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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 March 31, 2021
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 April 30, 2021:
Class A Common Stock par value $0.01 per share 30,731,275
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)

March 31, 2021 December 31, 2020
ASSETS
Current Assets:
Cash and cash equivalents $ 993,123  $ 888,526 
Accounts receivable, trade (less allowance for doubtful accounts of $8,780 and $11,234)
777,063  813,587 
Current portion of program rights, net 15,833  13,480 
Prepaid expenses and other current assets 170,199  223,173 
Total current assets 1,956,218  1,938,766 
Property and equipment, net of accumulated depreciation of $268,770 and $261,082
224,725  256,045 
Program rights, net 1,381,884  1,269,131 
Intangible assets, net 389,919  410,672 
Goodwill 682,632  686,407 
Deferred tax asset, net 22,363  25,046 
Operating lease right-of-use asset 120,293  146,522 
Other assets 467,648  513,749 
Total assets $ 5,245,682  $ 5,246,338 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 116,668  $ 120,530 
Accrued liabilities 268,264  320,005 
Current portion of program rights obligations 263,928  259,449 
Deferred revenue 76,787  71,048 
Current portion of long-term debt 8,438  75,000 
Current portion of lease obligations 27,736  32,435 
Total current liabilities 761,821  878,467 
Program rights obligations 210,428  182,511 
Long-term debt 2,825,104  2,774,307 
Lease obligations 159,816  194,324 
Deferred tax liability, net 134,630  132,009 
Other liabilities 138,854  125,970 
Total liabilities 4,230,653  4,287,588 
Commitments and contingencies
Redeemable noncontrolling interests 293,468  315,649 
Stockholders' equity:
Class A Common Stock, $0.01 par value, 360,000 shares authorized, 65,324 and 64,568 shares issued and 30,731 and 29,975 shares outstanding, respectively
653  646 
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 314,331  323,425 
Accumulated earnings 1,934,472  1,847,451 
Treasury stock, at cost (34,593 and 34,593 shares Class A Common Stock, respectively)
(1,419,882) (1,419,882)
Accumulated other comprehensive loss (156,237) (134,950)
Total AMC Networks stockholders' equity 673,452  616,805 
Non-redeemable noncontrolling interests 48,109  26,296 
Total stockholders' equity 721,561  643,101 
Total liabilities and stockholders' equity $ 5,245,682  $ 5,246,338 
See accompanying notes to condensed consolidated financial statements.
1


AMC NETWORKS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)

Three Months Ended March 31,
  2021 2020
Revenues, net
$ 691,741  $ 734,375 
Operating expenses:
Technical and operating (excluding depreciation and amortization)
280,572  344,060 
Selling, general and administrative
191,535  184,649 
Depreciation and amortization 25,246  26,730 
Impairment and other charges 16,055  — 
Restructuring and other related charges 8,625  5,966 
Total operating expenses 522,033  561,405 
Operating income 169,708  172,970 
Other income (expense):
Interest expense (34,742) (37,564)
Interest income 2,342  4,555 
Loss on extinguishment of debt (22,074) (2,908)
Miscellaneous, net 5,406  (29,939)
Total other expense (49,068) (65,856)
Income from operations before income taxes 120,640  107,114 
Income tax expense (25,915) (33,588)
Net income including noncontrolling interests 94,725  73,526 
Net income attributable to noncontrolling interests (7,704) (4,859)
Net income attributable to AMC Networks' stockholders $ 87,021  $ 68,667 
Net income per share attributable to AMC Networks' stockholders:
Basic $ 2.08  $ 1.24 
Diluted $ 2.02  $ 1.22 
Weighted average common shares:
Basic 41,930  55,477 
Diluted 43,171  56,061 
See accompanying notes to condensed consolidated financial statements.
2


AMC NETWORKS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
Three Months Ended March 31,
  2021 2020
Net income including noncontrolling interests $ 94,725  $ 73,526 
Other comprehensive income (loss):
Foreign currency translation adjustment (22,024) (27,121)
Unrealized gain (loss) on interest rate swaps 610  (1,997)
Other comprehensive loss, before income taxes (21,414) (29,118)
Income tax (expense) benefit (143) 465 
Other comprehensive loss, net of income taxes (21,557) (28,653)
Comprehensive income 73,168  44,873 
Comprehensive income attributable to noncontrolling interests
(7,434) (3,698)
Comprehensive income attributable to AMC Networks' stockholders
$ 65,734  $ 41,175 
See accompanying notes to condensed consolidated financial statements.
3


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, December 31, 2020 $ 646  $ 115  $ 323,425  $ 1,847,451  $ (1,419,882) $ (134,950) $ 616,805  $ 26,296  $ 643,101 
Net income attributable to AMC Networks’ stockholders —  —  —  87,021  —  —  87,021  —  87,021 
Net income attributable to non-redeemable noncontrolling interests —  —  —  —  —  —  —  1,134  1,134 
Transfer from redeemable noncontrolling interests —  —  —  —  —  —  —  18,367  18,367 
Contribution from noncontrolling member —  —  —  —  —  —  —  2,582  2,582 
Other comprehensive income —  —  —  —  —  (21,287) (21,287) (270) (21,557)
Share-based compensation expense —  —  13,446  —  —  —  13,446  —  13,446 
Proceeds from the exercise of stock options —  —  12,100  —  —  —  12,100  —  12,100 
Restricted stock units converted to shares —  (34,640) —  —  —  (34,633) —  (34,633)
Balance, March 31, 2021 $ 653  $ 115  $ 314,331  $ 1,934,472  $ (1,419,882) $ (156,237) $ 673,452  $ 48,109  $ 721,561 




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 —  —  —  68,667  —  —  68,667  —  68,667 
Net income attributable to non-redeemable noncontrolling interests —  —  —  —  —  —  —  (267) (267)
Distributions to noncontrolling member —  —  —  —  —  —  —  (448) (448)
Adoption of ASU 2016-13, credit losses —  —  —  (1,956) —  —  (1,956) —  (1,956)
Settlement of treasury stock —  —  (10,988) —  —  —  (10,988) —  (10,988)
Other comprehensive loss —  —  —  —  —  (28,653) (28,653) (1,161) (29,814)
Share-based compensation expense —  —  15,512  —  —  —  15,512  —  15,512 
Treasury stock acquired —  —  —  —  (85,957) —  (85,957) —  (85,957)
Restricted stock units converted to shares —  (8,862) —  —  —  (8,858) —  (8,858)
Balance, March 31, 2020 $ 643  $ 115  $ 282,153  $ 1,676,139  $ (1,149,138) $ (196,364) $ 613,548  $ 23,848  $ 637,396 


See accompanying notes to condensed consolidated financial statements.
4


AMC NETWORKS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended March 31,
2021 2020
Cash flows from operating activities:
Net income including noncontrolling interests $ 94,725  $ 73,526 
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 25,246  26,730 
Impairment and other charges 16,055  — 
Share-based compensation expense related to equity classified awards 13,446  15,512 
Non-cash restructuring and other related charges 4,329  3,928 
Amortization and write-off of program rights 150,987  223,982 
Amortization of deferred carriage fees 4,867  6,783 
Unrealized foreign currency transaction (gain) loss (13,758) 7,848 
Amortization of deferred financing costs and discounts on indebtedness 2,048  1,918 
Loss on extinguishment of debt 22,074  2,908 
Bad debt expense 771  1,211 
Deferred income taxes 4,646  15,900 
Loss on investments 5,366  — 
Write-down of non-marketable equity securities and note receivable —  20,000 
Other, net (755) 1,044 
Changes in assets and liabilities:
Accounts receivable, trade (including amounts due from related parties, net) 36,996  27,178 
Prepaid expenses and other assets 29,383  17,532 
Program rights and obligations, net (237,951) (221,627)
Income taxes payable 11,138  369 
Deferred revenue 5,671  9,522 
Deferred carriage fees, net (57) (15,484)
Accounts payable, accrued liabilities and other liabilities (67,664) (20,372)
Net cash provided by operating activities 107,563  198,408 
Cash flows from investing activities:
Capital expenditures (8,537) (12,916)
Acquisition of investment securities (25,694) — 
Cash paid on distribution of business (7,052) — 
Principal payment received on loan to investee 1,875  1,250 
Proceeds from sale of investments 95,370  10,000 
Net cash provided by (used in) investing activities 55,962  (1,666)
Cash flows from financing activities:
Proceeds from the issuance of long-term debt 984,500  5,000 
Principal payments on long-term debt (1,015,000) (209,375)
Deemed repurchases of restricted stock units (34,633) (8,858)
Purchase of treasury stock —  (85,957)
Proceeds from stock option exercises 12,100  — 
Principal payments on finance lease obligations (1,095) (781)
Contributions from noncontrolling interests 2,702  — 
Distributions to noncontrolling interests (2,464) (3,081)
Net cash used in financing activities (53,890) (303,052)
Net increase in cash and cash equivalents 109,635  (106,310)
Effect of exchange rate changes on cash and cash equivalents (5,038) (5,731)
Cash and cash equivalents at beginning of period 888,526  816,170 
Cash and cash equivalents at end of period $ 993,123  $ 704,129 
See accompanying notes to condensed consolidated financial statements.
5

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.
Segment Reporting Changes
In the first quarter of 2021, the Company changed its presentation of operating segments, reflecting a reorganized operating structure focused on a multi-platform distribution approach to content monetization. The Company's streaming services and IFC Films, previously included in the International and Other segment, are now included within Domestic Operations (formerly referred to as the National Networks segment). In addition, certain corporate overhead costs will no longer be allocated to the operating segments. Operating segment information for the prior period has been recast to reflect these changes. The new reporting structure consists of the following two operating segments:
Domestic Operations: Includes activities of our five national programming networks, our streaming services, AMC Studios operation, IFC Films and AMC Broadcasting & Technology. Our national programming networks are AMC, WE tv, BBC AMERICA, IFC, and SundanceTV. Our streaming services consist of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, and ALLBLK), AMC+ and other streaming initiatives. Our AMC Studios operation produces original programming for our programming networks and also licenses such programming worldwide. IFC Films is our film distribution business and 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 and 25/7 Media (formerly Levity), our production services business. See Note 4 relating to the spin-off of the Levity comedy venues 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, 2020 contained in the Company's Annual Report on Form 10-K ("2020 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, 2021.
Risks and Uncertainties
The COVID-19 pandemic and measures to prevent its spread continue to affect our businesses in a number of ways, including adverse advertising sales impacts and delays in the creation and availability of our programming. 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 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 vaccines, 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
6

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
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, 2021, the Company adopted Financial Accounting Standard Board (“FASB”) Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 - Income Taxes. The adoption of the standard did not have a material effect on its consolidated financial statements.
Note 2. Revenue Recognition
Transaction Price Allocated to Future Performance Obligations
As of March 31, 2021, 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.
Contract Balances from Contracts with Customers
The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers.
(In thousands) March 31, 2021 December 31, 2020
Balances from contracts with customers:
     Accounts receivable (including long-term, included in Other assets) $ 1,019,853  $ 1,081,070 
     Contract assets, short-term (included in Other current assets) 7,536  9,830 
     Contract assets, long-term (included in Other assets) 942  942 
     Contract liabilities (Deferred revenue) 76,787  71,048 
Revenue recognized for the three months ended March 31, 2021 relating to the contract liability at December 31, 2020 was $7.7 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 March 31,
2021 2020
Basic weighted average common shares outstanding 41,930  55,477 
Effect of dilution:
Stock options 12  — 
Restricted stock units 1,229  584 
Diluted weighted average common shares outstanding 43,171  56,061 
Approximately 0.5 million and 1.3 million restricted stock units outstanding as of March 31, 2021 and March 31, 2020, 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 March 31, 2021 and March 31, 2020, 0.4 million and 0.4 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 three months ended March 31, 2021, the Company did not repurchase any shares of its Class A Common Stock. As of March 31, 2021, the Company had $135.3 million of authorization remaining for repurchase under the Stock Repurchase Program.
7

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
Note 4. Impairment and Other Charges
In March 2021, the Company completed a spin-off of the live comedy venue and talent management businesses ("LiveCo") of Levity Entertainment Group, LLC. In connection with the transaction, the Company effectively exchanged all of its rights and interests in LiveCo for the release of the Company's obligations, principally related to leases. As a result of this divestiture, the Company recognized a loss on the disposal of $16.1 million reflecting the net assets transferred (consisting of property and equipment, lease right-of-use assets and intangibles, partially offset by lease and other obligations), which is included in Impairment and other charges. The Company retained its interest in the production services business of Levity Entertainment Group, LLC, which was renamed 25/7 Media Holdings, LLC following the spin-off.
Note 5. Restructuring and Other Related Charges
Restructuring and other related charges of $8.6 million for the three months ended March 31, 2021, consisted of $4.1 million of severance costs associated with the restructuring plan announced in November 2020 and $4.5 million at AMCNI related to the termination of distribution in certain international territories.
Restructuring and other related charges of $6.0 million for the three months ended March 31, 2020, primarily related to restructuring costs associated with the termination of distribution in certain territories, as well as severance and other personnel related costs associated with previously announced restructuring activities.
The following table summarizes the restructuring and other related charges recognized by operating segment:
(In thousands) Three Months Ended March 31,
2021 2020
Domestic Operations $ 2,427  $ 1,482 
International & Other 4,490  3,977 
Corporate / Inter-segment eliminations 1,708  507 
Total restructuring and other related charges $ 8,625  $ 5,966 

The following table summarizes the accrued restructuring costs:
(In thousands) Severance and employee-related costs Other exit costs Total
December 31, 2020 $ 25,571  $ 31  $ 25,602 
Charges 4,168  4,457  8,625 
Cash payments (22,499) —  (22,499)
Non-cash adjustments —  (4,457) (4,457)
Other 105  —  105 
Balance, March 31, 2021 $ 7,345  $ 31  $ 7,376 
Accrued restructuring costs of $7.4 million are included in accrued liabilities in the condensed consolidated balance sheet at March 31, 2021.
8

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
Note 6. Program Rights
Total capitalized produced and licensed content by predominant monetization strategy is as follows:

March 31, 2021
(In thousands)  Predominantly Monetized Individually  Predominantly Monetized as a Group  Total
Owned original program rights, net:
Completed $ 252,306  $ 23,015  $ 275,321 
In-production and in-development 263,912  13,197  277,109 
Total owned original program rights, net $ 516,218  $ 36,212  $ 552,430 
Licensed program rights, net:
Licensed film and acquired series $ 8,694  $ 560,787  $ 569,481 
Licensed originals 195,814  —  195,814 
Advances and content versioning costs —  79,992  79,992 
Total licensed program rights, net 204,508  640,779  845,287 
Program rights, net $ 720,726  $ 676,991  $ 1,397,717 
Current portion of program rights, net $ 15,833 
Program rights, net (long-term) 1,381,884 
$ 1,397,717 

Amortization, including write-offs, of owned and licensed program rights is as follows:
Three Months Ended March 31, 2021
(In thousands) Predominantly Monetized Individually Predominantly Monetized as a Group Total
Owned original program rights $ 33,906  $ 4,566  $ 38,472 
Licensed program rights 25,020  87,495  112,515 
Program rights amortization $ 58,926  $ 92,061  $ 150,987 
9

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)

Three Months Ended March 31, 2020
(In thousands) Predominantly Monetized Individually Predominantly Monetized as a Group Total
Owned original program rights $ 105,561  $ —  $ 105,561 
Licensed program rights 21,352  97,069  118,421 
Program rights amortization $ 126,913  $ 97,069  $ 223,982 

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. There were no program rights write-offs included in technical and operating expense for the three months ended March 31, 2021 and 2020.
Note 7. 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 $95.3 million at March 31, 2021 and $69.5 million at December 31, 2020. In February 2021, the Company invested $25.5 million for an interest in a Toronto-based production company and studio, which is accounted for as an equity method investment.
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. Investments in marketable equity securities were $11.2 million at March 31, 2021 and $62.4 million at December 31, 2020. In January 2021, the Company sold the remaining portion of one of its marketable securities with a carrying value of $51.0 million as of December 31, 2020, resulting in a realized loss of $5.4 million. There were no unrealized gains or losses on marketable equity securities for the three months ended March 31, 2021. For the three months ended March 31, 2020, unrealized losses on marketable equity securities were $1.1 million, 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 $36.0 million at March 31, 2021 and $35.8 million at December 31, 2020. For the three months ended March 31, 2020, the Company recognized impairment charges of $20.0 million related to the write-down of certain non-marketable equity securities, included in miscellaneous, net in the condensed consolidated statements of income.
10

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
Note 8. Goodwill and Other Intangible Assets
The carrying amount of goodwill, by operating segment is as follows:
(In thousands) Domestic Operations International
and Other
Total
December 31, 2020 $ 333,502  $ 352,905  $ 686,407 
Goodwill written off related to spin-off of a business unit —  (476) (476)
Amortization of "second component" goodwill (336) —  (336)
Foreign currency translation —  (2,963) (2,963)
March 31, 2021 $ 333,166  $ 349,466  $ 682,632 
As of March 31, 2021 and December 31, 2020, accumulated impairment charges in the International and Other segment totaled $123.1 million.
The reduction of $0.3 million in the carrying amount of goodwill for Domestic Operations 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 following tables summarize information relating to the Company's identifiable intangible assets:
(In thousands) March 31, 2021
Gross Accumulated Amortization Net Estimated Useful Lives
Amortizable intangible assets:
Affiliate and customer relationships $ 621,136  $ (335,631) $ 285,505 
6 to 25 years
Advertiser relationships 46,282  (27,080) 19,202 
11 years
Trade names and other amortizable intangible assets 104,902  (39,590) 65,312 
3 to 20 years
Total amortizable intangible assets 772,320  (402,301) 370,019 
Indefinite-lived intangible assets:
Trademarks 19,900  —  19,900 
Total intangible assets $ 792,220  $ (402,301) $ 389,919 
(In thousands) December 31, 2020
Gross Accumulated Amortization Net
Amortizable intangible assets:
Affiliate and customer relationships $ 624,699  $ (330,350) $ 294,349 
Advertiser relationships 46,282  (26,028) 20,254 
Trade names and other amortizable intangible assets 116,526  (40,357) 76,169 
Total amortizable intangible assets 787,507  (396,735) 390,772 
Indefinite-lived intangible assets:
Trademarks 19,900  —  19,900 
Total intangible assets $ 807,407  $ (396,735) $ 410,672 

Aggregate amortization expense for amortizable intangible assets for the three months ended March 31, 2021 and 2020 was $9.5 million and $12.1 million, respectively. Estimated aggregate amortization expense for intangible assets subject to amortization for each of the following five years is:
11

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
(In thousands)
Years Ending December 31,
2021 $ 37,433 
2022 37,161 
2023 37,073 
2024 37,004 
2025 35,203 

Note 9. Accrued Liabilities
Accrued liabilities consist of the following:
(In thousands) March 31, 2021 December 31, 2020
Employee related costs 71,636  $ 98,661 
Participations and residuals 87,839  106,785 
Interest 22,817  29,345 
Other accrued expenses 85,972  85,214 
Total accrued liabilities $ 268,264  $ 320,005 

Note 10. Long-term Debt
The Company's long-term debt consists of the following:
(In thousands) March 31, 2021 December 31, 2020
Senior Secured Credit Facility: (a)
Term Loan A Facility $ 675,000  $ 675,000 
Senior Notes:
4.75% Notes due December 2022
—  400,000 
5.00% Notes due April 2024
400,000  1,000,000 
4.75% Notes due August 2025
800,000  800,000 
       4.25% Notes due February 2029
1,000,000  — 
Total long-term debt 2,875,000  2,875,000 
Unamortized discount (26,379) (18,337)
Unamortized deferred financing costs (15,079) (7,356)
Long-term debt, net 2,833,542  2,849,307 
Current portion of long-term debt 8,438  75,000 
Noncurrent portion of long-term debt $ 2,825,104  $ 2,774,307 
(a)The Company's $500 million revolving credit facility remains undrawn at March 31, 2021. Total undrawn revolver commitments are available to be drawn for general corporate purposes of the Company.
Amendment to Amended and Restated Credit Agreement
On February 8, 2021, AMC Networks entered into Amendment No. 1 (“Amendment No. 1”) to the Second Amended and Restated Credit Agreement, dated as of July 28, 2017 (as amended by Amendment No. 1, the "Credit Agreement"), among AMC Networks and its subsidiary, AMC Network Entertainment LLC, as the Initial Borrowers, certain of AMC Networks' subsidiaries, as restricted subsidiaries, JPMorgan Chase Bank, N.A., as Administrative Agent, Collateral Agent and L/C Issuer, Bank of America, as an L/C Issuer, and the lenders party thereto. Amendment No. 1 extends the maturity dates of the $675 million term loan A facility and $500 million revolving credit facility under the Credit Agreement to February 8, 2026, and makes certain other amendments to the covenants and other provisions of the Credit Agreement.
Senior Notes
12

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
On February 8, 2021, AMC Networks issued, and certain of AMC Networks’ subsidiaries (hereinafter, the “Guarantors”) guaranteed, $1.0 billion aggregate principal amount of 4.25% senior notes due February 15, 2029 (the “4.25% Notes due 2029”) in a registered public offering and received net proceeds of $982.3 million, after deducting underwriting discounts and commissions and expenses. The Company used such proceeds to redeem (i) the remaining $400 million principal amount of the Company’s 4.75% senior notes due 2022 and (ii) $600 million principal amount of the Company’s 5.00% senior notes due 2024 on February 26, 2021 (the "Redemption Date"). The 4.75% senior notes due 2022 were redeemed at a redemption price of 100.000% of the principal amount of such notes and the 5.00% senior notes due 2024 were redeemed at a redemption price of 102.500% of the principal amount of such notes, in each case, plus accrued and unpaid interest to, but excluding, the Redemption Date. In connection with the redemptions, the Company incurred a loss on extinguishment of debt for the quarter ended March 31, 2021 of $22.1 million representing the redemption premium on the 5.00% senior notes due 2024, and the write-off of a portion of the unamortized discount and deferred financing costs related to both issuances.

Note 11. Leases
The following table summarizes the leases included in the condensed consolidated balance sheets as follows:
(In thousands) Balance Sheet Location March 31, 2021 December 31, 2020
Assets
Operating Operating lease right-of-use asset $ 120,293  $ 146,522 
Finance Property and equipment, net 12,904  13,179 
Total lease assets $ 133,197  $ 159,701 
Liabilities
Current:
Operating Current portion of lease obligations $ 24,305  $ 28,813 
Finance Current portion of lease obligations 3,431  3,622 
$ 27,736  $ 32,435 
Noncurrent:
Operating Lease obligations $ 133,154  166,452 
Finance Lease obligations 26,662  27,872 
159,816  $ 194,324 
Total lease liabilities $ 187,552  $ 226,759 

Note 12. 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.
13

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 March 31, 2021 and December 31, 2020:
(In thousands) Level I Level II Level III Total
At March 31, 2021:
Assets
Cash equivalents $ 147,523  $ —  $ —  $ 147,523 
Marketable securities 11,193  —  —  11,193 
Foreign currency derivatives —  407  —  407 
Liabilities
Interest rate swap contracts $ —  $ 1,793  $ —  $ 1,793 
Foreign currency derivatives —  2,917  —  2,917 
At December 31, 2020:
Assets
Cash equivalents
$ 107,494  $ —  $ —  $ 107,494 
Marketable securities
62,442  —  —  62,442 
Foreign currency derivatives
—  667  —  667 
Liabilities
Interest rate swap contracts $ —  $ 2,403  $ —  $ 2,403 
Foreign currency derivatives —  3,515  —  3,515 
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 March 31, 2021 and December 31, 2020, 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) March 31, 2021
Carrying
Amount
Estimated
Fair Value
Debt instruments:
Term loan A facility $ 662,584  $ 670,363 
5.00% Notes due April 2024
396,976  406,620 
4.75% Notes due August 2025
790,605  818,864 
4.25% Notes due February 2029
983,377  972,500 
$ 2,833,542  $ 2,868,347 
14

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)

(In thousands) December 31, 2020
Carrying
Amount
Estimated
Fair Value
Debt instruments:
Term loan A facility $ 669,878  $ 665,719 
4.75% Notes due December 2022
398,230  400,500 
5.00% Notes due April 2024
991,074  1,015,000 
4.75% Notes due August 2025
790,125  826,160 
$ 2,849,307  $ 2,907,379 
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 13. 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 March 31, 2021, 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
March 31, 2021 December 31, 2020
Derivatives designated as hedging instruments:
Liabilities:
Interest rate swap contracts Accrued liabilities $ 1,793  $ 2,403 
Derivatives not designated as hedging instruments:
Assets:
Foreign currency derivatives Prepaid expenses and other current assets $ 180  $ 300 
Foreign currency derivatives Other assets 227  367 
Liabilities:
Foreign currency derivatives Accrued liabilities $ 954  $ 1,084 
Foreign currency derivatives Other liabilities 1,962  2,431 
15

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 March 31, Three Months Ended March 31,
2021 2020   2021 2020
Derivatives in cash flow hedging relationships:
Interest rate swap contracts $ $ (2,234) Interest expense $ 606  $ 237 

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 March 31,
  2021 2020
Foreign currency derivatives Miscellaneous, net $ 54  $ 408 

Note 14. Income Taxes
For the three months ended March 31, 2021, income tax expense was $25.9 million, representing an effective tax rate of 21%. The items resulting in variances from the federal statutory rate primarily consist of state income tax expense of $3.4 million, tax expense of $2.5 million from nondeductible executive compensation, and tax expense from foreign operations of $1.4 million, partially offset by tax benefit of $1.3 million from foreign derived intangible income and $5.4 million for excess tax benefits related to stock compensation.
For the three months ended March 31, 2020, income tax expense was $33.6 million, representing an effective tax rate of 31%. The effective tax rate differs from the federal statutory rate of 21% due primarily to tax expense of $4.6 million for excess tax deficiencies related to stock compensation, tax expense from foreign operations of $4.0 million, state income tax expense of $3.0 million and $2.7 million for an increase in valuation allowances for foreign taxes and U.S. foreign tax credits, partially offset by tax benefit of $2.8 million relating to uncertain tax positions (including accrued interest) due to an audit settlement.
At March 31, 2021, the Company had foreign tax credit carry forwards of approximately $32.4 million, expiring on various dates from 2021 through 2031. These carryforwards have been reduced by a valuation allowance of $32.4 million as it is more likely than not that these carry forwards will not be realized. For the three months ended March 31, 2021, $0.3 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 15. Commitments and Contingencies
Commitments
As of March 31, 2021, the Company's contractual obligations not reflected on the Company's condensed consolidated balance sheet increased $30.6 million, as compared to December 31, 2020, to $1,042.5 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 "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. 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,
16

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
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. 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.
On January 18, 2018, 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. On August 30, 2018, Plaintiffs filed an Amended Complaint. 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. On December 31, 2020, the court granted the Company’s motion for re-argument and issued a revised summary judgment decision that granted in part and denied in part the Company’s motion for summary judgment. Following an appeal by the Company and oral argument, on April 13, 2021, The New York Appellate Division, First Department dismissed Plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing.
Due to the continued impact of the COVID-19 pandemic on the New York State courts, the joint trial, originally scheduled to begin on June 1, 2020, was delayed and was scheduled to begin on April 26, 2021. On March 23, 2021 the trial court entered a stipulation and order adjourning the trial to April 4, 2022, with the understanding that the parties will use their best efforts to hold the trial earlier if the court’s and the parties’ calendars and health and safety conditions permit. The Company believes that the remaining asserted claims are without merit, denies the allegations and will continue 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 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 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. The California Plaintiffs seek compensatory and punitive damages and restitution. On August 8, 2019, the judge in the California Action ordered a trial to resolve certain issues of contract interpretation only. Following eight days of trial in February and March 2020, on July 22, 2020, the judge 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. On January 20, 2021, the California Plaintiffs filed a second amended complaint, eliminating eight named defendants and their claims under Cal. Bus. & Prof. Code § 17200. On May 5, 2021, the California Plaintiffs filed a third amended complaint, repleading in part their claims for alleged breach of the covenant of good faith and fair dealing, inducing breach of contract, and certain breach of contract claims. The parties have resumed discovery in preparation for the September 2021 trial. The Company believes that the remaining asserted claims are without merit and will vigorously defend against them. 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 16. Equity Plans
In March 2021, AMC Networks granted 535,278 restricted stock units (RSUs) to certain executive officers and employees under the AMC Networks Inc. Amended and Restated 2016 Employee Stock Plan. The RSUs vest ratably over a three-year period and the vesting criteria for 178,764 RSUs include the achievement of certain performance targets by the Company.
17

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
During the three months ended March 31, 2021, 617,051 RSUs and 368,296 performance restricted stock units (PRSUs) of AMC Networks Class A Common Stock previously issued to employees of the Company vested. On the vesting date, 263,671 RSUs and 168,712 PRSUs were surrendered to the Company to cover the required statutory tax withholding obligations and 353,380 RSU and 199,584 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 $34.6 million, which has been reflected as a financing activity in the condensed consolidated statement of cash flows for the three months ended March 31, 2021.
Share-based compensation expense included in selling, general and administrative expense was $13.4 million and $15.5 million for the three months ended March 31, 2021 and March 31, 2020, respectively.
As of March 31, 2021, there was $58.8 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 2.0 years.
Note 17. Redeemable Noncontrolling Interests
The following table summarizes activity related to redeemable noncontrolling interest for the three months ended March 31, 2021.
(In thousands) Three Months Ended March 31, 2021
December 31, 2020 $ 315,649 
Net earnings 6,570 
Distributions (2,344)
Distribution related to spin-off transaction (8,040)
Transfer to noncontrolling interest (18,367)
March 31, 2021 $ 293,468 
In connection with the spin-off of the live comedy venue and talent management businesses of Levity Entertainment Group, LLC (see Note 4), $8.0 million of redeemable noncontrolling interests was distributed to the noncontrolling partners. In addition, as part of the transaction, the preexisting put rights of the noncontrolling interest holders were terminated. Accordingly, the remaining $18.4 million of noncontrolling interests was transferred from Redeemable noncontrolling interests to Noncontrolling interests in the condensed consolidated balance sheet.
Note 18. 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 March 31, 2021 and 2020, 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 $0.1 million for the three months ended March 31, 2021 and 2020, respectively.
Note 19. Cash Flows
The Company's non-cash investing and financing activities and other supplemental data are as follows:
(In thousands) Three Months Ended March 31,
2021 2020
Non-Cash Investing and Financing Activities:
Treasury stock not yet settled $ —  $ 10,988 
Finance lease additions —  14,271 
Capital expenditures incurred but not yet paid 2,314  2,501 
Supplemental Data:
Cash interest paid 39,614  27,873 
Income taxes paid, net 2,314  4,069 

18

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
Note 20. Segment Information
The Company classifies its operations into two operating segments: Domestic Operations and International and Other. These operating segments represent strategic business units that are managed separately.
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 and other 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 March 31, 2021
Domestic Operations International
and Other
Corporate / Inter-segment
Eliminations
Consolidated
Revenues, net
Advertising $ 199,142  $ 21,571  $ —  $ 220,713 
Distribution and other 374,827  99,596  (3,395) 471,028 
Consolidated revenues, net $ 573,969  $ 121,167  $ (3,395) $ 691,741 
Operating income (loss) $ 216,459  $ (3,162) $ (43,589) $ 169,708 
Share-based compensation expense 5,639  1,231  6,576  13,446 
Depreciation and amortization 13,373  4,949  6,924  25,246 
Impairment and other charges —  16,055  —  16,055 
Restructuring and other related charges 2,427  4,490  1,708  8,625 
Cloud computing amortization —  —  264  264 
Majority-owned equity investees AOI 4,635  —  —  4,635 
Adjusted operating income $ 242,533  $ 23,563  $ (28,117) $ 237,979 

(In thousands) Three Months Ended March 31, 2020
Domestic Operations International
and Other
Corporate / Inter-segment
Eliminations
Consolidated
Revenues, net
Advertising $ 213,226  $ 19,364  $ —  232,590 
Distribution and other 398,667  105,464  (2,346) 501,785 
Consolidated revenues, net $ 611,893  $ 124,828  $ (2,346) $ 734,375 
Operating income (loss) $ 224,600  $ 4,361  $ (55,991) 172,970 
Share-based compensation expense 2,724  609  12,179  15,512 
Depreciation and amortization 10,951  8,896  6,883  26,730 
Restructuring and other related charges 1,482  3,977  507  5,966 
Majority-owned equity investees AOI 1,276  —  —  1,276 
Adjusted operating income $ 241,033  $ 17,843  $ (36,422) $ 222,454 

Corporate overhead costs include 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).
Inter-segment eliminations are primarily licensing revenues recognized between the Domestic Operations and International and Other segments.
19

AMC NETWORKS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(unaudited)
(In thousands) Three Months Ended March 31,
2021 2020
Inter-segment revenues
Domestic Operations $ (670) $ (1,361)
International and Other (2,725) (985)
$ (3,395) $ (2,346)
The table below summarizes revenues based on customer location:
(In thousands) Three Months Ended March 31,
2021 2020
Revenues
United States $ 577,148  $ 624,993 
Europe 82,036  72,479 
Other 32,557  36,903 
$ 691,741  $ 734,375 

The table below summarizes property and equipment based on asset location:
(In thousands) March 31, 2021 December 31, 2020
Property and equipment, net
United States $ 209,374  $ 239,387 
Europe 14,641  15,938 
Other 710  720 
$ 224,725  $ 256,045 

20


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 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, streaming and programming industries;
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 film distribution businesses;
market demand for our owned original programming and our film content;
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 security of our program rights and other electronic data;
our ability to maintain and renew distribution or affiliation agreements with distributors;
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;
the impact of existing and proposed federal, state and international laws and regulations relating to data protection, privacy and security, including the European Union's General Data Protection Regulation ("GDPR");
the impact of Brexit;
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 and streaming 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
21


the factors described under Item 1A, "Risk Factors" in our 2020 Annual Report on Form 10-K (the "2020 Form 10-K"), as filed with the Securities and Exchange Commission ("SEC").
We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.
Introduction
Management's discussion and analysis, or MD&A, of our results of operations and financial condition is provided as a supplement to, and should be read in conjunction with, the unaudited condensed consolidated financial statements and notes thereto included elsewhere herein and our 2020 Form 10-K to enhance the understanding of our financial condition, changes in financial condition and results of our operations. Unless the context otherwise requires, all references to "we," "us," "our," "AMC Networks" or the "Company" refer to AMC Networks Inc., together with its subsidiaries. MD&A is organized as follows:
Business Overview. This section provides a general description of our business and our operating segments, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.
Consolidated Results of Operations. This section provides an analysis of our results of operations for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. Our discussion is presented on both a consolidated and operating segment basis. Our two operating segments are: (i) Domestic Operations and (ii) International and Other.
Liquidity and Capital Resources. This section provides a discussion of our financial condition as of March 31, 2021, as well as an analysis of our cash flows for the three months ended March 31, 2021 and 2020. The discussion of our financial condition and liquidity includes summaries of (i) our primary sources of liquidity and (ii) our contractual obligations that existed at March 31, 2021 as compared to December 31, 2020.
Critical Accounting Policies and Estimates. This section provides an update, if any, to our significant accounting policies or critical accounting estimates since December 31, 2020.
Business Overview
Segment Reporting Changes
In the first quarter of 2021, we changed our presentation of operating segments, reflecting a reorganized operating structure focused on a multi-platform distribution approach to content monetization. Our streaming services and IFC Films, previously included in the International and Other segment, are now included within Domestic Operations (formerly referred to as the National Networks segment). In addition, certain corporate overhead costs will no longer be allocated to the operating segments. Operating segment information for the prior period has been recast to reflect these changes. The new reporting structure consists of the following two operating segments:
Domestic Operations: Includes activities of our five national programming networks, our streaming services, AMC Studios operation, IFC Films and AMC Broadcasting & Technology. Our national programming networks are AMC, WE tv, BBC AMERICA, IFC, and SundanceTV. Our streaming services consist of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, and ALLBLK), AMC+ and other streaming initiatives. Our AMC Studios operation produces original programming for our programming networks and also licenses such programming worldwide. IFC Films is our film distribution business and 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 and 25/7 Media (formerly Levity), our production services business. See Note 4 to the unaudited condensed consolidated financial statements for additional information relating to the spin-off of the Levity comedy venues business.
22


Financial Results Overview
The tables presented below set forth our consolidated revenues, net, operating income (loss) and adjusted operating income ("AOI"), defined below, for the periods indicated.
(In thousands) Three Months Ended March 31,
2021 2020
Revenues, net
Domestic Operations $ 573,969  $ 611,893 
International and Other 121,167  124,828 
Inter-segment Eliminations (3,395) (2,346)
Consolidated revenues, net $ 691,741  $ 734,375 
Operating income (loss)
Domestic Operations $ 216,459  $ 224,600 
International and Other (3,162) 4,361 
Corporate / Inter-segment Eliminations (43,589) (55,991)
Consolidated operating income $ 169,708  $ 172,970 
AOI
Domestic Operations $ 242,533  $ 241,033 
International and Other 23,563  17,843 
Corporate / Inter-segment Eliminations (28,117) (36,422)
Consolidated AOI $ 237,979  $ 222,454 
We evaluate segment performance based on several factors, of which the primary financial measure is operating segment AOI. We define AOI, which is a financial measure that is not calculated in accordance with generally accepted accounting principles ("GAAP"), as operating income (loss) before depreciation and amortization, cloud computing amortization, share-based compensation expense or benefit, impairment and other 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. From time to time, we may exclude the impact of certain events, gains, losses or other charges (such as significant legal settlements) from AOI that affect our operating performance.
We believe that AOI is an appropriate measure for evaluating the operating performance on both an operating segment and consolidated basis. AOI and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in the industry.
Internally, we use revenues, net and AOI measures as the most important indicators of our business performance, and evaluate management's effectiveness with specific reference to these indicators. AOI should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities and other measures of performance and/or liquidity presented in accordance with GAAP. Since AOI is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.
The following is a reconciliation of consolidated operating income to AOI for the periods indicated:
(In thousands) Three Months Ended March 31,
2021 2020
Operating income $ 169,708  $ 172,970 
Share-based compensation expense 13,446  15,512 
Depreciation and amortization 25,246  26,730 
Restructuring and other related charges 8,625  5,966 
Impairment and other charges 16,055  — 
Cloud computing amortization 264  — 
Majority-owned equity investees AOI 4,635  1,276 
AOI $ 237,979  $ 222,454 
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Domestic Operations
In our Domestic Operations segment, we earn revenue principally from: (i) the distribution of our programming, through our programming networks and owned subscription streaming services, (ii) the sale of advertising, and (iii) the licensing of our original programming to distributors, including the distribution of programming of IFC Films. Distribution revenue primarily includes subscription fees paid by distributors to carry our programming networks and streaming services, and content licensing revenue from the licensing of original programming for digital, foreign and home video distribution. Subscription fees paid by distributors represent the largest component of distribution revenue. Our subscription fee revenues for our programming networks are based on a per subscriber fee, and, to a lesser extent, fixed fees under multi-year contracts, commonly referred to as "affiliation agreements," which generally provide for annual rate increases. The specific subscription fee revenues we earn vary from period to period, distributor to distributor and also vary among our programming services, but are generally based upon the number of each distributor's subscribers who receive our programming, referred to as viewing subscribers. Subscription fees for our streaming services are paid on a monthly basis. Content licensing revenue from the licensing of original programming for digital and foreign distribution is recognized upon availability or distribution by the licensee.
Under affiliation agreements with our distributors, we have the right to sell a specified amount of national advertising time on our programming networks. Our advertising revenues are more variable than subscription fee revenues because the majority of our advertising is sold on a short-term basis, not under long-term contracts. Our arrangements with advertisers provide for a set number of advertising units to air over a specific period of time at a negotiated price per unit. Additionally, in these advertising sales arrangements, our programming networks generally guarantee specified viewer ratings for their programming.
Programming expense, included in technical and operating expense, represents the largest expense of the Domestic Operations segment and primarily consists of amortization and write-offs of programming rights, such as those for original programming, feature films and licensed series, as well as participation and residual costs. The other components of technical and operating expense primarily include distribution and production related costs and program operating costs including cost of delivery, such as origination, transmission, uplinking and encryption.
The success of our business depends on original programming, both scripted and unscripted, across all of our programming services. These original series generally result in higher ratings for our networks. Among other things, higher audience ratings drive increased revenues through higher advertising revenues. The timing of exhibition and distribution of original programming varies from period to period, which results in greater variability in our revenues, earnings and cash flows from operating activities. We will continue to increase our investment in programming across all of our networks. There may be significant changes in the level of our technical and operating expenses due to the amortization of content acquisition and/or original programming costs and/or the impact of management's periodic assessment of programming usefulness. Such costs will also fluctuate with the level of revenues derived from owned original programming in each period as these costs are amortized based on the individual-film-forecast-computation method.
Most original series require us to make up-front investments, which are often significant amounts. Not all of our programming efforts are commercially successful, which could result in a write-off of program rights. If it is determined that programming rights have limited, or no, future programming usefulness based on actual demand or market conditions, a write-off of the unamortized cost is recorded in technical and operating expense.
International and Other
Our International and Other segment primarily includes the operations of AMCNI and 25/7 Media (formerly Levity).
In our International and Other segment, we earn revenue principally from the international distribution of programming and, to a lesser extent, the sale of advertising from our AMCNI programming networks. We also earn revenue through production services from 25/7 Media. For the three months ended March 31, 2021, distribution revenues represented 82% of the revenues of the International and Other segment. Distribution revenue primarily includes subscription fees paid by distributors or consumers to carry our programming networks and production services revenue generated from 25/7 Media. Our subscription revenues are generally based on either a per-subscriber fee or a fixed contractual annual fee, under multi-year affiliation agreements, which may provide for annual rate increases. Our production services revenues are based on master production agreements whereby a third-party engages us to produce content on its behalf. Production services revenues are recognized based on the percentage of cost incurred to total estimated cost of the contract. Distribution revenues are derived from the distribution of our programming networks primarily in Europe and to a lesser extent, Latin America.
Programming expense, program operating costs and production costs incurred to produce content for third parties are included in technical and operating expense, and represent the largest expense of the International and Other segment. Programming expense primarily consist of amortization of acquired content, costs of dubbing and sub-titling of programs, production costs, participation and residual costs. Program operating costs include costs such as origination, transmission, uplinking and encryption of our linear AMCNI channels as well as content hosting and delivery costs at our various on-line
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content distribution initiatives. Not all of our programming efforts are commercially successful, which could result in a write-off of program rights. If it is determined that programming rights have limited, or no, future programming usefulness based on actual demand or market conditions, a write-off of the unamortized cost is recorded in technical and operating expense.
Corporate / Inter-segment Eliminations
Corporate operations primarily consist of executive management and administrative support services, such as executive salaries and benefits costs, costs of maintaining corporate headquarters, facilities and common support functions (such as human resources, legal, finance, strategic planning and information technology). The segment financial information set forth below, including the discussion related to individual line items, does not reflect inter-segment eliminations unless specifically indicated.
Impact of COVID-19 on Our Business
The COVID-19 pandemic and measures to prevent its spread continue to affect our businesses in a number of ways, including adverse advertising sales impacts and delays in the creation and availability of our programming. 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 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 vaccines, 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.
Impact of Economic Conditions
Our future performance is dependent, to a large extent, on general economic conditions including the impact of direct competition, our ability to manage our businesses effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers.
Capital and credit market disruptions, as well as other events such as the COVID-19 pandemic, could cause economic downturns, which may lead to lower demand for our products, such as lower demand for television advertising and a decrease in the number of subscribers receiving our programming services from our distributors. Events such as these may adversely impact our results of operations, cash flows and financial position.
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Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020
The following table sets forth our consolidated results of operations for the periods indicated.
  Three Months Ended March 31,    
  2021 2020    
(In thousands) Amount % of
Revenues,
net
Amount % of
Revenues,
net
$ change % change
Revenues, net $ 691,741  100.0  % $ 734,375  100.0  % $ (42,634) (5.8) %
Operating expenses:
Technical and operating (excluding depreciation and amortization)
280,572  40.6  344,060  46.9  (63,488) (18.5)
Selling, general and administrative 191,535  27.7  184,649  25.1  6,886  3.7 
Depreciation and amortization 25,246  3.6  26,730  3.6  (1,484) (5.6)
Impairment and other charges 16,055  2.3  —  —  16,055  n/m
Restructuring and other related charges 8,625  1.2  5,966  0.8  2,659  44.6 
Total operating expenses 522,033  75.5  561,405  76.4  (39,372) (7.0)
Operating income 169,708  24.5  172,970  23.6  (3,262) (1.9)
Other income (expense):
Interest expense, net (32,400) (4.7) (33,009) (4.5) 609  (1.8)
Loss on extinguishment of debt (22,074) (3.2) (2,908) (0.4) (19,166) n/m
Miscellaneous, net 5,406  0.8  (29,939) (4.1) 35,345  (118.1)
Total other income (expense) (49,068) (7.1) (65,856) (9.0) 16,788  (25.5)
Net income from operations before income taxes 120,640  17.4  107,114  14.6  13,526  12.6 
Income tax expense (25,915) (3.7) (33,588) (4.6) 7,673  (22.8)
Net income including noncontrolling interests 94,725  13.7  73,526  10.0  21,199  28.8 
Net income attributable to noncontrolling interests (7,704) (1.1) (4,859) (0.7) (2,845) 58.6 
Net income attributable to AMC Networks' stockholders $ 87,021  12.6  % $ 68,667  9.4  % $ 18,354  26.7  %

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Domestic Operations Segment Results
The following table sets forth our Domestic Operations segment results for the periods indicated.
  Three Months Ended March 31,    
  2021 2020    
(In thousands) Amount % of
Revenues,
net
Amount % of
Revenues,
net
$ change % change
Revenues, net $ 573,969  100.0  % $ 611,893  100.0  % $ (37,924) (6.2) %
Operating expenses:
Technical and operating (excluding depreciation and amortization)
211,961  36.9  263,348  43.0  (51,387) (19.5)
Selling, general and administrative 129,749  22.6  111,512  18.2  18,237  16.4 
Depreciation and amortization 13,373  2.3  10,951  1.8  2,422  22.1 
Restructuring and other related charges 2,427  0.4  1,482  0.2  945  n/m
Operating income $ 216,459  37.7  % $ 224,600  36.7  % $ (8,141) (3.6) %
Share-based compensation expense 5,639  1.0  2,724  0.4  2,915  107.0 
Depreciation and amortization 13,373  2.3  10,951  1.8  2,422  22.1 
Restructuring and other related charges 2,427  0.4  1,482  0.2  945  n/m
Majority-owned equity investees AOI 4,635  0.8  1,276  0.2  3,359  263.2 
AOI $ 242,533  42.3  % $ 241,033  39.4  % $ 1,500  0.6  %
International and Other Segment Results
The following table sets forth our International and Other segment results for the periods indicated.
  Three Months Ended March 31,    
  2021 2020    
(In thousands) Amount % of
Revenues,
net
Amount % of
Revenues,
net
$ change % change
Revenues, net $ 121,167  100.0  % $ 124,828  100.0  % $ (3,661) (2.9) %
Operating expenses:
Technical and operating (excluding depreciation and amortization)
76,309  63.0  80,136  64.2  (3,827) (4.8)
Selling, general and administrative 22,526  18.6  27,458  22.0  (4,932) (18.0)
Depreciation and amortization 4,949  4.1  8,896  7.1  (3,947) (44.4)
Impairment charges 16,055  13.3  —  —  16,055  n/m
Restructuring and other related charges 4,490  3.7  3,977  3.2  513  12.9 
Operating loss $ (3,162) (2.6) % $ 4,361  3.5  % $ (7,523) n/m
Share-based compensation expense 1,231  1.0  609  0.5  622  102.1 
Depreciation and amortization 4,949  4.1  8,896  7.1  (3,947) (44.4)
Impairment and other charges 16,055  13.3  —  —  16,055  n/m
Restructuring and other related charges 4,490  3.7  3,977  3.2  513  12.9 
AOI $ 23,563  19.4  % $ 17,843  14.3  % $ 5,720  32.1  %
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Revenues, net
Revenues, net decreased $42.6 million to $691.7 million for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020. The net change by segment was as follows:
  Three Months Ended March 31,    
(In thousands) 2021 % of total 2020 % of total $ change % change
Domestic Operations $ 573,969  83.1  % $ 611,893  83.4  % $ (37,924) (6.2) %
International and Other 121,167  17.5  124,828  17.0  (3,661) (2.9)
Inter-segment Eliminations (3,395) (0.5) (2,346) (0.3) (1,049) 44.7 
Consolidated revenues, net $ 691,741  100.1  % $ 734,375  100.1  % $ (42,634) (5.8) %
Domestic Operations
The decrease in Domestic Operations revenues, net was attributable to the following:
  Three Months Ended March 31,    
(In thousands) 2021 % of total 2020 % of total $ change % change
Advertising $ 199,142  34.7  % $ 213,226  34.8  % $ (14,084) (6.6) %
Distribution and other 374,827  65.3  398,667  65.2  (23,840)