September 30, |
2020 |
|
2019 |
Non-Cash Investing and Financing Activities: |
|
|
|
|
|
|
|
Finance lease additions |
$ |
14,260 |
|
|
$ |
— |
|
Capital expenditures incurred but not yet paid |
2,105 |
|
|
1,659 |
|
Supplemental Data: |
|
|
|
Cash interest paid |
91,940 |
|
|
104,698 |
|
Income taxes paid, net |
60,335 |
|
|
121,110 |
|
Note 19. Segment Information
The Company classifies its operations into two operating segments:
National Networks and International and Other. These operating
segments represent strategic business units that are managed
separately.
The Company generally allocates all corporate overhead costs within
operating expenses to the Company's two operating segments based
upon their proportionate estimated usage of services, including
such costs as executive salaries and benefits, costs of maintaining
corporate headquarters, facilities and common support functions
(such as human resources, legal, finance, strategic planning and
information technology) as well as sales support functions and
creative and production services.
The Company evaluates segment performance based on several factors,
of which the primary financial measure is operating segment
adjusted operating income ("AOI"), a non-GAAP measure. The Company
defines AOI as operating income (loss) before depreciation and
amortization, cloud computing amortization, share-based
compensation expense or benefit, impairment charges (including
gains or losses on sales or dispositions of businesses),
restructuring and other related charges and including the Company’s
proportionate share of adjusted operating income (loss) from
majority-owned equity method investees. The Company has presented
the components that reconcile adjusted operating income to
operating income, an accepted GAAP measure, and other information
as to the continuing operations of the Company's operating segments
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Three Months Ended September 30, 2020 |
National
Networks |
|
International
and Other |
|
Inter-segment
eliminations |
|
Consolidated |
Revenues, net |
|
|
|
|
|
|
|
Advertising |
$ |
164,216 |
|
|
$ |
18,923 |
|
|
$ |
(37) |
|
|
$ |
183,102 |
|
Distribution |
297,933 |
|
|
180,369 |
|
|
(7,389) |
|
|
470,913 |
|
Consolidated revenues, net |
$ |
462,149 |
|
|
$ |
199,292 |
|
|
$ |
(7,426) |
|
|
$ |
654,015 |
|
Operating income (loss) |
$ |
129,842 |
|
|
$ |
11,198 |
|
|
$ |
(1,563) |
|
|
$ |
139,477 |
|
Share-based compensation expense |
9,922 |
|
|
2,472 |
|
|
— |
|
|
12,394 |
|
Depreciation and amortization |
13,422 |
|
|
14,125 |
|
|
— |
|
|
27,547 |
|
|
|
|
|
|
|
|
|
Restructuring and other related charges |
5,991 |
|
|
(1,585) |
|
|
— |
|
|
4,406 |
|
Majority-owned equity investees AOI |
— |
|
|
1,667 |
|
|
— |
|
|
1,667 |
|
Adjusted operating income |
$ |
159,177 |
|
|
$ |
27,877 |
|
|
$ |
(1,563) |
|
|
$ |
185,491 |
|
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Three Months Ended September 30, 2019 |
National
Networks |
|
International
and Other |
|
Inter-segment
eliminations |
|
Consolidated |
Revenues, net |
|
|
|
|
|
|
|
Advertising |
$ |
194,452 |
|
|
$ |
18,872 |
|
|
$ |
(24) |
|
|
213,300 |
|
Distribution |
364,540 |
|
|
163,967 |
|
|
(23,210) |
|
|
505,297 |
|
Consolidated revenues, net |
$ |
558,992 |
|
|
$ |
182,839 |
|
|
$ |
(23,234) |
|
|
$ |
718,597 |
|
Operating income (loss) |
$ |
182,479 |
|
|
$ |
(11,501) |
|
|
$ |
(2,540) |
|
|
168,438 |
|
Share-based compensation expense |
11,684 |
|
|
2,157 |
|
|
— |
|
|
13,841 |
|
Depreciation and amortization |
8,048 |
|
|
17,571 |
|
|
— |
|
|
25,619 |
|
Restructuring and other related charges |
6,199 |
|
|
3,992 |
|
|
— |
|
|
10,191 |
|
|
|
|
|
|
|
|
|
Majority-owned equity investees AOI |
— |
|
|
1,246 |
|
|
— |
|
|
1,246 |
|
Adjusted operating income |
$ |
208,410 |
|
|
$ |
13,465 |
|
|
$ |
(2,540) |
|
|
$ |
219,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Nine Months Ended September 30, 2020 |
National
Networks |
|
International
and Other |
|
Inter-segment
eliminations |
|
Consolidated |
Revenues, net |
|
|
|
|
|
|
|
Advertising |
$ |
564,876 |
|
|
$ |
53,097 |
|
|
$ |
(38) |
|
|
$ |
617,935 |
|
Distribution |
960,062 |
|
|
477,668 |
|
|
(20,984) |
|
|
1,416,746 |
|
Consolidated revenues, net |
$ |
1,524,938 |
|
|
$ |
530,765 |
|
|
$ |
(21,022) |
|
|
$ |
2,034,681 |
|
Operating income (loss) |
$ |
512,598 |
|
|
$ |
(147,226) |
|
|
$ |
(4,123) |
|
|
$ |
361,249 |
|
Share-based compensation expense |
34,754 |
|
|
8,387 |
|
|
— |
|
|
43,141 |
|
Depreciation and amortization |
30,633 |
|
|
49,549 |
|
|
— |
|
|
80,182 |
|
Impairment charges |
— |
|
|
130,411 |
|
|
— |
|
|
130,411 |
|
Restructuring and other related charges |
8,714 |
|
|
5,165 |
|
|
— |
|
|
13,879 |
|
Majority-owned equity investees AOI |
— |
|
|
4,361 |
|
|
— |
|
|
4,361 |
|
Adjusted operating income |
$ |
586,699 |
|
|
$ |
50,647 |
|
|
$ |
(4,123) |
|
|
$ |
633,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Nine Months Ended September 30, 2019 |
National
Networks |
|
International
and Other |
|
Inter-segment
eliminations |
|
Consolidated |
Revenues, net |
|
|
|
|
|
|
|
Advertising |
$ |
653,031 |
|
|
$ |
63,613 |
|
|
$ |
(75) |
|
|
$ |
716,569 |
|
Distribution |
1,126,819 |
|
|
469,841 |
|
|
(38,112) |
|
|
1,558,548 |
|
Consolidated revenues, net |
$ |
1,779,850 |
|
|
$ |
533,454 |
|
|
$ |
(38,187) |
|
|
$ |
2,275,117 |
|
Operating income (loss) |
$ |
648,180 |
|
|
$ |
(52,532) |
|
|
$ |
(12,090) |
|
|
$ |
583,558 |
|
Share-based compensation expense |
41,774 |
|
|
8,691 |
|
|
— |
|
|
50,465 |
|
Depreciation and amortization |
24,839 |
|
|
50,729 |
|
|
— |
|
|
75,568 |
|
Restructuring and other related charges |
6,776 |
|
|
23,915 |
|
|
(696) |
|
|
29,995 |
|
Majority-owned equity investees AOI |
— |
|
|
4,434 |
|
|
— |
|
|
4,434 |
|
|
|
|
|
|
|
|
|
Adjusted operating income |
$ |
721,569 |
|
|
$ |
35,237 |
|
|
$ |
(12,786) |
|
|
$ |
744,020 |
|
Inter-segment eliminations are primarily licensing revenues
recognized between the National Networks and International and
Other segments as well as revenues recognized by AMC Networks
Broadcasting & Technology for transmission revenues
recognized from the International and Other operating
segment.
AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(Continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
2020 |
|
2019 |
|
2020 |
|
2019 |
Inter-segment revenues |
|
|
|
|
|
|
|
National Networks |
$ |
(7,166) |
|
|
$ |
(18,140) |
|
|
$ |
(17,346) |
|
|
$ |
(29,790) |
|
International and Other |
(260) |
|
|
(5,094) |
|
|
(3,676) |
|
|
(8,397) |
|
|
$ |
(7,426) |
|
|
$ |
(23,234) |
|
|
$ |
(21,022) |
|
|
$ |
(38,187) |
|
The table below summarizes revenues based on customer
location:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues |
|
|
|
|
|
|
|
United States |
$ |
497,677 |
|
|
$ |
579,913 |
|
|
$ |
1,646,065 |
|
|
$ |
1,847,491 |
|
Europe |
110,448 |
|
|
108,365 |
|
|
274,763 |
|
|
299,782 |
|
Other |
45,890 |
|
|
30,319 |
|
|
113,853 |
|
|
127,844 |
|
|
$ |
654,015 |
|
|
$ |
718,597 |
|
|
$ |
2,034,681 |
|
|
$ |
2,275,117 |
|
The table below summarizes property and equipment based on asset
location:
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
September 30, 2020 |
|
December 31, 2019 |
Property and equipment, net |
|
|
|
United States |
$ |
241,541 |
|
|
$ |
244,175 |
|
Europe |
13,985 |
|
|
25,925 |
|
Other |
203 |
|
|
13,652 |
|
|
$ |
255,729 |
|
|
$ |
283,752 |
|
For the nine months ended September 30, 2020, impairment
charges were recorded related to certain property and equipment in
Europe and Other. See Note 7 for additional details regarding the
impairment test of long-lived assets.
Item 2. Management's Discussion and
Analysis of Financial Condition and Results of
Operations.
This Management's Discussion and Analysis of Financial Condition
and Results of Operations contains statements that constitute
forward-looking information within the meaning of the Private
Securities Litigation Reform Act of 1995. In this Management's
Discussion and Analysis of Financial Condition and Results of
Operations there are statements concerning our future operating
results and future financial performance. Words such as "expects,"
"anticipates," "believes," "estimates," "may," "will," "should,"
"could," "potential," "continue," "intends," "plans" and similar
words and terms used in the discussion of future operating results
and future financial performance identify forward-looking
statements. You are cautioned that any such forward-looking
statements are not guarantees of future performance or results and
involve risks and uncertainties and that actual results or
developments may differ materially from the forward-looking
statements as a result of various factors. Factors that may cause
such differences to occur include, but are not limited
to:
•the
impact of COVID-19 on the economy and our business, including the
measures taken by governmental authorities to address the pandemic,
which may precipitate or exacerbate other risks and/or
uncertainties;
•the
level of our revenues;
•market
demand, including changes in viewer consumption patterns, for our
programming networks, our subscription streaming services, our
programming, and our production services;
•demand
for advertising inventory and our ability to deliver guaranteed
viewer ratings;
•the
highly competitive nature of the cable, telecommunications, SVOD
and programming industries;
•our
ability to maintain and renew distribution or affiliation
agreements with distributors;
•the
cost of, and our ability to obtain or produce, desirable
programming content for our networks, other forms of distribution,
including digital and licensing in international markets, as well
as our independent film distribution businesses;
•market
demand for our owned original programming and our independent film
content;
•changes
in consumer demand for our comedy venues;
•the
security of our program rights and other electronic
data;
•the
loss of any of our key personnel and artistic talent;
•changes
in domestic and foreign laws or regulations under which we
operate;
•economic
and business conditions and industry trends in the countries in
which we operate;
•fluctuations
in currency exchange rates and interest rates;
•changes
in laws or treaties relating to taxation, or the interpretation
thereof, in the U.S. or in the countries in which we operate,
including the impact of the Tax Cuts and Jobs Act and the
Bipartisan Budget Act of 2018;
•the
impact of new and proposed federal, state and international laws
and regulations relating to data protection, privacy and security,
including the E.U. General Data Protection Regulation;
•the
impact of Brexit, particularly in the event of the U.K.'s departure
from the E.U. without an agreement on terms;
•our
substantial debt and high leverage;
•reduced
access to capital markets or significant increases in costs to
borrow;
•the
level of our expenses;
•the
level of our capital expenditures;
•future
acquisitions and dispositions of assets;
•our
ability to successfully acquire new businesses and, if acquired, to
integrate, and implement our plan with respect to businesses we
acquire;
•problems
we may discover post-closing with the operations, including the
internal controls and financial reporting process, of businesses we
acquire;
•uncertainties
regarding the financial results of equity method investees, issuers
of our investments in marketable equity securities and
non-marketable equity securities and changes in the nature of key
strategic relationships with partners and joint
ventures;
•the
outcome of litigation and other proceedings;
•whether
pending uncompleted transactions, if any, are completed on the
terms and at the times set forth (if at all);
•other
risks and uncertainties inherent in our programming
businesses;
•financial
community and rating agency perceptions of our business,
operations, financial condition and the industry in which we
operate;
•events
that are outside our control, such as political unrest in
international markets, terrorist attacks, natural disasters and
other similar events; and
•the
factors described under Item 1A, "Risk Factors" in our 2019
Annual Report on Form 10-K (the "2019 Form 10-K"), as filed with
the Securities and Exchange Commission ("SEC") and under 1A, "Risk
Factors" in this Quarterly Report on Form 10-Q.
We disclaim any obligation to update or revise the forward-looking
statements contained herein, except as otherwise required by
applicable federal securities laws.