EDGAR 10-K Filing

Company CIK: 1514991
Filing Year: 2025
Filename: 1514991_10-K_2025_0001514991-25-000009.json

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ITEM 1. BUSINESS
Item 1. Business.
AMC Networks Inc. is a Delaware corporation with its principal executive offices located at 11 Penn Plaza, New York, NY 10001. AMC Networks Inc. is a holding company and conducts substantially all of its operations through its majority owned or controlled subsidiaries. Unless the context otherwise requires, all references to "we," "our," "us," "AMC Networks" or the "Company" refer to AMC Networks Inc., together with its subsidiaries. "AMC Networks Inc." refers to AMC Networks Inc. individually as a separate entity. Our telephone number is (212) 324-8500.
AMC Networks Inc. was incorporated on March 9, 2011 as an indirect, wholly-owned subsidiary of Cablevision Systems Corporation (Cablevision Systems Corporation and its subsidiaries are referred to as "Cablevision"). On June 30, 2011, Cablevision spun off the Company, and AMC Networks Inc. became an independent public company.
OVERVIEW
AMC Networks is a global entertainment company known for its popular and award-winning content. We distribute our content to audiences globally on an array of distribution platforms, including linear networks, subscription streaming services and other ad-supported streaming platforms, as well as through licensing arrangements. We have an extensive library of television and film properties, including several storied franchises such as The Walking Dead Universe, the Anne Rice catalog, and the Agatha Christie library that are well-known to global audiences.
We have operated in the entertainment industry for more than 40 years, and over that time we have created targeted and focused video entertainment products that we own and operate and that are powered by distinguished brands, including AMC, AMC+, BBC AMERICA ("BBCA"), IFC, SundanceTV, We TV, Acorn TV, Shudder, Sundance Now, ALLBLK, HIDIVE and IFC Films.
Through our AMC Studios in-house studio, production and distribution operation, we own and control a significant portion of the original scripted series that we deliver to viewers on our linear and streaming platforms. Our ability to produce and own high quality content has provided us with the opportunity to license our owned content to leading third-party platforms. Our owned content as well as the content that we license is distributed domestically and internationally across linear networks, digital streaming services, home video and syndication.
Internationally, we deliver programming that reaches subscribers in more than 100 countries and territories around the world. The international division of the Company, AMC Networks International ("AMCNI"), consists of our premier AMC global brand as well as a portfolio of popular, locally recognized brands delivering programming in a wide range of genres.
AMC Networks also operates a film distribution business that distributes independent narrative and documentary films under three distinct film brands: IFC Films, RLJ Entertainment Films ("RLJE Films") and Shudder. The film distribution business also operates IFC Films Unlimited, a subscription streaming service comprised of a broad range of theatrically-released and award winning titles from its distribution labels.
Strategy
Our strategy is to create, showcase and curate high-quality, brand-defining content that appeals to distinct audiences as we aim to maximize the distribution, advertising and content licensing revenue of each of our branded services.
Our strategic areas of focus are:
Continued Development of High-Quality Original Content including Owned and Controlled Content and Valuable IP. We intend to continue to develop strong high-quality original content across our linear networks and streaming services to optimize our distribution, advertising and content licensing revenue, further enhance our brands, strengthen our engagement with our viewers, subscribers, distributors and advertisers, and to build viewership and attract and retain subscribers for our streaming services.
Multi-Platform Distribution Approach to Content Monetization and Distribution while Growing Streaming Offerings and Targeted Brands. We distribute our content across an array of distribution platforms, including our own linear networks at cost-effective rates, subscription streaming services and ad-supported streaming platforms, as well as through licensing arrangements with other distributors and platforms so that our viewers can access our content where, when and how they want to watch it. As part of our strategy, we are aiming to expand distribution of our services and content in order to increase our total addressable market.
Our targeted streaming strategy is to serve distinct audiences and build loyal and engaged fan communities around each service. With our targeted approach, we are serving audiences with streaming offerings that are companions to (rather than competitive with) the larger general entertainment streaming services. As we assess the optimal level and mix of programming
across our platforms, we will prioritize curation to provide compelling offerings that aim at maximizing subscriber engagement and retention.
We have launched several of our services, most notably AMC+, Acorn TV, Shudder and HIDIVE, in key international markets, including Canada, parts of Europe, Australia and New Zealand. We will continue to be opportunistic in determining the most optimal monetization strategy for new international markets.
Growth and Innovation in Advertising and Advertising Technologies. We continue to leverage our high-quality popular content on our networks to optimize our advertising revenue. In addition, we are embracing an array of new advertising opportunities, including an expanding and robust presence on free ad-supported streaming ("FAST") and advertising video on demand ("AVOD") platforms. We currently have a total of 19 active distinct channels featuring our content, in different configurations, across major FAST platforms, such as Pluto TV, Plex, Sling TV and Samsung TV Plus.
Maintain Financial Discipline With Focus on Free Cash Flow. We are aiming to become more efficient to drive free cash flow and maximize stockholder value, including through streamlining our organization; remaining prudent with our investments in programming, including continuing to focus on reducing programming spend to historical levels; implementing, and tracking comprehensive goals, strategies and tactics driving efficiencies in the business; enhancing our technology and customer service; improving marketing; and reducing corporate costs.
SEGMENTS
We manage our business through the following two operating segments:
•Domestic Operations: Consists of our five programming networks, our streaming services, our AMC Studios operation and our film distribution business. Our programming networks are AMC, We TV, BBC AMERICA, IFC, and SundanceTV. Our streaming services consist of AMC+ and our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, ALLBLK, and HIDIVE). Our AMC Studios operation produces original programming for our programming services and third parties and also licenses programming worldwide. Our film distribution business includes IFC Films, RLJ Entertainment Films and Shudder. The operating segment also includes AMC Networks Broadcasting & Technology, our technical services business, which primarily services the programming networks.
•International: Consists of AMC Networks International ("AMCNI"), our international programming businesses consisting of a portfolio of channels distributed around the world.
In January 2024, the Company updated the name of its previously titled "International and Other" operating segment to "International" due to the divestiture of the 25/7 Media production services business on December 29, 2023, which was the sole component of the operating segment that comprised “Other.” This update did not constitute a change in segment reporting, but rather an update in name only. Prior period segment information contained in this report for the "International" operating segment includes the results of the 25/7 Media production services business through the date of divestiture.
For financial information of the Company by operating segment, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Consolidated Results of Operations" and Note 20 to the accompanying consolidated financial statements.
Domestic Operations
Our flagship AMC brand consists of the AMC programming network, AMC+ streaming service and AMC Studios.
AMC programming network
•AMC is the home of some of the most popular and acclaimed dramas on television. As of December 31, 2024, AMC reached approximately 60 million subscribers(1) and had distribution agreements with all major United States ("U.S.") and Canada distributors.
•In 2024, AMC continued to expand The Walking Dead Universe franchise with the premiere of The Walking Dead: The Ones Who Live, featuring the iconic characters Rick and Michonne from the original series. The Walking Dead: The Ones Who Live was a fan-favorite sensation that quickly became the most watched series on AMC+ so far. Also in 2024, AMC brought viewers the second season in another popular spin-off in The Walking Dead Universe, The Walking Dead: Daryl Dixon, titled The Book of Carol. Both The Walking Dead: Daryl Dixon and another spin-off in The Walking Dead Universe, The Walking Dead: Dead City, will return for new seasons in 2025.
•In 2024, AMC brought viewers the popular and critically acclaimed second season of Anne Rice’s Interview with the Vampire, the first series in a burgeoning Anne Rice Immortal Universe, and announced a new series set to premiere in late 2025 called Anne Rice’s Talamasca: The Secret Order after kicking 2025 off with a second season of Anne Rice’s Mayfair Witches.
•In 2025, AMC is set to present the third season of Dark Winds, “perhaps the most ambitious Native-led TV show ever made,” according to The Hollywood Reporter, starring Zahn McClarnon and executive produced by Robert Redford and George R.R. Martin. The series has achieved 100% Fresh ratings on Rotten Tomatoes for each of its first two seasons.
•AMC's film library consists of films that are licensed under long-term contracts with major studios such as Warner Bros., Sony, MGM, NBC Universal, Paramount, Lionsgate and Buena Vista. AMC generally structures its contracts for the exclusive cable television rights to air the films during identified window periods.
AMC+ streaming service
•Launched in 2020, AMC+ is the Company’s premium streaming bundle featuring an extensive lineup of popular and critically acclaimed programming from AMC, BBC AMERICA, IFC and SundanceTV along with full access to targeted streaming services Shudder, Sundance Now and the IFC Films library. Its content library includes fan favorites Mad Men, Interview with the Vampire, Killing Eve, The Killing, A Discovery of Witches, Halt & Catch Fire, Hell on Wheels, Turn: Washington’s Spies, The Terror, Into the Badlands, Preacher, Orphan Black, Rectify, Portlandia, Gangs of London and series from The Walking Dead Universe, among many others.
•In 2024, AMC+ continued to grow the popular The Walking Dead Universe franchise with two new installments, including the record-setting The Walking Dead: The Ones Who Live as well as the second season of the acclaimed The Walking Dead: Daryl Dixon titled The Book of Carol, and expanded its identity as a destination for fans with the celebrated second season of Anne Rice’s Interview with the Vampire, and the long-awaited final season of Snowpiercer. AMC+ also continued its legacy of producing new critically-acclaimed dramas with Monsieur Spade starring Clive Owen, the propulsive crime drama Parish starring Breaking Bad’s Giancarlo Esposito, as well as featuring a slate of premium films in partnership with IFC Films including Palme d’Or nominee The Taste of Things and the National Board of Review winner Ghostlight.
•AMC+ is available to subscribers through either ad-supported or commercial free plans through our direct-to consumer ("DTC") applications, as well as through multi-channel video programming distributors ("MVPDs") and virtual MVPDs, and digital streaming platforms such as Amazon Prime Video Channels, Apple TV Channels and The Roku Channel.
•AMC+ is currently available in several international markets including Canada, Spain, Australia and New Zealand.
1 Estimated U.S. subscribers as measured by Nielsen
AMC Studios
•AMC Studios is AMC Networks’ in-house production and distribution operation which launched in 2010 with The Walking Dead, the highest-rated show on cable television so far.
•Since then, AMC Studios has produced several critically acclaimed, award-winning and culturally distinctive originals for AMC Networks’ suite of channels and services including Anne Rice’s Interview with the Vampire, Anne Rice’s Mayfair Witches, Dark Winds, The Walking Dead: Dead City, The Walking Dead: Daryl Dixon, Fear the Walking Dead, Halt and Catch Fire, The Terror anthology, Preacher, and the Peabody Award-winning Rectify, as well as unscripted series Ride with Norman Reedus and James Cameron’s Story of Science Fiction.
•Upcoming AMC Studios series include Anne Rice’s Talamasca: The Secret Order, and The Terror: Devil in Silver for AMC and AMC+. AMC Studios also produced Sanctuary: A Witch's Tale for Sundance Now, which premiered in January 2024.
•In addition to producing series for AMC Networks suite of channels, AMC Studios is an executive producer of the hit series SILO for Apple TV+.
Other Programming Networks
•As of December 31, 2024, We TV reached approximately 59 million subscribers(1) and had distribution agreements with all major U.S. distributors.
•Driven by unscripted originals, We TV continues to be the #1 U.S. cable network for women, in particular black women, on Friday nights and home to a popular slate of series and franchises including Love After Lockup, Life After Lockup, Mama June: Family Crisis, Toya & Reginae, and the celebrated return of the We TV’s pioneers of family reality TV, the Braxton family, with 2024’s new docuseries The Braxtons.
•In 2024, We TV also premiered several new unscripted series, including The Barnes Bunch, following NBA legend Matt Barnes and his family; Deb’s House, a new competition reality series featuring Hip Hop pioneer and mogul Debra Antney, who also serves as executive producer; and the new reality series Tia Mowry: My Next Act.
•We TV's programming also includes popular series S.W.A.T., 9-1-1, Bones, NCIS, and Law & Order as well as feature films, with certain exclusive license rights from studios such as Paramount, MGM, Sony, Lionsgate, NBC Universal, and Warner Bros.
•As of December 31, 2024, BBCA reached approximately 56 million subscribers(1) and had distribution agreements with all major U.S. distributors.
•BBCA is a hub of innovative, culturally contagious programming with “Britishness” at its core. The network has attracted wide critical acclaim for its award-winning natural history programming from the BBC. In 2024, BBCA brought viewers a new landmark series narrated by Sir David Attenborough Planet Earth: Mammals from the award-winning BBC Natural History Unit, with the next landmark, Planet Earth: Asia, planned for 2025.
•BBCA is also the home of The Graham Norton Show, a popular United Kingdom ("U.K.") late night talk show with a lineup of celebrity guests.
1 Estimated U.S. subscribers as measured by Nielsen
•As of December 31, 2024, IFC reached approximately 52 million subscribers(1) and had distribution agreements with all major U.S. distributors.
•IFC is the home of offbeat, unexpected comedies. Originals include the Emmy-nominated Cooper’s Bar starring Rhea Seahorn, In the Kitchen with Harry Hamlin, and SisterS starring Sarah Goldberg.
•IFC's slate includes a mix of fan favorite movies and popular television comedies ranging from Two and a Half Men and Everybody Loves Raymond to classic TV favorites such as Gilligan’s Island and Sanford and Son.
•As of December 31, 2024, SundanceTV reached approximately 49 million subscribers(1) and had distribution agreements with all major U.S. distributors.
•SundanceTV launched in 1996 and is committed to the mission of celebrating creativity, distinctive storytelling and iconic films.
•SundanceTV attracts viewer and critical acclaim for its original unscripted programming, including Off Script with The Hollywood Reporter featuring the entertainment industry’s leading talents, the True Crime Story franchise featuring Smugshot and It Couldn’t Happen Here from Hilarie Burton Morgan, and new limited series such as 2024’s The Tailor of Sin City.
Other Streaming Services
The Company’s streaming portfolio of branded subscription services serve a targeted, passionate fanbase with content depth, curation and community. The content on these platforms is a mix of licensed and owned original programming. Our various services are distributed in several key markets internationally, including Canada, the U.K., parts of Europe, Australia and New Zealand.
Our streaming services, including AMC+ and the following targeted services, ended 2024 with approximately 12.4 million aggregate paid streaming subscribers2.
•Acorn TV is North America’s largest streaming service specializing in premium British and international mysteries and dramas from around the world.
•Acorn TV’s 2024 programming slate featured new seasons of exclusive original series including the long-running detective drama The Brokenwood Mysteries, Dalgliesh based on the bestselling novels by PD James, British crime drama Whitstable Pearl, the Italian set Signora Volpe starring Emilia Fox, Harry Wild starring and executive produced by Emmy and Golden Globe winner Jane Seymour, the New Zealand set My Life Is Murder starring Lucy Lawless, and new breakout series Inspector Ellis starring Olivier Award winner Sharon D Clarke, among others.
•In 2024, Acorn TV also went into production on two new series filming in Ireland: Irish Blood, starring and executive produced by Alicia Silverstone; and Art Detectives starring True Blood’s Stephen Moyer. The new series Murder Before Evensong was also greenlit, which is based on the first novel in the Sunday Times best-selling series by British author the Reverend Richard Coles and starring Matthew Lewis of the Harry Potter franchise.
1 Estimated U.S. subscribers as measured by Nielsen
2 A paid subscription is defined as a subscription to a direct-to-consumer service or a subscription received through distributor arrangements, in which we receive a fee for the distribution of our streaming services.
•Long-running fan favorite hit series returning in 2025 include Midsomer Murders, The Chelsea Detective, Murdoch Mysteries, and The Madame Blanc Mysteries, along with international favorites such as Darby and Joan set in the Australian outback and the South African production Recipes for Love & Murder.
•Acorn TV is currently available in key international markets including Canada, the U.K., Australia, New Zealand, and parts of Europe.
•Called “one of the best streaming services in the world” by RogerEbert.com, Shudder offers a premium selection in genre entertainment covering horror, thrillers and the supernatural, bringing subscribers Hollywood favorites, cult classics, original series, and a critically acclaimed slate of new and exclusive genre films.
•2024 programming highlights included such critic and audience hits as In A Violent Nature, Late Night with the Devil, Oddity, Baghead, Infested, Stopmotion, You’ll Never Find Me, Azrael, V/H/S/Beyond and the Nicolas Cage feature Arcadian, among many others.
•Shudder’s annual programming events included “Halfway to Halloween,” a month-long event featuring new movies, series and specials including a new season of The Last Drive-In with Joe Bob Briggs and Shudder’s #1 movie premiere so far Late Night with the Devil. Shudder also featured a super-sized new “Season of Screams” stunt, a three-month programming event surrounding Halloween featuring live events, watch parties and new releases every week, including the return of the fan-favorite found footage franchise V/H/S with its most watched installment yet V/H/S/Beyond, a new season of the popular reality competition series The Boulet Brothers’ Dragula, and the series premiere of Mark Duplass’s latest iteration of his cult Creep franchise with the six-part anthology series The Creep Tapes.
•Shudder is currently available in several international markets including Canada, the U.K., Ireland, Australia and New Zealand.
•Sundance Now offers a rich selection of engrossing dramas, imaginative fantasy, gripping mysteries and true crime, riveting documentaries and intelligent thrillers from gifted storytellers around the world.
•In 2024, the service debuted a strong slate of both original and acquired series, including The Long Shadow featuring David Morrissey and Toby Jones, Black Snow starring Travis Fimmel, Fifteen-Love featuring Aidan Turner, White Lies starring Natalie Dormer, The Newsreader with Sam Reid and Anna Torv, and a trio of fan favorite supernatural dramas Sanctuary: A Witch’s Tale, Domino Day: Lone Witch and Midwich Cuckoos: Village of the Damned.
•Sundance Now also houses a critically-acclaimed and award-winning library, including popular supernatural drama A Discovery of Witches, multi-Emmy winner State of the Union, glamorous international thriller Riviera, celebrated Norwegian Noir Wisting starring Carrie-Anne Moss, and Palme d’Or nominee The Taste of Things, among many other independent films and series.
•ALLBLK is focused on content from the Black perspective utilizing but not limited to Black creators, storytellers, cast and crew. An invitation to a world of streaming entertainment that is inclusively, but unapologetically - Black.
•Featuring a diverse lineup of content that spans genres and generations, ALLBLK premiered several new series, films and specials in 2024, including the final season of long running hit series Double Cross, new seasons of fan favorite series Kold & Windy and Wicked City; popular original films Lunar Lockdown, The Influencer and The Match; and hit comedy special Gary “G Thang” Johnson: Sitcho Ass Down.
•ALLBLK is also the streaming home for We TV’s engaging slate of unscripted originals, including celebrity docuseries such as Toya & Reginae, The Braxtons and Tia Mowry: My Next Act, breakout reality competition series
Deb’s House featuring Hip Hop pioneer and mogul Debra Antney, and the wildly popular Love After Lockup franchise.
•ALLBLK greenlit and completed production on hitman series Wild Rose, created by and starring R&B sensation Omarion, and the highly anticipated original film Operation: Aunties directed by Wendy Raquel Robinson and starring Martin’s Tisha Campbell.
•HIDIVE LLC (“HIDIVE”) operates an anime-focused streaming service offering a robust library of entertainment that includes television series, movies, and original video animations in both subtitled and dubbed audio formats. In addition to its deep and diverse catalog, HIDIVE offers first-run simulcasts of the best new anime at or near the same time as their Japanese broadcast, which in 2024 included the global hit series【OSHI NO KO】 Season 2, I Parry Everything!, Chained Soldier, and Loner Life in Another World, among others.
•HIDIVE is currently available in the U.S. and Canada as well as key overseas markets including the U.K., Ireland, Australia, and New Zealand.
•AMC Networks’ subsidiary Sentai Holdings, LLC (“Sentai”) is a leading global acquirer, producer and supplier of anime content that it distributes through its affiliates including HIDIVE, The Anime Network and Sentai Filmworks, as well as select commercial partners.
Film Distribution
AMC Networks also operates a film business that distributes movies under three very distinct brands: IFC Films, RLJ Entertainment Films and Shudder. The IFC Films brand is known for being a home to independent and auteur focused films, attracting high-profile talent and filmmakers. RLJ Entertainment Films is a market leader in acquiring tentpole and cast-driven genre content with an eye towards broad commercial appeal. Shudder operates the highest profile, horror-focused streaming service in the United States, and has become the prime destination for audiences to discover trend-setting filmmakers in the horror landscape. The film distribution business also operates IFC Films Unlimited, a subscription streaming service comprised of a broad range of theatrically-released and award-winning titles from its distribution brands. Each brand has a distinct approach while complementing one another - each synonymous with quality and commercial content, consistently debuting the next generation of distinguished filmmakers.
•IFC Films is a leading distributor of high-quality, talent-driven independent films, which included 17 new releases in 2024.
•IFC Films is a leader in progressive windowing strategies and pioneered the “day and date” model to maximize revenue and marketing effectiveness.
•IFC Films is known for its fostering approach to filmmakers, distributing the early films of directors such as Christopher Nolan, Greta Gerwig, Barry Jenkins, Alfonso Cuaron and Richard Linklater.
•Notable 2024 releases include the Oscar shortlisted international films The Taste of Things and Memoir of a Snail; Shudder’s Late Night with the Devil and Oddity; and RLJE Films’ Arcadian and Little Bites, among others.
AMC Networks Broadcasting & Technology
•AMC Networks Broadcasting & Technology is a full-service network programming feed origination and distribution company located in Bethpage, New York, which primarily services most of the national programming networks of the Company.
•AMC Networks Broadcasting & Technology consolidates origination and satellite communication functions in a 67,000 square-foot facility designed to keep AMC Networks at the forefront of network origination and distribution technology. AMC Networks Broadcasting & Technology has 40 plus years of experience across its network services groups, including network origination, affiliate engineering, network transmission, and traffic and scheduling that provide day-to-day delivery of any programming network, in high definition or standard definition.
International
AMCNI, consisting of our international programming businesses, operates a portfolio of channels centered around the flagship AMC channel and local channels supported by local production in the U.K., Latin America, and parts of Europe.
AMC Networks International
•AMCNI, the international division of the Company, delivers entertaining and acclaimed programming that reaches subscribers in more than 100 countries and territories around the world, through operational centers in London, Madrid, Budapest, Prague, Warsaw, Miami, Buenos Aires and Mexico City.
•AMCNI consists of our global brand, AMC, as well as a portfolio of popular, locally recognized brands delivering programming in a wide range of genres, including sports, film, cooking, lifestyle, crime and investigation, science, documentary and kids.
•Our local and regional channels are programmed for local audiences and language, and we develop and license local content that is tailored to individual market tastes.
•AMCNI operates a number of joint venture partnerships and managed channel services as well as DTC services.
◦A joint venture with Paramount International Networks delivers a portfolio of seven entertainment channels which is managed from London, including TRUE CRIME, TRUE CRIME XTRA, LEGEND and LEGEND XTRA (U.K. only) CBS Justice, FILMCAFE, and CBS Reality (available outside of the U.K.).
◦Dreamia, a joint venture with NOS in Portugal, delivers channels including Canal Hollywood, Canal Panda, Panda Kids, Biggs, Blast, Casa e Cozinha, and recently launched the over-the-top ("OTT") application Panda+.
•The UK portfolio of channels reaches viewers via the Sky, Virgin Media, Freesat and Freeview platforms and on demand via the WATCH FREE UK player available from Freesat, Freeview and YouView and downloadable via IOS, Android, and all major device/manufacturer stores. A significant part of AMCNI UK’s content library is also available via partnerships with major streaming platforms such as ITVx, FreeVee, Pluto TV, Rakuten TV and Samsung TV.
•Highlights of the top AMCNI locally recognized channels are detailed below:
•El Gourmet is a “go-to” TV culinary destination for Latin American audiences that connects with its viewers by celebrating local traditions and featuring culinary experiences from all over the world. Its mission is to reunite family and friends around the table to make memorable life experiences.
•Launched over two decades ago, El Gourmet offers 100% of its content in Spanish, with over 75% original productions and more than 200 episodes premiering each year, showcasing some of the greatest celebrity cooks of this region.
•Jim Jam is a pre-school kids channel focused on education, providing a stimulating, engaging and safe environment for 2-5 year olds and contributing to their social, intellectual, and emotional development by providing learning through fun.
•Popular content includes Bing, Fireman Sam, Thomas and Friends and Caillou.
•Jim Jam is available in over 60 EMEA countries.
•Canal Hollywood is one of the leading pay-TV film channels in Spain and Portugal, offering a wide selection of movies produced by major U.S. studios.
•Genres include comedy, drama, thriller, western, musical, and science fiction and the industry’s biggest stars.
•Sports 1 & Sports 2 are basic cable channels in our core Central European territories.
•The channels broadcast European football, European Handball, NBA and ice hockey among other live sports events.
REGULATION
Our businesses are subject to and affected by regulations of U.S. federal, state and local government authorities, and our international operations are subject to laws and regulations of regulators in the countries in which they operate, as well as international bodies, such as the European Union. The Federal Communications Commission (the "FCC") regulates U.S. programming networks directly in some limited respects; other FCC regulations, although imposed on cable television operators, satellite operators or other MVPDs, affect programming networks indirectly. The rules, regulations, policies and procedures affecting our businesses are constantly subject to change and legislative and regulatory proposals increasingly seek to cover all sources of content, including the digital platforms over which we offer content, which has affected and may continue to affect our regulatory burdens. The descriptions below are summary in nature and do not purport to describe all present and proposed laws and regulations affecting our businesses.
Closed Captioning and Other Accessibility
Our networks are required to provide closed-captioning of programming for the hearing impaired, and comply with other regulations designed to make our content more accessible, and we are required to provide closed captioning on certain video content that we offer on the Internet or through other Internet Protocol distribution methods. We must also ensure that our DTC applications can pass through closed captions on content and comply with certain other accessibility requirements. The U.S. Congress and the FCC periodically consider proposals to enhance that accessibility. Some of those proposals, if adopted, would increase our obligations substantially.
CALM Act
FCC rules require MVPDs to ensure that all commercials comply with specified volume standards, and our distribution agreements generally require us to certify compliance with such standards.
Emergency Alert Codes or Attention Signals
We may not include emergency alert codes or attention signals, or simulations of them, in our content under any circumstances other than a genuine alert, an authorized test of the emergency alert system, or a permissible public service announcement.
Obscenity Restrictions
Cable operators and other MVPDs are prohibited from transmitting obscene programming, and our distribution agreements generally require us to refrain from including such programming on our networks.
Program Carriage
The Communications Act and the FCC's program carriage rules prohibit distributors from favoring their affiliated programming networks over unaffiliated similarly situated programming networks in the rates, terms and conditions of carriage agreements between programming networks and cable operators or other MVPDs. Despite these rules, certain regulatory interpretations and court decisions make it more difficult for our programming networks to challenge a distributor’s decision to decline to carry one of our programming networks or discriminate against one of our programming networks.
Packaging Programming and Volume Discounts
The FCC from time to time examines whether to adopt rules restricting how programmers package and price their networks, or whether to impose other restrictions on carriage agreements between programmers and MVPDs. We do not currently require distributors to carry more than one of our national programming networks in order to obtain the right to carry a particular national programming network. However, we generally negotiate with a distributor for the carriage of all of our national networks concurrently, and we offer volume discounts to distributors who make our programming available to larger numbers of subscribers or who carry more of our programming networks.
Some states also have sought to regulate the manner in which MVPDs package and offer programming. We generally do not allow our networks or individual programs on those networks to be offered by distributors on an "a la carte" basis.
Effect of "Must-Carry" and "Retransmission Consent" Requirements
The FCC's implementation of the statutory "must-carry" obligations requires cable and DBS operators to give certain broadcasters preferential access to channel space and preferential channel positions, and FCC "retransmission consent" rules allow broadcasters to require cable and DBS operators to carry broadcast-affiliated networks as a condition of access to the local broadcast station and to charge substantial fees for both carriage of the local broadcast station and the broadcast-affiliated networks. In contrast, programming networks, such as ours, have no guaranteed right of carriage on cable television or DBS systems nor any guaranteed channel position. These carriage laws may reduce the amount of channel space that is available for carriage of our networks by cable television systems and DBS operators, or the amount of programming funds that cable and DBS operators have available for carriage of our networks.
Website and Streaming Service Requirements
We maintain various websites that provide information regarding our businesses and offer content for sale. The operation of these websites may be subject to a range of federal, state and local laws such as privacy, data security, accessibility, child safety, oversight of user-generated content, and consumer protection regulations. For example, most states have enacted laws that impose data security and security breach obligations, and new frameworks regulating consumer privacy have recently been established at the state level and overseas, including the GDPR, the CCPA, the Video Privacy Protection Act (the "VPPA") and other similar comprehensive privacy laws that have been enacted in other states. The GDPR, the CCPA and other state laws impose, among other things, stringent operational requirements for processors and controllers of personal data, including expansive disclosures about how personal information is to be used, and significant fines for violations. In addition, the FCC from time to time considers whether some or all websites or DTC applications offering video programming should be considered MVPDs and regulated as such, which would increase our regulatory costs and obligations substantially.
Other Regulation
The FCC also imposes rules that may impact us regarding a variety of issues such as advertising in children's television and telemarketing. Programming businesses are also subject to regulation by regulators in the countries in which they operate, as well as international bodies, such as the European Union. In certain countries, these regulations include restrictions on the types of advertising that can be sold on our networks, programming content requirements, requirements to make programming available on non-discriminatory terms and local content quotas.
COMPETITION
Our programming services, consisting of linear networks and streaming services, operate in three highly competitive markets. First, our programming services compete with other programming services to obtain distribution on cable television
systems and other multichannel video programming distribution systems, and ultimately for viewing by each distributor's subscribers. Second, our programming services compete with other programming services and other sources of video content, to secure desired entertainment programming. Third, our programming services compete with other sellers of advertising time and space, including other cable programming networks, radio, newspapers, outdoor media and, increasingly, internet sites. The success of our businesses depends on our ability to license and produce content for our programming services that is adequate in quantity and quality and will generate satisfactory viewer ratings. In each of these cases, some of our competitors are large publicly held companies that have greater financial resources than we do.
Distribution of Programming Services
The business of distributing programming services to cable television systems and other MVPDs and licensing of original programming for distribution is highly competitive. Our programming services face competition from other programming networks and services for carriage by a particular MVPD, and for the carriage on the service tier that will attract the most subscribers. Once our programming service is selected by a distributor for carriage, that service competes for viewers not only with the other programming services available on the distributor's system, but also with over-the-air broadcast television, Internet-based video and other online services, mobile services, radio, print media, motion picture theaters, DVDs, and other sources of information and entertainment. The continued growth of subscription streaming services, such as Netflix and Amazon Prime, and the increased offerings by virtual MVPDs have increased the competition for audiences by providing an alternative to the traditional television content distribution model by changing when, where and how audiences consume video content.
Important to our success in each area of competition we face are the prices we charge for our programming services, the quantity, quality and variety of the programming offered on our services, and the effectiveness of our services' marketing efforts. The competition for viewers among advertiser supported networks is directly correlated with the competition for advertising revenues with each of our competitors.
Our ability to successfully compete with other networks and services may be hampered because the cable television systems or other MVPDs through which we seek distribution may be affiliated with other programming networks or services. In addition, because such distributors may have a substantial number of subscribers, the ability of such programming services to obtain distribution on the systems of affiliated distributors may lead to increased distribution and advertising revenue for such programming networks or services because of their increased penetration compared to our programming services. Even if such affiliated distributors carry our programming services, such distributors may place their affiliated programming network on a more desirable tier, thereby giving the affiliated programming network a competitive advantage over our own.
New or existing programming networks that are affiliated with broadcasting networks like ABC, CBS, Fox or NBC may also have a competitive advantage over our programming networks in obtaining distribution through the "bundling" of agreements to carry those programming networks with agreements giving the distributor the right to carry a broadcast station affiliated with the broadcasting network.
Part of our strategy involves exploiting identified segments of the cable television viewing audience that are generally well defined and limited in size. Our networks have faced and will continue to face increasing competition as other programming networks and online or other services seek to serve the same or similar niches.
We also seek to increase our content licensing revenues by expanding the opportunities for licensing our programming through other media platforms and we compete with other programming companies in this market based on the desirability of our programming.
Sources of Programming
We also compete with other programming networks and other distributors including digital distribution platforms to secure desired programming. Most of our original programming and all of our acquired programming is obtained through agreements with other parties that have produced or own the rights to such programming. Competition for this programming will increase as the number of programming networks and other distributors increases. Other programming networks or streaming services that are affiliated with programming sources such as movie or television studios or film libraries may have a competitive advantage over us in this area.
With respect to the acquisition of entertainment programming, such as syndicated programs and movies that are not produced by or specifically for networks, our competitors include national broadcast television networks, local broadcast television stations, other cable programming networks, Internet-based video content distributors, and video-on-demand programs. Some of these competitors have exclusive contracts with motion picture studios or independent motion picture distributors or own film libraries.
Competition for Advertising Revenue
Our programming networks, and ad-supported streaming services, must compete with other sellers of advertising time and space, including other MVPDs, radio, newspapers, outdoor media and increasing shifts in spending toward online and mobile offerings from more traditional media. While the evolution of advanced advertising technologies, including addressable advertising and programmatic buying, creates additional monetization opportunities, we compete with other programming networks to gain an advantage in the use of such technologies. We compete for advertisers on the basis of rates we charge and also on the number and demographic nature of viewers who watch our programming. Advertisers will often seek to target their advertising content to those demographic categories they consider most likely to purchase the product or service they advertise. Accordingly, the demographic make-up of our viewership can be equally or more important than the number of viewers watching our programming.
HUMAN CAPITAL RESOURCES
We are passionate about creating and curating celebrated series and films across distinct brands that connect with passionate fans and audiences in meaningful ways. We believe the key to our success and our ability to engage audiences in this way lies in the strength of our people and our culture. Our human capital management objectives are to invest in and support our employees so that we are able to attract, develop, motivate and retain a high performing workforce.
As of December 31, 2024, our global workforce included approximately 1,800 employees. In addition, for certain of our productions, the Company, through in-house and third-party production service companies, engages the services of writers, directors, actors and various crew members who are subject to certain specially negotiated collective bargaining agreements. Since these agreements are generally entered into on a per-project basis, negotiations occur on various agreements throughout the year. We believe that our relations with labor unions and our employees are generally good. Some examples of our human resources programs and initiatives are described below.
Employee Attraction, Retention and Training
Our Company has a proud legacy as the home to many of the greatest stories and characters in the history of TV and film. This history is imbued in our corporate culture and values and informs who we are and our mission to be a premier destination for passionate and engaged fan communities around the world with entertainment that stands out, drives popular culture and fuels the Company’s growth. We aim to recruit and retain top talent that reflects the communities where we live and work and the audiences who engage with our content by emphasizing our competitive rewards; offering opportunities that support employees both personally and professionally; promoting continuous learning and development at all levels; and through our commitment to fostering a positive, inclusive and collaborative corporate culture. We assess employee sentiment annually through a global employee engagement survey to identify what we are doing well and what opportunities and challenges we should address in the coming year.
Health, Financial, Family and Well-being Benefits
Our benefit offerings are designed to meet the range of needs of our global workforce and support the health, finance and well-being of our employees. While offerings vary by location, in the U.S. they generally include: employee and family medical, dental and vision coverage; life and disability insurance coverage; family resources, such as adoption assistance, child/elder care, and college planning; retirement savings with a company match; identity theft protection; and employee assistance programs.
Compensation
Our approach to compensation is to pay for performance, encouraging and rewarding employees who deliver on our short- and long-term objectives. We aim to pay competitively to market across departments, levels and geographies to ensure equitable compensation, by applying our compensation policies consistently among our employees.
Learning & Development
Our talent management and development team promotes year-round learning opportunities for employees throughout the organization, including live in-person and virtual workshops and annual trainings across a variety of topics. We also partner with established industry organizations like CTAM, NAMIC and The WICT Network to provide development opportunities from leading educational institutions including the Harvard Business School, Stanford University and INSEAD, as well as entertainment and production organizations like the Handy Foundation and Reel Works to support and train the next generation of storytellers. Additionally, we promote a workplace culture where everyone treats each other with kindness and respect, prioritizing the well-being and security of our people, content and information through ongoing trainings covering anti-harassment and discrimination, inclusion and cultural awareness, information security and more.
Diversity and Inclusion
We seek to present programming that authentically speaks to and reflects the wide range of audiences we reach every day. We support opportunities for a broad range of voices to be represented in front of and behind the camera and to use our platforms to bring their visions to life. We encourage this through our "Future of Film" initiative, spotlighting works from emerging creative talents of all backgrounds. Additionally, we celebrate the diversity of our audiences through our ongoing heritage month collections.
Community & Social Impact
Giving and social impact programs and initiatives are an important part of our culture. Through philanthropic efforts, local outreach and partnerships, we support causes aimed at making a difference in the communities where we live and work. In 2024, we matched employee donations in support of hundreds of causes on our online giving and volunteering platform, Give Back at AMCN. Through the platform, employees can research charitable organizations and make personal donations, which the Company matches. To help foster further community impact, the Company also provides every employee with annual time off to volunteer in support of charitable organizations.
AVAILABLE INFORMATION
Our corporate website is http://www.amcnetworks.com and the investor relations section of our website is located at http://investors.amcnetworks.com. We make available, free of charge through the investor relations section of our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as our proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission ("SEC"). References to our website in this Annual Report on Form 10-K (this "Annual Report") are provided as a convenience and the information contained on, or available through, the website is not part of this or any other report we file with or furnish to the SEC.
We use the following, as well as other social media channels, to disclose public information to investors, the media and others:
•Our website (http://www.amcnetworks.com); and
•Our X (formerly Twitter) account (@AMC_Networks).
Our officers may use similar social media channels to disclose public information. It is possible that certain information we or our officers post on our website and on social media could be deemed material, and we encourage investors, the media and others interested in AMC Networks to review the business and financial information we or our officers post on our website and on the social media channels identified above. The information on our website and those social media channels is not incorporated by reference into this Annual Report.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
A wide range of risks may affect our business, financial condition and results of operations, now and in the future. We consider the risks described below to be the most significant. There may be other economic, business, competitive, regulatory or other factors that are currently unknown or unpredictable or that we do not presently consider to be material that could have material adverse effects on our future results. Below is a summary of the principal factors that could materially adversely affect our business, financial condition and results of operations. This summary does not address all of the risks that we face.
Risks Related to Our Business
•Our dependence on viewer and distributor appeal of our programming, which is often unpredictable and volatile;
•Our ability to secure or maintain programming in adequate quantity or quality;
•Increased programming costs;
•Changes in the operating environment of multichannel distributors, including declines in the number of subscribers;
•Our ability to renew distribution agreements on favorable terms or at all;
•Our ability to attract and retain streaming subscribers;
•Adverse advertising market conditions in specific markets;
•Ongoing changes in business strategy, including decisions to make investments in new business, products, services, technologies and other strategic activities;
•Intense competition in the industries in which we operate;
•Our ability to adapt to new technological developments, including new content distribution platforms and the growing use of AI and to changes in consumer behavior resulting from these new technologies;
•Consolidation among cable, satellite and telecommunications service providers;
•Theft of our content, including digital copyright theft and other unauthorized exhibitions of our content;
•Litigation and other legal proceedings; and
•Impairment charges related to goodwill and other intangible assets;
Economic and Operational Risks
•Risks from doing business internationally;
•Continually evolving cybersecurity and other technology-related risks;
•The interruption or unavailability of third-party facilities, systems and/or software upon which we rely;
•Failure or disruption of our technology facilities or loss of access to third party satellites;
•The loss of any of our key personnel or artistic talent;
•Regulatory constraints in the United States;
•Adverse regulation by foreign governments;
•Economic and financial problems in the United States or other parts of the world;
•Fluctuations in foreign exchange rates;
•Disruptions of or interferences with cloud computing services that we rely on;
•A pandemic or other health emergency;
•Our ability to achieve sustaining or improving operating expense reductions;
•Our ability to successfully make investments in, and/or acquire and integrate, other business, assets, products or technologies;
•Additional tax liabilities; and
•A significant amount of our book value consisting of intangible assets that may not generate cash in the event of a sale.
Risks Relating to Our Debt
•Our substantial long-term debt and high leverage;
•Our ability to generate sufficient cash to service all of our indebtedness;
•Our ability to refinance our indebtedness on favorable terms, or at all;
•Variable rates of interest, which some of our outstanding debt is based on;
•The various restrictive covenants in our debt agreements;
•Our ability to incur substantially more debt;
•Potential lowering or withdrawal of the ratings assigned to our debt securities by ratings agencies;
•Our ability to raise the funds necessary to settle conversions of our Convertible Notes (as defined below); and
•The conditional conversion and fundamental change repurchase features of the Convertible Notes.
Risks Relating to Our Controlled Ownership
•The potential for conflicts of interest due to our controlled ownership by the Dolan family;
•Our ability to forgo certain corporate governance rules of Nasdaq due to our controlled ownership;
•Future stock sales, including as a result of the exercise of registration rights by certain of our stockholders;
•Our sharing of certain executives and directors with Sphere Entertainment Co., Madison Square Garden Sports Corp. and Madison Square Garden Entertainment Corp., which may give rise to conflicts.
Risks Relating to Our Business
Our business depends on the appeal of our programming to our U.S. and international viewers and our distributors, which is often unpredictable and volatile.
Our business depends upon viewer preferences and audience acceptance of the programming on our networks in the United States and internationally. These factors are often unpredictable and volatile, and subject to influences that are beyond our control, such as the quality and appeal of competing programming, general economic conditions and the availability of other entertainment activities. We may not be able to anticipate and react effectively to shifts in viewer preferences and/or interests in our markets. A change in viewer preferences has caused, and could in the future continue to cause, the audience for
certain of our programming to decline, which has resulted in, and could in the future continue to result in, a reduction of advertising revenues and jeopardize our bargaining position with distributors. In addition, certain of our competitors have more flexible programming arrangements, as well as greater amounts of available content, distribution and capital resources, and may react more quickly than we might to shifts in tastes and interests.
The success of our business depends on original programming, and our ability to accurately predict how audiences will respond to our original programming is particularly important. Because our network branding strategies depend significantly on a relatively small number of original programs, a failure to anticipate viewer preferences for such programs could be especially detrimental to our business. We periodically review the programming usefulness of our program rights based on a series of factors, including ratings, type and quality of program material, standards and practices, and fitness for exhibition. We have incurred write-offs of program rights in the past, including $17.3 million for the year ended December 31, 2023 and $64.9 million for the year ended December 31, 2024, and may incur future program rights write-offs if it is determined that program rights have limited, or no, future usefulness.
In addition, our AMC, IFC and SundanceTV programming networks broadcast feature films. In general, the popularity of feature-film content on linear television has declined, and is expected to continue to decline, due in part to the broad availability of such content through an increasing number of distribution platforms. If the popularity of feature-film programming further declines, we may lose viewership, which would decrease our revenues.
If our programming does not gain the level of audience acceptance we expect, or if we are unable to maintain the popularity of our programming, our ratings would suffer, which will negatively affect advertising revenues, and we may have a diminished bargaining position with distributors, which could reduce our subscription and content licensing revenues. Ratings have declined in recent years, which has had a negative effect on our advertising revenues and our financial results. We cannot assure you that we will be able to maintain the success of any of our current programming or generate sufficient demand and market acceptance for our new programming.
The failure to develop popular new programming to replace programming that is older or ending can have adverse impacts on our business and results of operations.
Our programming services' success depends upon the availability of programming that is adequate in quantity and quality, and we may be unable to secure or maintain such programming.
The success of our programming services, consisting of linear networks and streaming services, depends upon the availability of quality programming, particularly original programming and films, that is suitable for our target markets. While we produce certain of our original programming through our studio operations, we obtain most of the programming on our services (including original programming, films and other acquired programming) through agreements with third parties that have produced or control the rights to such programming. These agreements expire at varying times and may be terminated by the other parties if we are not in compliance with their terms.
Competition for programming has increased as the number of programming networks and streaming services has increased. Certain programming networks and streaming services that are affiliated with programming sources such as movie or television studios or film libraries have a competitive advantage over us. In addition to other cable programming networks, such as Paramount Global and Warner Bros. Discovery, Inc., we also compete for programming with national broadcast television networks, local broadcast television stations, video on demand services and subscription streaming services, such as Netflix, Apple TV and Amazon Prime. Some of these competitors have exclusive contracts with motion picture studios or independent motion picture distributors or own film libraries.
We cannot assure you that we will ultimately be successful in producing or obtaining the quality programming our networks and streaming services need to be successful.
Increased programming costs have adversely affected and may continue to adversely affect our profits.
We produce original programming and other content and may continue to invest in this area, the costs of which are significant. We also acquire programming and television series, as well as a variety of digital content and other ancillary rights from other companies, and we pay license fees, royalties or contingent compensation in connection with these acquired rights. Our investments in original programming have been and are expected to continue to be significant and involve complex negotiations with numerous third parties. These costs may not be recouped when the content is broadcast or distributed, and higher costs may lead to decreased profitability or potential write-downs. Increased competition from additional entrants into the market for development and production of original programming, such as Netflix, Apple TV, and Amazon Prime, increases our programming content costs.
We incur costs for the creative talent, including actors, writers and producers, who create our original programming. Some of our original programming has achieved significant popularity and critical acclaim, which has increased and could continue to increase the costs of such programming in the future. In addition, from time to time we have disputes with writers,
producers and other creative talent over the amount of royalty and other payments (see Item 3, "Legal Proceedings" for additional information). We believe that disputes of this type are endemic to our business and similar disputes may arise from time to time in the future. Increases in the costs of programming have led to and may in the future lead to decreased profitability or otherwise adversely impact our business.
Although in some cases the financial commitment for original programming is partially offset by foreign, state or local tax incentives, there is a risk that the tax incentives will not remain available for the duration of a series. If tax incentives are no longer available, reduced substantially, or cannot be utilized, we may incur higher costs in order to complete the production or produce additional seasons. If we are unable to produce original programming content on a cost-effective basis, our business, financial condition and results of operations may be materially adversely affected.
Changes in the operating environment of multichannel distributors, including declines in the number of subscribers, could have a material negative effect on our business and results of operations.
Our business derives a substantial portion of its revenues and income from cable television providers and other MVPDs. Subscription streaming services and virtual MVPDs have changed when, where and how audiences consume video content. These changes have significantly disrupted the traditional U.S. television industry, including by (i) disrupting the traditional television content distribution model with subscription streaming services and virtual MVPDs, which are increasing in number and some of which have a significant and growing subscriber base, (ii) disrupting the traditional advertising-supported television model as a result of increased video consumption through subscription streaming services and virtual MVPDs with no advertising or less advertising than on television networks and (iii) shifting the time viewing of television programming. In part as a result of these changes, over the past years, the number of subscribers to traditional MVPDs in the United States has significantly declined and the linear U.S. television industry has experienced significant declines in ratings for programming, which has materially negatively affected subscription and advertising revenues, including ours. Developments in technology and new content delivery products and services have also led to an increased amount of video content, as well as changes in consumers' expectations regarding the availability of video content, their willingness to pay for access to or ownership of such content, their perception of what quality entertainment is and their tolerance for commercial interruptions. We are engaged in efforts to respond to and mitigate the risks from these changes, but the success of these initiatives depends in part on the cooperation of measurement companies, advertisers and affiliates and, therefore, is not within our control. We have incurred significant costs to implement our strategy and initiatives, and will continue to do so, and if they are not successful, our competitive position, businesses and results of operations could be adversely affected.
Because a limited number of distributors account for a large portion of our business, failure to renew our programming networks' distribution agreements, renewal on less favorable terms or the termination of those agreements, either in the United States or internationally, could have a material adverse effect on our business.
Our programming networks depend upon agreements with a limited number of cable television system operators and other MVPDs. The loss of any significant distributor could have a material adverse effect on our consolidated results of operations.
Currently our programming networks have distribution agreements with staggered expiration dates through 2030. Failure to renew distribution agreements, renewal on less favorable terms (including with respect to price, packaging, positioning and other marketing opportunities) or the termination of distribution agreements could have a material adverse effect on our results of operations. A reduced distribution of our programming networks would adversely affect our distribution revenues and impact our ability to sell advertising or the rates we charge for such advertising. Even if distribution agreements are renewed, there is no assurance that the renewal rates will equal or exceed the rates that we currently charge these distributors.
In addition, we have, in some instances, made upfront payments to distributors in exchange for additional subscribers or have agreed to waive or accept lower subscription fees if certain numbers of additional subscribers are provided. In certain cases, we also support our distributors' efforts to market our programming networks or permit distributors to offer promotional periods without payment of subscriber fees. As we continue our efforts to add viewing subscribers, our net revenues may be negatively affected by these deferred carriage fee arrangements, discounted subscriber fees or other payments.
Our efforts to attract and retain streaming subscribers may not be successful, which may adversely affect our business
Our ability to attract and retain subscribers depends in part on our ability to consistently provide compelling content choices, effectively market our streaming services, as well as provide a quality experience for subscribers. Furthermore, the relative service levels, content offerings, pricing and related features of competitors to our service may adversely impact our ability to attract and retain subscribers. For example, we have in the past increased, and may in the future increase, prices for our streaming services, which could result in subscribers cancelling their subscriptions or potential subscribers not choosing to sign up for our services. We incur significant marketing expenditures to attract streaming subscribers, therefore retention of those subscribers is critical to our business model. We must continually add new subscriptions both to replace canceled subscriptions and to grow our streaming services beyond our current subscription base. While we permit multiple users within the same household to share a single account for noncommercial purposes, if account sharing is abused, our ability to add new
subscribers may be hindered and our results of operations may be adversely impacted. In addition, certain companies such as Netflix, Disney+ and Amazon Prime have launched ad-supported tiers in their streaming services, which has further increased competition for streaming subscribers and advertising revenue. If we are unable to successfully compete with current and new competitors in both retaining our existing subscriptions and attracting new subscriptions, our streaming services will be adversely affected.
Advertising market conditions in specific markets have caused and are expected to continue to cause our revenues and operating results to decline significantly in any given period.
We derive substantial revenues from the sale of advertising on a variety of platforms, and a decline in advertising expenditures could have a significant adverse effect on our revenues and operating results in any given period. Our advertising revenues were $677 million for the year ended December 31, 2024 compared to $716 million for the year ended December 31, 2023, a 5% decline. The strength of the advertising market can fluctuate in response to the economic prospects of specific advertisers or industries, advertisers' current spending priorities and the economy in general, and this may adversely affect the growth rate of our advertising revenues.
In addition, the pricing and volume of advertising has been affected by shifts in spending toward online and mobile offerings from more traditional media, and toward new ways of purchasing advertising, such as through automated purchasing, dynamic advertising insertion, third parties selling local advertising spots and advertising exchanges, some or all of which are not as advantageous to us as traditional advertising methods. The increased number of entertainment choices available to consumers has intensified audience fragmentation and reduced the viewing of content through traditional and virtual MVPDs, which has caused, and is expected to continue to cause, audience ratings declines for our programming networks and has adversely affected the pricing and volume of advertising.
Advertising revenues are impacted by new technologies, and that impact has been and could continue to be significant. Since advertising sales are dependent on audience measurement provided by third parties, and the results of audience measurement techniques can vary independent of the size of the audience for a variety of reasons, including variations in the employed statistical sampling methods, we are subject to risks related to the employed statistical sampling methods, new distribution platforms and viewing technologies, and the shifting of the marketplace to the use of measurement of different viewer behaviors, such as delayed viewing. Although audience measurement systems have evolved and improved to capture the viewership of programming across multiple platforms, they still do not fully capture all viewership across streaming and other digital platforms and advertisers may not be willing to pay advertising rates based on the viewership that is not being measured. While Nielsen's statistical sampling method is the primary measurement technique used in our television advertising sales, we measure and monetize our campaign reach and frequency on and across digital platforms based on other third-party data using a variety of methods including the number of impressions served and demographics. In addition, multi-platform campaign verification and viewership on tablets and smartphones, which is growing rapidly, are presently not measured by any one consistently applied method. These variations and changes could have a significant effect on advertising revenues. In addition, in certain geographic regions, our ability to fully capture viewership information may be limited by local laws and regulations.
As discussed throughout this Item 1A. Risk Factors, our ability to generate advertising revenue is also dependent on, among other things, our ability to compete in a highly competitive, rapidly evolving industry, respond to changes in consumer behavior and achieve audience acceptance of our content and brands. There can be no assurance that we can successfully navigate the evolving advertising markets or that the advertising revenues we generate will replace the declines in advertising revenues generated from our traditional linear business.
Our ongoing changes in business strategy, including decisions to make investments in new businesses, products, services, technologies and other strategic activities, could have an adverse effect on our business, financial condition or results of operations.
We have made, and expect to continue to make, changes to our business strategy to effectively respond to market and consumer changes that are subject to execution risk and there can be no assurance they will produce anticipated benefits. As part of our business strategy, we have invested in, and expect to continue to invest in, new businesses, products, services, technologies and other strategic initiatives, including through acquisitions, and strategic partnerships and investments, and enter into restructurings, cost savings and other transformation initiatives. These investments and initiatives may involve significant risks and uncertainties, including: difficulty integrating acquired businesses; failure to realize anticipated benefits; unanticipated expenses and liabilities; potential disruption to our business and operations; diversion of management’s attention; difficulty managing expanded operations; the loss or inability to retain key employees and creative talent; unanticipated challenges to or loss of our relationship with new or existing users, viewers, advertisers, suppliers, distributors and licensors; legal and regulatory limitations; insufficient revenues from such investments to offset any new liabilities assumed and expenses associated with new investments; and failure to successfully develop an acquired business or technology. Many of these factors are outside of our control, and because new investments are inherently risky, and the anticipated benefits or value of these
investments may not materialize, there can be no assurance such investments and other strategic initiatives will not adversely affect our business, financial condition or results of operations.
We are subject to intense competition, which may have a negative effect on our profitability or on our ability to expand our business.
The industries in which we operate are highly competitive. Our programming networks and streaming services compete with other programming networks and other types of video programming services for marketing and distribution by cable and other MVPD systems and ultimately for viewing by their subscribers. We compete with other providers of programming networks for the right to be carried by a particular cable or other MVPD system and for the right to be carried by such system on a particular "tier" of service. The increasing offerings by virtual MVPDs through alternative distribution methods creates competition for carriage on those platforms. Our programming networks and streaming services compete with other programming networks, streaming services and other sources of video content to secure desired entertainment programming.
Competition for content, audiences, advertising, talent, subscribers and service providers is intense and comes from broadcast television, other cable networks, distributors, including subscription streaming services and virtual MVPDs, social media content distributors, and other entertainment outlets and platforms, as well as from search providers, social networks, program guides and "second screen" applications.
We face significant competition for the development and production of original programming, including from, among others, cable programming networks such as Paramount Global and Warner Bros. Discovery, Inc., and subscription streaming services such as Netflix, Apple TV and Amazon Prime, which has increased and is expected to continue to increase our content costs as creating competing high quality, original content requires significant investment. Additionally, new technological developments, including the development and use of generative artificial intelligence (“AI”) and large language model tools, are rapidly evolving. If our competitors gain an advantage by using such technologies, our ability to compete effectively and our results of operations could be adversely impacted. As competition for the creation and acquisition of quality programming continues to escalate, the complexity of negotiations over acquired rights to the content and the value of the rights we acquire or retain has increased and is expected to further increase, leading to increased acquisition costs, and our ability to successfully acquire content of the highest quality may face greater uncertainty.
Our ability to compete successfully depends on a number of factors, including our ability to create or acquire high quality and popular programs, adapt to new technologies and distribution platforms and achieve widespread distribution for our content. More content consumption options increase competition for viewers as well as for programming and creative talent, which can decrease our audience ratings, and therefore potentially our advertising revenues.
Certain programming networks affiliated with broadcasting networks like ABC, CBS, Fox or NBC or other key free-to-air programming networks in countries where our networks are distributed may have a competitive advantage over our programming networks in obtaining distribution through the "bundling" of carriage agreements for such programming networks with a distributor's right to carry the affiliated broadcasting network. In addition, our ability to compete with certain programming networks for distribution may be hampered because the cable television or other MVPDs through which we seek distribution may be affiliated with these programming networks. Because such distributors may have a substantial number of subscribers, the ability of such programming networks to obtain distribution on the systems of affiliated distributors may lead to increased distribution and advertising revenue for such programming networks because of their increased penetration compared to our programming networks. Even if the affiliated distributors carry our programming networks, they may place their affiliated programming network on a more desirable tier, thereby giving their affiliated programming network a competitive advantage over our own.
In addition, our competitors include market participants with interests in multiple media businesses that are often vertically integrated, whereas our businesses generally rely on distribution relationships with third parties. As more cable and satellite operators, Internet service providers, subscription streaming services, other content distributors, aggregators and search providers create or acquire their own content, their competitive advantage could grow, which could adversely affect our ability to negotiate favorable terms and distribution or otherwise compete effectively in the delivery marketplace. Certain of our competitors also have preferential access to important technologies, customer data or other competitive information.
There can be no assurance that we will be able to compete successfully in the future against existing or new competitors, or that competition will not have a material adverse effect on our business, financial condition or results of operations.
We may not be able to adapt to new technological developments, including new content distribution platforms and the growing use of AI and to changes in consumer behavior resulting from these new technologies, which may adversely affect our business.
We must successfully adapt to technological advances in our industry, including alternative distribution platforms, viewing technologies, as well as the rising use of AI and large language model tools. Our ability to exploit new distribution platforms and viewing technologies will affect our ability to maintain or grow our business. New forms of content distribution provide different economic models and compete with current distribution methods in ways that are not entirely predictable.
Such competition has reduced and is likely to continue to reduce demand for our traditional television offerings, potentially at an accelerating pace, and could reduce demand for the offerings of digital platforms and, in turn, reduce our revenue from these sources. Accordingly, we must adapt to changing consumer behavior driven by advances such as virtual MVPDs, video on demand, subscription streaming services, including services such as Netflix, Apple TV and Amazon Prime, and mobile devices. Gaming and other consoles such as Microsoft's Xbox and Roku have established themselves as alternative providers of video services. Such changes have impacted and are expected to continue to impact the revenues we are able to generate from our traditional distribution methods, by decreasing the viewership of our programming networks on cable and other MVPD systems which are almost entirely directed at television video delivery and by making advertising on our programming networks less valuable to advertisers. Additionally, the development and use of generative AI and large language model tools in our industry are rapidly evolving, and the advantages and risks associated with its use are largely uncertain. If we fail to adapt our distribution methods and content to new technologies, our appeal to our targeted audiences would likely decline and there would be a material negative effect on our business.
Consolidation among cable, satellite and telecommunications service providers has had, and could continue to have, an adverse effect on our revenue and profitability.
Consolidation among cable and satellite distributors and telecommunications service providers has given the largest operators considerable leverage and market power in their relationships with programmers. We currently have agreements in place with the major U.S. cable and satellite operators and telecommunications service providers and this consolidation has affected, and could continue to affect, our ability to maximize the value of our content through those distributors. In addition, many of the countries and territories in which we distribute our networks also have a small number of dominant distributors.
In connection with consolidation in the industry, in some cases, if a distributor is acquired, the agreement of the acquiring distributor will govern following the acquisition. In those circumstances, the acquisition of a distributor that is party to one or more distribution agreements with our programming networks on terms that are more favorable to us could adversely impact our financial condition and results of operations. Continued consolidation within the industry could reduce the number of distributors that carry our programming and further increase the negotiating leverage of the cable and satellite television system operators, which could have an adverse effect on our financial condition or results of operations.
Theft of our content, including digital copyright theft and other unauthorized exhibitions of our content, may decrease revenue received from our programming and adversely affect our businesses and profitability.
The success of our businesses depends in part on our ability to maintain, protect and monetize our intellectual property rights to our entertainment content. We are fundamentally a content company and theft of our brands, programming, digital content and other intellectual property has the potential to significantly affect us and the value of our content. Copyright theft is particularly prevalent in many parts of the world that lack effective copyright and technical protective measures similar to those existing in the United States or that lack effective enforcement of such measures, including some of the jurisdictions in which we operate. The interpretation of copyright, data protection, privacy and other laws as applied to our content, and piracy detection and enforcement efforts, remain in flux. The failure to strengthen, or the weakening of, existing intellectual property laws could make it more difficult for us to adequately protect our intellectual property and negatively affect its value and our results of operations.
Content theft has been made easier by the wide availability of higher bandwidth and reduced storage costs, as well as tools that undermine security features such as encryption and the ability of pirates to cloak their identities online. In addition, we and our numerous production and distribution partners operate various technology systems in connection with the production and distribution of our programming, and intentional, or unintentional, acts could result in unauthorized access to our content, a disruption of our services, or improper disclosure of confidential information. The prevalence of digital formats and technologies heightens this risk. Moreover, further technological developments in the area of generative AI could impact our ability to protect against infringing uses of our content. Unauthorized access to our content could result in the premature release of our programming, which may have a significant adverse effect on the value of the affected programming.
Copyright theft has an adverse effect on our business because it reduces the revenue that we are able to receive from the legitimate sale and distribution of our content, undermines lawful distribution channels and inhibits our ability to recoup or profit from the costs incurred to create such content. A change in the laws of one jurisdiction may also have an impact on our ability to protect our intellectual property rights across other jurisdictions. In addition, many parts of the world where piracy is prevalent lack effective copyright and other legal protections or enforcement measures. Efforts to prevent the unauthorized distribution, performance and copying of our content may affect our profitability and may not be successful in preventing harm to our business.
Litigation may be necessary to enforce our intellectual property rights, protect trade secrets or to determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations. Our failure to protect our intellectual property rights, particularly our brand, in a
meaningful manner or challenges to related contractual rights could result in erosion of our brand and limit our ability to control marketing of our networks, which could have a materially adverse effect on our business, financial condition and results of operations.
In addition, we may, from time to time, lose or cease to control certain of our rights in the intellectual property on which we rely. Under applicable intellectual property laws, such rights may expire or be transferred to third parties as a result of the operation of copyright reversion and/or termination of transfer rights under applicable laws. Additionally, where we acquire rights in certain properties or content, we may only acquire such rights for a limited period or subject to other restrictions. Where we lose intellectual property rights, we may not be able to re-acquire such rights on reasonable terms or at all. The loss of control of such intellectual property rights may adversely impact our ability to prevent others from exploiting content based on such rights.
We are, and may in the future become, subject to litigation and other legal proceedings, which could negatively impact our business, financial condition and results of operations.
From time to time, we are subject to various legal proceedings (including class action lawsuits), claims, regulatory investigations and arbitration proceedings in the U.S. and in foreign countries, including claims relating to intellectual property, employment, wage and hour, consumer privacy, contractual and commercial disputes, and the production, distribution, and licensing of our content. Any proceedings, actions, claims or inquiries initiated by or against us, whether successful or not, may be time consuming, result in costly litigation, damage awards, consent decrees, injunctive relief or increased costs of business, require us to change our business practices or products, result in negative publicity, require significant amounts of management time, result in the diversion of significant operational resources or otherwise harm our business and financial results. In addition, our insurance may not be adequate to protect us from all material expenses related to pending and future claims. Any of these factors could materially adversely affect our business, financial condition and results of operations. For further information about specific litigation and proceedings, see the section titled “Legal Proceedings” contained in Part I, Item 3 of this Annual Report on Form 10-K.
We have recognized, and could in the future recognize, impairment charges related to goodwill and other intangible assets.
In accordance with U.S. GAAP, management periodically assesses our goodwill and other intangible assets to determine if they are impaired. Significant negative industry or economic trends, including the continued decline of traditional linear television viewership and linear ad revenues, disruptions to our business, inability to effectively integrate acquired businesses, underperformance of our content, loss of significant customers or suppliers, unexpected significant changes or planned changes in use of the assets, including in connection with restructuring initiatives, divestitures and market capitalization declines could require us to evaluate the recoverability of our goodwill or our long-lived and indefinite lived-assets prior to the annual assessment. These types of events have in the past resulted, and could again in the future result, in impairment charges, which have in the past negatively affected, and could in the future negatively affect, our results of operations. For example, during 2024, we recorded $371 million of goodwill impairment charges. These types of events could be an indicator of significant declines in the expected performance of our reporting units and could negatively affect our business.
Economic and Operational Risks
We face risks from doing business internationally.
We have operations through which we distribute programming outside the United States. As a result, our business is subject to certain risks inherent in international business, many of which are beyond our control. These risks include:
•laws and policies affecting trade and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws;
•changes in local regulatory requirements, including restrictions on content, imposition of local content quotas and restrictions on foreign ownership;
•exchange controls, tariffs and other trade barriers;
•differing degrees of protection for intellectual property and varying attitudes towards the piracy of intellectual property;
•foreign cybersecurity, privacy and data protection laws and regulations, as well as data localization requirements, and changes in these laws and requirements;
•the instability of foreign economies and governments;
•war and acts of terrorism; and
•anti-corruption laws and regulations such as the Foreign Corrupt Practices Act and the U.K. Bribery Act that impose stringent requirements on how we conduct our foreign operations and changes in these laws and regulations.
Events or developments related to the risks described above as well as other risks associated with international trade could adversely affect our revenues from non-U.S. sources, which could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.
We face continually evolving cybersecurity and other technology-related risks, which could result in the disclosure, theft, destruction or misappropriation of, or access to, confidential information, disruption of our programming, damage to our brands and reputation, legal exposure and financial losses.
We maintain and transmit information, including confidential and proprietary information regarding our content, distributors, advertisers, viewers and employees, in digital form as necessary to conduct our business. We also rely on third-party vendors to provide certain services in connection with the storage, processing and transmission of digital information. Data maintained or transmitted in digital form is subject to the risk of, among other things, cybersecurity attacks, tampering, misappropriation, theft, destruction or unauthorized access. We develop and maintain systems to monitor and prevent cybersecurity incidents from occurring, but the development and maintenance of these systems is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Despite our efforts, the risks of a data breach cannot be entirely eliminated and our third-party vendors' information technology and other systems that maintain and transmit consumer, distributor, advertiser, company, employee and other confidential information may be compromised by a malicious penetration of our network security, or that of a third party provider due to employee error, computer malware or ransomware, viruses, hacking and phishing attacks, or otherwise. Hybrid work arrangements increase the risk of cyber incidents, including data breaches. Additionally, outside parties from time to time attempt to fraudulently induce employees or users to disclose sensitive or confidential information in order to gain access to data or systems.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, are increasing in sophistication and complexity and often are not recognized until launched against a target, a security incident could potentially persist for an extended period of time before being detected. We may not be able to anticipate the incident or respond adequately or timely, and the extent of a particular incident, and the steps that we may need to take to investigate the incident, may not be immediately clear. As a result, our or our customers’ or affiliates’ sensitive, proprietary and/or confidential information may be lost, disclosed, accessed or taken without consent. If our or our third-party providers' data systems are compromised, our ability to conduct our business may be impaired, we may lose profitable opportunities or the value of those opportunities may be diminished and, as described above, we may lose revenue as a result of unlicensed use of our intellectual property. Further, a penetration of our or our third-party providers' network security or other misappropriation or misuse of personal consumer or employee information could subject us to business, regulatory, litigation and reputation risk, which could have a negative effect on our business, financial condition and results of operations.
We also continue to review and enhance our security measures in light of the constantly evolving techniques used to gain unauthorized access to networks, data, software and systems. We have expended, and expect to continue to expend, significant expenses on an ongoing basis in order to review and enhance our security measures and to address any actual or potential security incidents that arise, but these measures may be ineffective and we may be subject to legal or regulatory action, as well as financial losses, and we may not have insurance coverage for any or all such losses. If we experience an actual or perceived security incident, our ability to conduct business may be interrupted or impaired, we may incur damage to our systems, we may lose profitable opportunities or the value of those opportunities may be diminished and we may lose revenue as a result of unlicensed use of our intellectual property. Unauthorized access to or security breaches of our systems could result in the loss of data, loss of business, severe reputational damage adversely affecting customer or investor confidence, diversion of management’s attention, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations and significant costs for remediation that may include liability for stolen or lost assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach and other liabilities. In addition, in the event of a security incident, changes in legislation may increase the risk of potential litigation. For example, the CCPA, which provides a private right of action (in addition to statutory damages) for California residents whose sensitive personal information is breached as a result of a business’ violation of its duty to reasonably secure such information, took effect on January 1, 2020 and was expanded by the CPRA, which took effect in January 2023. A number of other states have passed similar laws and additional states may do so in the near future. Our insurance coverage may not be adequate to cover the costs of a data breach, indemnification obligations, or other liabilities.
We also routinely transmit and receive personal, confidential and proprietary information by email and other electronic means. We have discussed and worked with customers, partners, employees, directors, independent contractors and vendors to secure transmission capabilities and protect against cyber incidents, but we do not have, and may be unable to put in place, secure capabilities with all of our customers, partners, employees, directors, independent contractors and vendors and we may not be able to ensure that these third parties have appropriate controls in place to protect the confidentiality of the information. An interception, misuse or mishandling of personal, confidential or proprietary information being sent to or received from a
client, vendor, service provider, counterparty or other third party could result in legal liability, regulatory action and reputational harm.
In addition, new regulations require us to disclose information about material cybersecurity incidents on a timely basis, including those that may not have been resolved or fully investigated at the time of disclosure, or, in some instances, we may have obligations to notify relevant stakeholders of security breaches. Such mandatory disclosures are costly, could provide information to threat actors, could lead to negative publicity, may cause our customers to lose confidence in the effectiveness of our security measures and may require us to expend significant capital and other resources to respond to or alleviate problems caused by an actual or perceived security breach.
The interruption or unavailability of third-party facilities, systems and/or software upon which we rely may have a material negative effect on our business, financial condition and results of operations.
We rely upon various internal and third-party software and systems in the operation of our business, including, with respect to credit card processing, email marketing, content distribution, database, human resource management and financial systems. System interruption and the lack of redundancy in the information systems and infrastructure, both of our own websites and other computer systems and of affiliate and third-party software, computer networks, applications and other communications systems service providers on which we rely may adversely affect our ability to operate websites, applications, process and fulfill transactions, respond to customer inquiries, transmit or display content, and generally maintain cost-efficient operations. Such interruptions could occur as a result of a number of factors, including design defects, the age of the technology, network failures, technology modernization initiatives, malfunctions in maintenance updates or security patches, natural disaster, malicious actions, such as hacking or acts of terrorism or war, or human error. Any such damage or disruptions could also compromise the security of our information systems and networks.
While we have backup systems and offsite data centers for certain aspects of our operations, disaster recovery planning by its nature cannot cover all eventualities. In addition, we may not have adequate insurance coverage to compensate for any or all losses from a major interruption. If any of these adverse events were to occur, it could have a material negative effect on our business, financial condition and results of operations.
If our technology facilities fail or their operations are disrupted, or if we lose access to third party satellites, our performance could be hindered.
Our programming is transmitted using technology facilities at certain of our subsidiaries. These technology facilities are used for a variety of purposes, including signal processing, program editing, promotions, creation of programming segments to fill short gaps between featured programs, quality control, and live and recorded playback. These facilities are subject to interruption from fire, lightning, adverse weather conditions and other natural causes. Equipment failure, employee misconduct or outside interference could also disrupt the facilities' services. We maintain full time disaster recovery sites, which are capable of providing simultaneous playout of AMC, BBCA, SundanceTV, IFC and We TV in the event of a disruption of operations at our main facility in Bethpage, NY. In the event of a catastrophic failure of the Bethpage facility, the disaster recovery sites can be operational on the satellite within one to two hours.
In addition, we rely on third-party satellites in order to transmit our programming signals to our distributors. As with all satellites, there is a risk that the satellites we use will be damaged as a result of natural or man-made causes, or will otherwise fail to operate properly. Although we maintain in-orbit protection providing us with back-up satellite transmission facilities should our primary satellites fail, there can be no assurance that such back-up transmission facilities will be effective or will not themselves fail. Further, there are a limited number of communications satellites available for the transmission of programming, and, in the event of a disruption, we may not be able to secure an alternate distribution source in a timely manner.
Any significant interruption at any of our technology facilities affecting the distribution of our programming, or any failure in satellite transmission of our programming signals, could have an adverse effect on our operating results and financial condition.
The loss of any of our key personnel or artistic talent could adversely affect our business.
We believe that our success depends to a significant extent upon the performance of our senior executives and other key employees and on our ability to identify, attract, hire, train and retain such personnel. We generally do not maintain "key man" insurance, and there is no assurance of the continued services of our senior executives or other key employees. In addition, we depend on the availability of third-party production companies to create some of our original programming. For certain of our productions, through in-house and third party production service companies, we engage the services of writers, directors, actors and various crew members who are subject to certain specially negotiated collective bargaining agreements. While the Company was not significantly impacted by the 2023 Writers Guild of America and SAG-AFTRA strikes, any future labor disputes or a strike by one or more unions representing any of these parties who are essential to our original programming could have a material adverse effect on our original programming, disrupt our operations and reduce our revenues. The loss of any
significant personnel or artistic talent, or our artistic talent losing their audience base, could also have a material adverse effect on our business.
Our business is limited by United States regulatory constraints which may adversely impact our operations.
We are subject to a variety of laws and regulations in the jurisdictions in which we or our partners operate. The broadcast and cable industries in the U.S. are highly regulated by U.S. federal laws and regulations issued and administered by various federal agencies, including the FCC. See Item 1, "Business-Regulation" in this Annual Report. For example, we are required to obtain licenses from the FCC to operate our television stations and periodically renew them. It cannot be assured that the FCC will approve our future renewal applications or that the renewals will be for full terms or will not include conditions or qualifications. The nonrenewal, or renewal with substantial conditions or modifications, of one or more of our licenses could have a material adverse effect on our business, financial condition or results of operations. Furthermore, to the extent that regulations and laws, either presently in force or proposed or adopted in the future, hinder or stimulate the growth of the cable television, satellite or other MVPD industries, or seek to regulate the manner in which video content is distributed on websites or in DTC applications, our business could be affected.
Our program services and online properties are subject to a variety of laws and regulations, including those relating to content regulation, user privacy and data protection, consumer protection, intellectual property, content restrictions, child protection and accessibility. The United States Congress and the FCC currently have under consideration, and may in the future adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect our operations. In particular, the legal and regulatory framework governing AI remains unsettled, and developments in this area may have an adverse impact on our business.
Regulatory investigations and enforcement actions could also impact our business operations. For example, we and other companies in the media, entertainment, and advertising technology industries are subject to government oversight by regulatory bodies with regard to our compliance with data privacy and security laws. Advocacy organizations have also filed complaints with data protection authorities against businesses with streaming apps and advertising technology, arguing that certain of these companies’ practices do not comply with the CCPA or other regulations. Any such investigations or enforcement actions arising out of these complaints or out of other circumstances may require us to alter our practices. Further, if we or the third parties that we work with, such as contract payment processing services, content and distribution partners, vendors, or developers, violate or are alleged to violate applicable privacy or security laws, laws concerning access to data, industry standards, our contractual obligations, or our policies, such violations and alleged violations may also put our users’ information at risk and could in turn harm our business and reputation and subject us to potential liability. Any of these consequences could cause our users, advertisers, or content partners to lose trust in us, which could harm our business. Furthermore, any failure on our part to comply with these laws may subject us to liability and reputational harm.
The regulation of cable television operators, satellite carriers, and other video programming distributors is subject to the political process and has been in constant flux over the past two decades. Further changes in the law and regulatory requirements, including material ones, may be proposed or adopted in the future. We cannot assure you that our business will not be adversely affected by future legislation, new regulation or deregulation of us or of our competitors.
Our businesses are subject to risks of adverse regulation by foreign governments.
Programming businesses are subject to the regulations of regulators in the countries in which they operate as well as international bodies, such as the European Union ("E.U."). These regulations may include restrictions on the types of advertisements that can be sold on our networks, programming content requirements, requirements to make programming available on non-discriminatory terms, local levies or taxes applied to our networks and local content quotas. Consequently, our businesses must adapt their ownership and organizational structures as well as their pricing and service offerings to satisfy the rules and regulations to which they are subject. A failure to comply with applicable rules and regulations could result in penalties, restrictions on our business or loss of required licenses or other adverse conditions.
Existing or proposed legislation, regulations and frameworks could also significantly affect our business. For example, the E.U. GDPR imposes, among other things, stringent operational requirements for processors and controllers of personal data, including expansive disclosures about how personal information is to be used, and significant fines for non-compliance. Complying with these laws and regulations has been and could continue to be costly, could require us to change our business practices, or could limit or restrict aspects of our business in a manner adverse to our business operations. In particular, certain data privacy laws have required monitoring of, and changes to, our practices related to the collection, use, disclosure and storage of personal information. Many of these laws and regulations continue to evolve, and sometimes conflict among the countries in which we operate, and substantial uncertainty surrounds their scope and application. Our failure to comply with these law and regulations could result in exposure to enforcement actions by foreign governments, as well as significant negative publicity and reputational damage.
Adverse changes in foreign rules and regulations could have a significant adverse impact on our profitability.
Economic and financial problems in the United States or in other parts of the world have in the past adversely affected and could in the future adversely affect our results of operations.
Our business is affected by prevailing economic and financial conditions in the United States and other countries where our networks are distributed, including financial instability, a general decline in economic conditions (including as a result of a pandemic or other health emergency), disruptions to financial markets, inflation, recession, high unemployment or geopolitical events (including the war between Russia and Ukraine as well as the Israel-Hamas conflict), political uncertainty, or fears about such events occurring. The adverse impact on our businesses of actual or perceived declines in economic conditions or a failure of conditions to improve as anticipated will depend, in part, on their severity and duration, and our ability to mitigate these impacts on our businesses is limited. The worsening of global economic conditions has in the past adversely affected, and could in the future adversely affect, our business, financial condition or results of operations, and worsening of economic conditions in certain specific parts of the world could impact the expansion and success of our businesses in such areas. Furthermore, some foreign markets in which we operate may be more adversely affected by worsening economic conditions than the United States or other countries. Adverse economic conditions have resulted in and could in the future result in advertisers reducing their spending on advertising and negatively affect the ability of those with whom we do business to satisfy their obligations to us, as well as consumer discretionary spending.
We derive substantial revenues from advertisers, and these expenditures are sensitive to general economic conditions and consumer buying patterns. Adverse economic conditions have in the past adversely affected advertising rates and volume, which has resulted in a decrease in our advertising revenues.
Decreases in consumer discretionary spending in the U.S. and other countries where our networks are distributed have in the past affected and may in the future affect cable television and other video service subscriptions, in particular with respect to digital service tiers on which certain of our programming networks are carried. This could lead to a decrease in the number of subscribers receiving our programming from MVPDs, which could, in turn, have a negative impact on our viewing subscribers and subscription revenues. Similarly, a decrease in viewing subscribers could have a negative impact on the number of viewers actually watching the programs on our programming networks, thereby impacting the rates we are able to charge advertisers.
Fluctuations in foreign exchange rates have had and could have in the future an adverse effect on our results of operations.
We have significant operations in a number of foreign jurisdictions and certain of our operations are conducted in foreign currencies. The value of these currencies fluctuates relative to the U.S. dollar. As a result, we are exposed to exchange rate fluctuations, which have had, and may in the future have, an adverse effect on our results of operations in a given period.
Specifically, we are exposed to foreign currency exchange rate risk to the extent that we enter into transactions denominated in currencies other than ours or our subsidiaries' respective functional currencies, such as trade receivables, programming contracts, notes payable and notes receivable (including intercompany amounts) that are denominated in a currency other than the applicable functional currency. Changes in exchange rates with respect to amounts recorded in our consolidated balance sheets related to these items will result in unrealized or realized (based upon period-end exchange rates) foreign currency transaction gains or losses upon settlement of the transactions. Moreover, to the extent that our revenue, costs and expenses are denominated in currencies other than our or our subsidiaries' respective functional currencies, we will experience fluctuations in our revenue, costs and expenses solely as a result of changes in foreign currency exchange rates.
We also are exposed to unfavorable and potentially volatile fluctuations of the U.S. dollar (our reporting currency) against the currencies of our non-U.S. dollar functional currency operating subsidiaries when their respective financial statements are translated into U.S. dollars for inclusion in our consolidated financial statements. Cumulative translation adjustments are recorded in accumulated other comprehensive income (loss) as a separate component of equity. Any increase (decrease) in the value of the U.S. dollar against any foreign currency that is the functional currency of one of our operating subsidiaries will cause us to experience unrealized foreign currency translation losses (gains) with respect to amounts already invested in such foreign currencies. Accordingly, we may experience a negative impact on our comprehensive income (loss) and equity with respect to our holdings solely as a result of foreign currency translation. Our primary exposure to foreign currency risk from a foreign currency translation perspective is to the euro, British pound and, to a lesser extent, other local currencies in Europe. We generally do not hedge against the risk that we may incur non-cash losses upon the translation of the financial statements of our non-U.S. dollar functional currency operating subsidiaries and affiliates into U.S. dollars.
We rely upon cloud computing services to operate certain aspects of our business and any disruption of or interference with our use of these services would impact our operations and our business would be adversely impacted.
Cloud computing services provide a distributed computing infrastructure platform for business operations. We have architected our software and computer systems so as to utilize data processing, storage capabilities and other services provided by third party cloud providers. Such third parties’ facilities are vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct. Currently, we run the vast
majority of our computing through these third parties' services. We have experienced, and we expect that in the future we will experience, interruptions, delays and outages in service and availability from our third-party cloud providers from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints. Given this, along with the fact that we cannot easily switch our third party cloud operations to another cloud provider, without significant costs, or at all, any disruption of or interference with our use of third party cloud providers would impact our operations and our business.
Our operations and business have in the past been, and could in the future be, materially adversely impacted by a pandemic or other health emergency.
Pandemics, such as the COVID-19 pandemic, and public health emergencies have affected and may, in the future, adversely affect our businesses. We experienced adverse advertising sales impacts and suspended content production as a result of the COVID-19 pandemic, which led to delays in the creation and availability of substantially all of our programming. 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 a pandemic or other public health emergency, the impact on our businesses could be exacerbated. In addition, remote work arrangements heighten the operational risks, including cybersecurity risks, to which we are subject.
We cannot reasonably predict the ultimate impact of any pandemic or public health emergency, 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 or public health emergency, the impact of governmental regulations that have been, and may continue to be, imposed in response, the effectiveness of actions taken to contain or mitigate the outbreak, the availability, safety and efficacy of vaccines, including against emerging variants of the infectious disease, and global economic conditions.
In addition to the risks described above, to the extent that a pandemic or other public health emergency adversely affects our operations and financial condition, it may also heighten other risks described in this section.
We may not be successful in achieving sustaining or improving operating expense reductions and might experience business disruptions associated with restructuring and cost reduction activities.
Our business has been, and may in the future be, the subject of restructuring and cost reduction initiatives. We may not be successful in achieving the full cost reduction benefits we expect over the timeframe we expect, or at all, and the ongoing costs of implementing cost reduction and restructuring measures might be greater than anticipated. If these measures are not successful or sustainable, we may undertake additional restructuring and cost reduction efforts, which could result in future restructuring charges. Moreover, our ability to achieve our other strategic goals and business plans might be adversely affected, and we could experience business disruptions, if our restructuring efforts and cost reduction activities prove ineffective. These actions may also distract management from other business opportunities and adversely impact employee productivity and morale.
Our inability to successfully make investments in, and/or acquire and integrate, other businesses, assets, products or technologies could harm our business, financial condition or operating results.
Our success may depend on opportunities to buy other businesses or technologies that could complement, enhance or expand our current business or products or that might otherwise offer us growth opportunities. We have acquired, and have made strategic investments in, a number of companies (including through joint ventures) in the past, and we expect to make additional acquisitions and strategic investments in the future. Such transactions may result in dilutive issuances of our equity securities, use of our cash resources, and incurrence of debt and amortization expenses related to intangible assets. Any acquisitions and strategic investments that we are able to identify and complete may be accompanied by a number of risks, including:
•the difficulty of assimilating the operations and personnel of acquired companies into our operations;
•the potential disruption of our ongoing business and distraction of management;
•the incurrence of additional operating losses and operating expenses of the businesses we acquired or in which we invested;
•the difficulty of integrating acquired technology and rights into our services and unanticipated expenses related to such integration;
•the failure to successfully further develop an acquired business or technology and any resulting impairment of amounts currently capitalized as intangible assets;
•the failure of strategic investments to perform as expected or to meet financial projections;
•the potential for patent and trademark infringement and data privacy and security claims against the acquired companies, or companies in which we have invested;
•litigation or other claims in connection with acquisitions, acquired companies, or companies in which we have invested;
•the impairment or loss of relationships with customers and partners of the companies we acquired or in which we invested or with our customers and partners as a result of the integration of acquired operations;
•the impairment of relationships with, or failure to retain, employees of acquired companies or our existing employees as a result of integration of new personnel;
•the difficulty of integrating operations, systems, and controls as a result of cultural, regulatory, systems, and operational differences;
•the performance of management of companies in which we invest but do not control;
•in the case of foreign acquisitions and investments, the impact of particular economic, tax, currency, political, legal and regulatory risks associated with specific countries; and
•the impact of known potential liabilities or liabilities that may be unknown, including as a result of inadequate internal controls, associated with the companies we acquired or in which we invested.
Our failure to be successful in addressing these risks or other problems encountered in connection with our past or future acquisitions and strategic investments could cause us to fail to realize the anticipated benefits of such acquisitions or investments, incur unanticipated liabilities, and harm our business, financial condition and results of operations.
We may have exposure to additional tax liabilities.
We are subject to income taxes as well as non-income based taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United States and various foreign jurisdictions. Judgment is required in determining our worldwide provision for income taxes and other tax liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are regularly under audit by tax authorities in both the United States and various foreign jurisdictions. Although we believe that our tax estimates are reasonable, (1) there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions, expense amounts for non-income based taxes and accruals and (2) any material differences could have an adverse effect on our financial position and results of operations in the period or periods for which determination is made.
Although a portion of our revenue and operating income is generated outside the United States, we are subject to potential current U.S. income tax on this income since we are a U.S. corporation, resulting in a potentially higher effective tax rate for the Company. This includes (i) what is referred to as "Subpart F Income," which generally includes, but is not limited to, such items as interest, dividends, royalties, gains from the disposition of certain property, certain currency exchange gains in excess of currency exchange losses, and certain related party sales and services income and (ii) what is referred to as “global intangible low-taxed income,” which generally equals certain foreign earnings in excess of 10 percent of the foreign subsidiaries’ tangible business assets. While we may mitigate any potential negative impacts of the aforementioned regimes through claiming a foreign tax credit against our U.S. federal income taxes or potentially have foreign or U.S. taxes reduced under applicable income tax treaties, we are subject to various limitations on claiming foreign tax credits or we may lack treaty protections in certain jurisdictions that will potentially limit any reduction of the increased effective tax rate. A higher effective tax rate may also result to the extent that losses are incurred in non-U.S. subsidiaries that do not reduce our U.S. taxable income.
We are subject to changing tax laws, treaties and regulations in and between countries in which we operate, including treaties between the United States and other nations. A change in these tax laws, treaties or regulations, including those in and involving the United States, or in the interpretation thereof, could result in a materially higher or lower income or non-income tax expense. Also, various income tax proposals in the countries in which we operate and measures in response to the economic uncertainty in certain European jurisdictions in which we operate could result in changes to the existing tax laws under which our taxes are calculated. We are unable to predict whether any of these or other proposals in the United States or foreign jurisdictions will ultimately be enacted. Any such changes could negatively impact our business.
In December 2021, the Organization for Economic Co-operation and Development (OECD) released the Pillar Two Model Rules, which aim to reform international corporate taxation rules, including the implementation of a global minimum tax rate. The Company began the phased implementation of the Pillar Two Model Rules in the first quarter of 2024 and as of December 31, 2024, the Pillar Two minimum tax requirement did not have a material impact upon the Company's full year results of operations or financial position.
A significant amount of our book value consists of intangible assets that may not generate cash in the event of a voluntary or involuntary sale.
At December 31, 2024, our consolidated financial statements included approximately $4.4 billion of consolidated total assets, of which approximately $0.5 billion were classified as intangible assets. Intangible assets primarily include affiliation
agreements and affiliate relationships, advertiser relationships, trademarks and goodwill. While we believe that the carrying values of our intangible assets are recoverable, there is no assurance that we would receive any cash from the voluntary or involuntary sale of these intangible assets, particularly if we were not continuing as an operating business.
Risks Relating to Our Debt
Our substantial long-term debt and high leverage could adversely affect our business.
We have a significant amount of long-term debt. As of December 31, 2024, we had $2.4 billion principal amount of total long-term debt (excluding finance leases), comprised of $366 million of senior secured debt under our Credit Facility, $875 million of senior secured notes, $985 million of senior unsecured notes and $144 million of convertible senior notes.
Our substantial amount of debt could have important consequences. For example, it could:
•increase our vulnerability to general adverse economic and industry conditions because, during periods in which we experience lower earnings and cash flow, we will be required to devote a proportionally greater amount of our cash flow to paying interest and principal on our debt;
•require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund future programming investments, capital expenditures, working capital, business activities and other general corporate requirements;
•limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate because our available cash flow after paying interest and principal payments on our debt may not be sufficient to make the capital and other expenditures necessary to address these changes;
•place us at a competitive disadvantage compared with our relatively less leveraged competitors that have more cash flow available to fund working capital, capital expenditures, acquisitions, share repurchases, dividend payments and general corporate requirements;
•limit our ability to borrow additional funds in the future to fund working capital, capital expenditures, acquisitions and general corporate requirements, even when necessary to maintain adequate liquidity;
•make it more difficult for us to satisfy our financial obligations, including obligations with respect to our outstanding indebtedness, or to refinance our indebtedness on terms acceptable to us or at all; and
•make it more difficult for us to satisfy financial ratio tests that are applicable under the agreements governing our outstanding indebtedness.
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make payments on, or repay or refinance, our debt, and to fund planned distributions and capital expenditures, will depend largely upon our future operating performance and our ability to borrow additional funds in the future. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. Our future performance, to a certain extent, is subject to general economic, financial, competitive, regulatory and other factors that are beyond our control. Our leverage may make our results of operations more susceptible to adverse economic and industry conditions by limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and may place us at a competitive disadvantage as compared to our competitors that have less debt. In addition, our ability to borrow funds in the future to make payments on our debt will depend on the satisfaction of the covenants in the Credit Facility and our other debt agreements, including the indentures governing our notes and other agreements we may enter into in the future.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness, including the notes. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. Agreements relating to our indebtedness, including the Credit Facility, may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to obtain proceeds in an amount sufficient to meet any debt service obligations then due.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our obligations under our outstanding indebtedness.
If we cannot make scheduled payments on our debt, we will be in default and, the holders of our senior notes and convertible senior notes could declare all outstanding principal and interest to be due and payable, the lenders under the Credit Facility could terminate their commitments to loan money, lenders under, or holders of, our secured debt (including our 10.25% senior secured notes due January 15, 2029 and any borrowings outstanding under the Credit Facility) could, in certain situations, foreclose against the assets securing their borrowings, and we could be forced into bankruptcy or liquidation.
We may not be able to refinance our indebtedness on favorable terms, or at all. Our inability to refinance our indebtedness could materially and adversely affect our liquidity and our ongoing results of operations.
We will need to refinance our existing indebtedness as it matures, and we do not expect to generate sufficient cash from operations to repay at maturity our outstanding debt obligations. For example, we have $2.0 billion of senior notes due in 2029 that we will need to repay and/or refinance. As a result, we will be dependent upon our ability to access the capital and credit markets. Market conditions, including further changes in interest rates, as well as our financial condition at the time of a refinancing, may increase the risk that the terms of any refinancing will not be as favorable as the terms of the existing debt (including agreeing to more restrictive covenants on our business or needing to provide collateral securing the debt), or that we may not be able to refinance the existing debt at all. Failure to raise significant amounts of funding to repay these obligations at maturity on terms favorable to us, or at all, could adversely affect our business. If we are unable to raise such amounts, we would need to take other actions including reducing investments in new programming, selling assets, seeking strategic investments from third parties or reducing other discretionary uses of cash, any of which could adversely impact our business and financial condition. The Credit Facility and indentures governing our notes restrict, and market or business conditions may limit, our ability to do some of these things. See “The agreements governing our debt contain various covenants that impose restrictions on us that may affect our ability to operate our business.”
Some of our outstanding debt is based on variable rates of interest, which has resulted and could in the future result in higher interest expenses in the event of an increase in the interest rates.
Although a significant amount of our outstanding debt has fixed interest rates, borrowings under our Credit Facility bear interest at variable rates. As a result, increases in market interest rates have increased our interest expense and our debt service obligations. If interest rates were to further increase, this would further increase the amount of interest expense that we would have to pay for borrowings under the Credit Facility, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. While we have in the past entered into hedging agreements limiting our exposure to higher interest rates, we did not have any interest rate swap contracts outstanding at December 31, 2024. We may enter into hedging agreements in the future; however, any such agreements do not offer complete protection from this risk.
The agreements governing our debt contain various covenants that impose restrictions on us that may affect our ability to operate our business.
The agreements governing the Credit Facility and the indentures governing our notes contain covenants that, among other things, limit our ability to:
•borrow money or guarantee debt;
•create liens;
•pay dividends on or redeem or repurchase stock;
•make investments;
•enter into transactions with affiliates;
•enter into strategic transactions; and
•sell assets or merge with other companies.
The Credit Facility requires us to comply with a Cash Flow Ratio and an Interest Coverage Ratio, each as defined in the Credit Facility. Compliance with these covenants may limit our ability to take actions, including repurchasing our common stock or making investments, that might be to our advantage or to the advantage of our stockholders. The terms of any future indebtedness we may incur could include more restrictive covenants.
Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants and maintain these financial ratios, and we cannot assure you that we will be able to maintain compliance with these covenants and financial ratios in the future. For example, higher programming expenditures, higher operating costs or lower revenues could lead to a default under certain financial covenants contained in the Credit Facility. In addition, because the calculations of the financial ratios are made as of certain dates, the financial ratios can fluctuate significantly from period to period as the amounts outstanding under the Credit Facility are dependent on the timing of cash flows related to operations, capital expenditures and securities offerings. If we fail to comply with these covenants, we cannot assure you that we will be able to obtain waivers from the lenders and/or amend the covenants, which could, among other things, impact our liquidity. Moreover, in connection with any future waivers or amendments to our indebtedness that we may obtain, our lenders may modify the terms of our such
indebtedness or impose additional operating and financial restrictions on us. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity for the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing. Any of these events could have a material adverse effect on our business, financial condition and results of operations.
Despite our current levels of debt, we may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial debt.
We and our subsidiaries may incur substantial additional indebtedness in the future, including secured or convertible indebtedness. The terms of the Credit Facility and indentures governing our notes allow us to incur substantial amounts of additional debt, subject to certain limitations. If we incur secured indebtedness and such secured indebtedness is either accelerated or becomes subject to a bankruptcy, liquidation or reorganization, our assets would be used to satisfy obligations with respect to the indebtedness secured thereby before any payment could be made on the notes that are not similarly secured.
In addition, as we have in the past, we may in the future refinance all or a portion of our debt, including our senior notes or borrowings under the Credit Facility, and obtain the ability to incur more debt as a result. If new debt is added to our current debt levels, the related risks we could face would be magnified.
A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future debt issuance costs and reduce our access to capital.
The debt ratings for our notes are below the "investment grade" category, which results in higher interest costs as well as a reduced pool of potential purchasers of our debt as some investors will not purchase debt securities that are not rated "investment grade". In addition, there can be no assurance that any rating assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency, if in that rating agency's judgment, future circumstances, such as adverse changes to economic conditions that could impact an issuer's ability to meet its financial commitments, so warrant. A lowering or withdrawal of the ratings assigned to our debt securities may further increase our future debt issuance costs and reduce our access to capital.
We may not have the ability to raise the funds necessary to settle conversions of our 4.25% convertible senior notes due 2029 (the “Convertible Notes”) or to repurchase the Convertible Notes upon a fundamental change.
Holders of our Convertible Notes will have the right to require us to repurchase their notes upon the occurrence of a fundamental change (as defined in the indenture governing the Convertible Notes) at a purchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date. In addition, we will be required to make cash payments in respect of the Convertible Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make purchases of Convertible Notes surrendered therefor or Convertible Notes being converted. In addition, our ability to repurchase the Convertible Notes or to pay cash upon conversion of the Convertible Notes is limited by the agreements governing our existing indebtedness (including the Credit Facility) and may also be limited by law, by regulatory authority or by agreements that will govern our future indebtedness. Our failure to repurchase Convertible Notes at a time when the repurchase is required by the Convertible Notes Indenture or to pay cash payable on future conversions of the Convertible Notes as required by the Convertible Notes Indenture would constitute a default under the Convertible Notes Indenture. A default under the Convertible Notes Indenture or the fundamental change itself could also lead to a default under agreements governing our existing or future indebtedness (including the Credit Facility). If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Convertible Notes or make cash payments upon conversion thereof.
The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of the Convertible Notes is triggered, holders of Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A Common Stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
The fundamental change repurchase feature of the Convertible Notes may delay or prevent an otherwise beneficial attempt to effect a change of control of the Company.
The terms of the Convertible Notes require us to repurchase the Convertible Notes in the event of a fundamental change. A change of control of our company would trigger an option of the holders of the Convertible Notes, as applicable, to require us to repurchase the Convertible Notes. This may have the effect of delaying or preventing a change of control of our company that would otherwise be beneficial to investors in the Convertible Notes.
Risks Relating to Our Controlled Ownership
We are controlled by the Dolan family and trusts for their benefit, which may create certain conflicts of interest. In addition, as a result of their control, the Dolan family has the ability to prevent or cause a change in control or approve, prevent or influence certain actions by the Company.
We have two classes of common stock:
•Class A Common Stock, which is entitled to one vote per share and is entitled collectively to elect a number of directors constituting at least 25% of our Board of Directors.
•Class B Common Stock, which is generally entitled to ten votes per share and is entitled collectively to elect the remainder of our Board of Directors.
As of December 31, 2024, certain members of the Dolan family, including certain trusts for the benefit of members of the Dolan family (collectively "the Dolan Family Group"), collectively owned all of our Class B Common Stock, approximately 3% of our outstanding Class A Common Stock and approximately 79% of the total voting power of all our outstanding common stock. The members of the Dolan Family Group are parties to a stockholders agreement (the "Stockholders Agreement") that has the effect of causing the voting power of certain holders of our Class B Common Stock to be cast as a block on all matters to be voted on by holders of Class B Common Stock. Under the Stockholders Agreement, the shares of Class B Common Stock owned by members of the Dolan Family Group are to be voted on all matters in accordance with the determination of the Dolan Family Committee. However, the decisions of the Dolan Family Committee are non-binding with respect to the Class B Common Stock owned by certain Dolan family trusts (the "Excluded Trusts") which collectively own 77% of the outstanding Class B Common Stock. The Dolan Family Committee consists of James L. Dolan, Thomas C. Dolan, Patrick F. Dolan, Kathleen M. Dolan, Marianne E. Dolan and Deborah A. Dolan-Sweeney (collectively, the "Dolan Siblings"). The Dolan Family Committee generally acts by vote of a majority of the Dolan Siblings, except that a vote on a going-private transaction must be approved by a two-thirds vote of the Dolan Siblings and a vote on a change-in-control transaction must be approved by not less than all but one of the Dolan Siblings. The Dolan Family Group is able to prevent a change in control of our Company and no person interested in acquiring us would be able to do so without obtaining the consent of the Dolan Family Group.
Shares of Class B Common Stock owned by Excluded Trusts are to be voted on all matters in accordance with the determination of the Excluded Trusts holding a majority of the Class B Common Stock held by all Excluded Trusts, except in the case of a vote on a going-private transaction or a change in control transaction, in which case a vote of trusts holding two-thirds of the Class B Common Stock owned by Excluded Trusts is required.
The Dolan Family Group and Excluded Trusts by virtue of their stock ownership, have the power to elect all of our directors subject to election by holders of Class B Common Stock and are able collectively to control stockholder decisions on matters on which holders of all classes of our common stock vote together as a single class. These matters could include the amendment of some provisions of our certificate of incorporation and the approval of fundamental corporate transactions.
In addition, the affirmative vote or consent of the holders of at least 66 2/3% of the outstanding shares of the Class B Common Stock, voting separately as a class, is required to approve:
•the authorization or issuance of any additional shares of Class B Common Stock, and
•any amendment, alteration or repeal of any of the provisions of our certificate of incorporation that adversely affects the powers, preferences or rights of the Class B Common Stock.
As a result, the Dolan Family Group and Excluded Trusts have the power to prevent such issuance or amendment.
We have adopted a written policy whereby an independent committee of our Board of Directors will review and approve or take such other action as it may deem appropriate with respect to certain transactions involving the Company and its subsidiaries, on the one hand, and certain related parties, including the Dolan family and related entities on the other hand. This policy does not address all possible conflicts which may arise, and there can be no assurance that this policy will be effective in dealing with conflict scenarios.
We are a "controlled company" for the purposes of The NASDAQ Stock Market LLC ("NASDAQ"), which allows us not to comply with certain of the corporate governance rules of NASDAQ.
Members of the Dolan Family Group have entered into the Stockholders Agreement, which relates to, among other things, the voting and transfer of their shares of our Class B Common Stock. As a result, we are a "controlled company" under the corporate governance rules of NASDAQ. As a controlled company, we have the right to elect not to comply with the corporate governance rules of NASDAQ requiring: (i) a majority of independent directors on our Board of Directors, (ii) an independent compensation committee and (iii) an independent corporate governance and nominating committee. Our Board of Directors has elected for the Company to be treated as a "controlled company" under NASDAQ corporate governance rules and not to comply with the NASDAQ requirement for a majority independent board of directors and an independent corporate governance and nominating committee because of our status as a controlled company.
Future stock sales, including as a result of the exercise of registration rights by certain of our stockholders, could adversely affect the trading price of our Class A Common Stock.
Certain parties have registration rights covering a portion of our shares. We have entered into registration rights agreements with the Dolan family, including the Dolan Siblings, certain Dolan family interests and the Dolan Family Foundation that provide them with "demand" and "piggyback" registration rights with respect to approximately 12.6 million shares of Class A Common Stock, including shares issuable upon conversion of shares of Class B Common Stock. Sales of a substantial number of shares of Class A Common Stock, including sales pursuant to these registration rights agreements, could adversely affect the market price of the Class A Common Stock and could impair our future ability to raise capital through an offering of our equity securities.
We share certain executives and directors with Sphere Entertainment Co. ("Sphere Entertainment"), Madison Square Garden Sports Corp. ("MSGS") and Madison Square Garden Entertainment Corp. ("MSGE"), which may give rise to conflicts.
We share two executives with MSGS, MSGE and Sphere Entertainment (each, an "Other Entity" and, collectively the "Other Entities"): Gregg G. Seibert, serves as a Vice Chairman of the Company and as a Vice Chairman of the Other Entities, and David Granville-Smith, serves as an Executive Vice President of the Company and as an Executive Vice President of MSGS and Sphere Entertainment. Each of the Other Entities and the Company are affiliates by virtue of being under common control of the Dolan family and Excluded Trusts. As a result, they will not be devoting their full time and attention to the Company's affairs. Six members of our Board of Directors, including our Chairman, are directors of MSGS, three members of our Board of Directors, including our Chairman, are directors of MSGE and five members of our Board of Directors, including our Chairman, are directors of Sphere Entertainment. In addition, the Company’s Chief Executive Officer, Kristin Dolan, also serves as a director of Sphere Entertainment. These directors and officers may have actual or apparent conflicts of interest with respect to matters involving or affecting each company. For example, the potential for a conflict of interest exists when we, on one hand, and an Other Entity, on the other hand, consider acquisitions and other corporate opportunities that may be suitable for us and for the Other Entity. Also, conflicts may arise if there are issues or disputes under the commercial arrangements that exist between the Other Entities and us. In addition, certain of our directors and officers own stock, restricted stock units and options to purchase stock in one or more of the Other Entities, as well as cash performance awards with any payout based on the performance of one or more of the Other Entities. These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our Company and one or more of the Other Entities. See "Certain Relationships and Related Party Transactions-Certain Relationships and Potential Conflicts of Interest" in our latest proxy statement filed with the SEC for a description of our related party transaction approval policy that we have adopted to help address such potential conflicts that may arise.
Our overlapping directors and executives with the Other Entities may result in the diversion of corporate opportunities to and other conflicts with the Other Entities and provisions in our governance documents may provide us no remedy in that circumstance.
Our amended and restated certificate of incorporation acknowledges that directors and officers of the Company may also be serving as directors, officers, employees, consultants or agents of MSGS, MSGE, Sphere Entertainment or their respective subsidiaries and that we may engage in material business transactions with such entities (the applicable provisions of the amended and restated certificate of incorporation, the "Overlap Provisions"). The Company has renounced its rights to certain business opportunities and the Overlap Provisions provide that no director or officer of the Company who is also serving as a director, officer, employee, consultant or agent of an Other Entity or any subsidiary of an Other Entity will be liable to the Company or its stockholders for breach of any fiduciary duty that would otherwise exist by reason of the fact that such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in our amended and restated certificate of incorporation) to the Other Entity or any of its subsidiaries, or does not refer or communicate information regarding such corporate opportunities to the Company. The Overlap Provisions also expressly validate certain contracts, agreements, assignments and transactions (and amendments, modifications or terminations thereof) between the Company and
the Other Entities and their subsidiaries and, to the fullest extent permitted by law, provide that the actions of the overlapping directors or officers in connection therewith are not breaches of fiduciary duties owed to the Company, any of its subsidiaries or their respective stockholders.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
We lease approximately 676,000 square feet of space in the United States under lease arrangements with remaining terms through 2033. Our lease arrangements include approximately 326,000 square feet of office space at 11 Penn Plaza, New York, NY 10001 with a term through 2027, which we use as our corporate headquarters and as the principal business location of our
Company. Our lease arrangements also include approximately 67,000 square-feet of space for our broadcasting and technology operations in Bethpage, New York with a term through 2029. In addition, we lease other properties in New York, California, Georgia, Florida, Texas, Maryland and Illinois.
We lease approximately 165,000 square feet of space outside of the U.S., including in Spain, Hungary and the U.K. that support our international operations.
We believe our properties are adequate for our use.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
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 "Plaintiffs") filed a complaint in California Superior Court in connection with 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 "Walking Dead Litigation"). The Plaintiffs asserted that the Company had been improperly underpaying the Plaintiffs under their contracts with the Company and they asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, inducing breach of contract, and liability for violation of Cal. Bus. & Prof. Code § 17200. The Plaintiffs sought compensatory and punitive damages and restitution. On August 8, 2019, the judge in the Walking Dead Litigation 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 January 20, 2021, the Plaintiffs filed a second amended complaint, eliminating eight named defendants and their claims under Cal. Bus. & Prof. Code § 17200. On May 5, 2021, the Plaintiffs filed a third amended complaint, repleading in part their claims for alleged breach of the implied covenant of good faith and fair dealing, inducing breach of contract, and certain breach of contract claims. On June 2, 2021, the Company filed a demurrer and motion to strike seeking to dismiss the claim for breach of the implied covenant of good faith and fair dealing and certain tort and breach of contract claims asserted in the third amended complaint. On July 27, 2021, the court granted in part and denied in part the Company's motion. On January 12, 2022, the Company filed a motion for summary adjudication of many of the remaining claims. On April 6, 2022, the court granted the Company’s summary adjudication motion in part, dismissing the Plaintiffs’ claims for breach of the implied covenant of good faith and fair dealing and inducing breach of contract. On January 26, 2023, the Plaintiffs filed a notice of appeal of the court’s post-trial, demurrer, and summary adjudication decisions. On September 25, 2024, a hearing was held on the Plaintiffs’ appeals. On November 4, 2024, the appellate court issued a decision affirming the trial court’s decisions in favor of the Company in the 2021 first phase trial and the 2022 motion for summary judgment. The parties entered into an agreement to resolve through confidential binding arbitration the remaining claims in the litigation (consisting mainly of ordinary course profit participation audit claims), and as a result, the court formally dismissed the case. The arbitration to resolve the two remaining claims for breach of contract was held between October 16 through October 20, 2023. On March 12, 2024, the arbitral panel issued a decision awarding the Plaintiffs a sum of approximately $7.8 million. The arbitral panel's decision did not have a material impact on the Company's financial condition or results of operations.
On November 14, 2022, the Plaintiffs filed a separate complaint in California Superior Court (the “MFN Litigation”) in connection with the Company’s July 16, 2021 settlement agreement with Frank Darabont (“Darabont”), Ferenc, Inc., Darkwoods Productions, Inc., and Creative Artists Agency, LLC (the “Darabont Parties”), which resolved litigations the Darabont Parties had brought 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 “Darabont Settlement”). Plaintiffs assert claims for breach of contract, alleging that the Company breached the most favored nations (“MFN”) provisions of Plaintiffs’ contracts with the Company by failing to pay them additional contingent compensation as a result of the Darabont Settlement (the “MFN Litigation”). Plaintiffs claim in the MFN Litigation that they are entitled to actual and compensatory damages in excess of $200 million. The Plaintiffs also brought a cause of action to enjoin an arbitration the Company commenced in May 2022 concerning the same dispute. On December 15, 2022, the Company removed the MFN Litigation to the United States District Court for the Central District of California. On January 13, 2023, the Company filed a motion to dismiss the MFN Litigation and informed the court that the Company had withdrawn the arbitration Plaintiffs sought to enjoin. On March 25, 2024, the Court issued a ruling denying the Company’s motion to dismiss and the parties are currently conducting discovery. The trial for this matter, initially scheduled for September 17, 2024, has been rescheduled to October 27, 2025. The Company believes that the asserted claims are without merit and will vigorously defend against them if they are not dismissed. 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 has been a party to actions and claims arising from alleged violations of the VPPA and analogous state laws. In addition to putative class actions, the Company faced a series of arbitration claims managed by multiple plaintiffs’ law firms. The class action complaints and the arbitration claims all alleged that the Company’s use of a Meta Platforms, Inc. pixel on the websites for certain of its subscription video services and channels violated the privacy protection provisions of the VPPA and its state law analogues. On October 27, 2023, the Company reached a settlement with multiple plaintiffs relating to their pending class actions alleging violations of the VPPA and analogous state laws with respect to the Company's subscription video services. On May 16, 2024, the class action settlement was approved by the United States District Court for the Southern District of New York. The Company has also reached settlements to resolve the arbitration claims. All of the settlements reached by the Company in connection with these matters were reimbursed by the Company’s insurance carriers.
The Company is party to various lawsuits and claims in the ordinary course of business, including the matters described above, as well as other lawsuits and claims relating to employment, intellectual property, and privacy and data protection matters. 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.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable.
Part II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our Class A Common Stock is listed on NASDAQ under the symbol "AMCX." Our Class B Common Stock is not listed on any exchange. Our Class A Common Stock began trading on NASDAQ on July 1, 2011.
Performance Graph
The following graph compares the performance of the Company's Class A Common Stock with the performance of the S&P Mid-Cap 400 Index (the "S&P 400"), the Russell 2000 Index (the "Russell 2000") and a peer group (the "Peer Group Index") by measuring the changes in our Class A Common Stock prices from December 31, 2019 through December 31, 2024. Because no published index of comparable media companies currently reports values on a dividends-reinvested basis, the Company has created a Peer Group Index for purposes of this graph in accordance with the requirements of the SEC. The Peer Group Index is made up of companies that engage in cable television programming as a significant element of their business, although not all of the companies included in the Peer Group Index participate in all of the lines of business in which the Company is engaged, and some of the companies included in the Peer Group Index also engage in lines of business in which the Company does not participate. Additionally, the market capitalizations of many of the companies included in the Peer Group are quite different from that of the Company. The common stocks of the following companies have been included in the Peer Group Index: Warner Bros. Discovery, Inc., the Walt Disney Company, Fox Corporation, Lions Gate Entertainment Corporation, Nexstar Media Group, Inc., Roku, Inc., and Paramount Global. The chart assumes $100 was invested on December 31, 2019 in each of: i) Company's Class A Common Stock, ii) the S&P 400, iii) the Russell 2000 and iv) in this Peer Group weighted by market capitalization.
Due to the Company being moved out of the S&P 400 during 2024, we have reevaluated the equity market index we use as our benchmark index and determined that the Russell 2000 provides for a better comparison of returns with entities of similar size and market capitalization. Accordingly, we will be using the Russell 2000 as our benchmark index moving forward. The Russell 2000 includes 2,000 companies across a variety of industries with a median market capitalization of approximately $1 billion as of January 31, 2025. For the current year only, comparisons of the Company’s returns to both the S&P 400 and the Russell 2000 are included in the graph.
INDEXED RETURNS
Period Ended
Company Name / Index Base Period 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24
AMC Networks Inc. 100 90.56 87.19 39.67 47.57 25.06
S&P MidCap 400 Index 100 113.66 141.80 123.28 143.54 163.54
Russell 2000 Index 100 119.96 137.74 109.59 128.14 142.93
Peer Group 100 122.78 105.65 57.83 62.47 73.55
This performance graph shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
As of February 7, 2025, there were 496 holders of record of our Class A Common Stock and 32 holders of record of our Class B Common Stock.
Stock Repurchase Program
The Company's Board of Directors has authorized a program to repurchase up to $1.5 billion of the Company's outstanding shares of common stock (the "Stock Repurchase Program"). The authorization of up to $500 million was announced on March 7, 2016, an additional authorization of $500 million was announced on June 7, 2017, and an additional authorization of $500 million was announced on June 13, 2018. The Stock Repurchase Program has no pre-established closing date and may be suspended or discontinued at any time. The Company did not repurchase any shares of its Class A Common Stock during the year ended December 31, 2024. As of December 31, 2024, the Company had $135.3 million available for repurchase under the Stock Repurchase Program.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management's discussion and analysis of financial condition and results of operations, or MD&A, is a supplement to and should be read in conjunction with the accompanying consolidated financial statements and related notes. Our MD&A is provided to enhance the understanding of our financial condition, changes in financial condition and results of our operations and 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 years ended December 31, 2024 and 2023. Our discussion is presented on both a consolidated and segment basis. Our two segments are: (i) Domestic Operations and (ii) International. Analysis of our results of operations, on both a consolidated and segment basis, for the year ended December 31, 2022, including a comparison of 2023 to 2022, is included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Liquidity and Capital Resources. This section provides a discussion of our financial condition as of December 31, 2024 as well as an analysis of our cash flows for the years ended December 31, 2024 and 2023. The discussion of our financial condition and liquidity also includes a summary of our primary sources of liquidity. Analysis of our cash flows for the year ended December 31, 2022 is included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Critical Accounting Policies and Estimates. This section provides a discussion of our accounting policies considered to be important to an understanding of our financial condition and results of operations, and which require significant judgment and estimates on the part of management in their application.
Business Overview
Financial Highlights
The tables presented below set forth our consolidated revenues, net, operating income (loss) and adjusted operating income (loss) ("AOI")(1), for the periods indicated.
Dollars in thousands Year Ended December 31, Change
2024 2023 2024 vs. 2023
Revenues, net
Domestic Operations $ 2,112,989 $ 2,316,587 (8.8) %
International 325,028 404,476 (19.6) %
Inter-segment Eliminations (16,703) (9,186) 81.8 %
$ 2,421,314 $ 2,711,877 (10.7) %
Operating Income (Loss)
Domestic Operations $ 194,295 $ 583,542 (66.7) %
International (56,604) (9,624) n/m
Corporate / Inter-segment Eliminations (177,291) (185,506) (4.4) %
$ (39,600) $ 388,412 n/m
Adjusted Operating Income (Loss)
Domestic Operations $ 619,579 $ 712,744 (13.1) %
International 64,905 60,548 7.2 %
Corporate / Inter-segment Eliminations (121,911) (103,188) 18.1 %
$ 562,573 $ 670,104 (16.0) %
Percentage changes in the table above deemed "n/m" are not meaningful.
(1) Adjusted Operating Income (Loss), is a non-GAAP financial measure. See the "Non-GAAP Financial Measures" section on page 58 for additional information, including our definition and our use of this non-GAAP financial measure, and for a reconciliation to its most comparable GAAP financial measure.
Impairment and other charges
Impairment and other charges of $399.5 million for the year ended December 31, 2024 primarily consisted of a $268.7 million goodwill impairment charge in the Domestic Operations reporting unit, $102.0 million of goodwill impairment charges at AMCNI, and $29.2 million of long-lived asset impairment charges at BBCA.
Impairment and other charges of $96.7 million for the year ended December 31, 2023 primarily consisted of $65.4 million of long-lived asset impairment charges at BBCA and 25/7 Media, and $21.7 million of goodwill impairment charges at 25/7 Media.
Restructuring and other related charges
Restructuring and other related charges were $49.5 million for the year ended December 31, 2024, consisting of $44.2 million of content impairments and $5.3 million of severance and employee-related costs. Following the purchase of the remaining interest in BBCA in November 2024, the Company completed a strategic programming assessment and recorded a restructuring charge of $43.2 million pertaining to certain scripted original programming that no longer aligned with the channel's go-forward strategy. The remaining content impairments were recorded in connection with We TV shifting to a reduced originals strategy.
Restructuring and other related charges were $27.8 million for the year ended December 31, 2023, with the majority of such costs related to a restructuring plan (the "Plan") that commenced in November 2022. During the year ended December 31, 2023, the Company completed the Plan and recorded restructuring and other related charges consisting primarily of charges relating to severance and other personnel costs, and its exit during the third quarter of 2023 of a portion of office space at its corporate headquarters in New York and office space in Silver Spring, Maryland and Woodland Hills, California.
25/7 Media sale
On December 29, 2023, the Company sold its remaining interest in 25/7 Media to the noncontrolling interest holders. The results of operations of 25/7 Media are included in the consolidated financial statements through the date of sale.
Segment Reporting
We manage our business through the following two operating segments:
•Domestic Operations: Consists of our five programming networks, our streaming services, our AMC Studios operation and our film distribution business. Our programming networks are AMC, We TV, BBCA, IFC, and SundanceTV. Our streaming services consist of AMC+ and our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, ALLBLK, and HIDIVE). Our AMC Studios operation produces original programming for our programming services and third parties and also licenses programming worldwide. Our film distribution business includes IFC Films, RLJ Entertainment Films and Shudder. The operating segment also includes AMC Networks Broadcasting & Technology, our technical services business, which primarily services the programming networks.
•International: Consists of AMCNI, our international programming businesses consisting of a portfolio of channels distributed around the world.
In January 2024, we updated the name of our previously titled "International and Other" operating segment to "International" due to the divestiture of the 25/7 Media production services business on December 29, 2023, which was the sole component of the operating segment that comprised “Other.” This update did not constitute a change in segment reporting, but rather an update in name only. Prior period segment information contained in this report for the "International" operating segment includes the results of the 25/7 Media production services business through the date of divestiture.
Domestic Operations
In our Domestic Operations segment, we earn revenue principally from: (i) subscription revenue in connection with the distribution of our programming through our programming networks and 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.
Subscription revenue includes fees paid by distributors and consumers for our programming networks and streaming services. Substantially all of our subscription revenues for our programming networks are based on a per subscriber fee, commonly referred to as "affiliation agreements." The subscription revenues we earn vary from period to period, distributor to distributor and also vary among our programming services, but are generally based on the impact of renewals of affiliation agreements and upon the number of each distributor's subscribers who receive our programming, referred to as viewing subscribers. Subscription fees for our streaming services are typically based on a per subscriber fee and are generally paid by distributors and consumers on a monthly basis. In negotiating for additional subscribers or extended carriage, we have agreed,
in some instances, to make upfront payments to a distributor which we record as deferred carriage fees and are amortized as a reduction to revenue over the period of the related affiliation agreement. We also may support the distributors' efforts to market our networks. We believe that these transactions generate a positive return on investment over the contract period.
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 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. If these guaranteed viewer ratings are not met, we are generally required to provide additional advertising units to the advertiser at no charge. For these types of arrangements, a portion of the related revenue is deferred if the guaranteed ratings are not met and is subsequently recognized either when we provide the required additional advertising time or the guarantee obligation contractually expires. Most of our advertising revenues vary based on the timing of our original programming series and the popularity of our programming as measured by Nielsen. Our national programming networks have advertisers representing companies in a broad range of sectors, including the automotive, restaurants/food, health, technology and telecommunications industries. We seek to increase our advertising revenues by increasing the rates we charge for such advertising, which is directly related to the overall distribution of our programming, penetration of our services on various digital platforms such as AVOD and FAST services, integration of our advanced advertising products, and the popularity (including within desirable demographic groups) of our services as measured by Nielsen.
Content licensing revenue is earned from the licensing of original programming for digital, foreign and home video distribution and is recognized upon availability or distribution by the licensee, and, to a lesser extent, is earned through the distribution of AMC Studios produced series to third parties. Content licensing revenues vary based on the timing of availability of programming to distributors.
We continue to contract for and produce high-quality, attractive programming and remain disciplined in our marketing spend in our efforts to acquire and retain higher lifetime value subscribers. As competition for programming increases and alternative distribution technologies continue to emerge and develop in the industry, costs for content acquisition and original programming have increased. There is a concentration of subscribers in the hands of a few distributors, which could create disparate bargaining power between the largest distributors and us by giving those distributors greater leverage in negotiating the price and other terms of affiliation agreements. We also seek to increase our content licensing revenues by expanding the opportunities for licensing our programming through digital distribution platforms, foreign distribution and home video services.
Content expenses, included in technical and operating expenses, represent the largest expenses of the Domestic Operations segment and primarily consist of amortization of program 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 expenses primarily include distribution and production related costs and program operating costs including cost of delivery, such as origination, transmission, uplink 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 and higher viewership on our streaming services. 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. There may be significant changes in the level of our technical and operating expenses due to the level of our content investment spend and the related amortization of content acquisition and/or original programming costs. Program rights that are predominantly monetized as a group are amortized based on projected usage and viewership patterns, typically resulting in an accelerated amortization pattern and, to a lesser extent, program rights that are predominantly monetized individually are amortized based on the individual-film-forecast-computation method.
Most original series require us to make significant up-front investments. Our programming efforts are not always commercially successful, which has in the past resulted and could in the future result in a write-off of program rights. If events or changes in circumstances indicate that the fair value of program rights predominantly monetized individually or a group is less than its unamortized cost, the Company will write off the excess to technical and operating expenses in the consolidated statements of income (loss). Program rights with no future programming usefulness are substantively abandoned resulting in the write-off of remaining unamortized cost. There were program rights write-offs of $20.0 million and $14.5 million included in technical and operating expense for the years ended December 31, 2024 and 2023, respectively, for programming that was substantively abandoned. For the year ended December 31, 2024, there was also $44.2 million of program write-offs recorded to restructuring and other related charges in connection with the Company's strategic programming assessments.
See "Critical Accounting Policies and Estimates" for a discussion of the amortization and write-off of program rights.
International
In our International segment, we earn revenue principally from subscription revenue in connection with the international distribution of programming and, to a lesser extent, the sale of advertising from our AMCNI programming networks. Subscription revenue consists of the fees paid by distributors to carry our programming networks. Our subscription revenues are generally based on either a per-subscriber fee or a fixed contractual annual fee, under multi-year affiliation agreements. Subscription revenues are derived from the distribution of our programming networks primarily in Europe, and to a lesser extent, Latin America.
Content expenses, programming operating costs and production costs incurred to produce content for third parties primarily comprise technical and operating expenses. Content expenses represent the largest expense of the International segment and primarily consist of amortization of acquired content. Program operating costs include costs such as origination, transmission, uplink and encryption of our linear AMCNI channels as well as content hosting and delivery costs at our various on-line content distribution initiatives. Other components of technical and operating expense include costs of dubbing and sub-titling of programs. Our programming efforts are not all commercially successful, which has in the past resulted and could in the future result in a write-off of program rights. If events or changes in circumstances indicate that the fair value of program rights predominantly monetized individually or a group is less than its unamortized cost, the Company will write off the excess to technical and operating expenses in the consolidated statements of income (loss). Program rights with no future programming usefulness are substantively abandoned, resulting in the write-off of remaining unamortized cost. There were no material programming write-offs included in technical and operating expense for the years ended December 31, 2024 and 2023.
Similar to our Domestic Operations businesses, the most significant business challenges we expect to encounter in our International business include programming competition (from both foreign and domestic programmers), limited channel capacity on distributors' platforms, the number of subscribers on those platforms and economic pressures on subscription fees. Other significant business challenges unique to our international operations include increased programming costs for international rights and translation (i.e., dubbing and subtitling), a lack of availability of international rights for a portion of our domestic programming content, increased distribution costs for cable, satellite or fiber feeds, a limited physical presence in certain territories, and our exposure to foreign currency exchange rate risk. See also the risk factors described under Item 1A, "Risk Factors - We face risks from doing business internationally." in this Annual Report.
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. 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 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. Additionally, changes in macroeconomic factors and circumstances, particularly high inflation and interest rates, and uncertainty regarding changes to inflation rates and interest rates, may adversely impact our results of operations, cash flows and financial position or our ability to refinance our indebtedness on terms favorable to us, or at all.
Capital and credit market disruptions, as well as other events such as pandemics or other health emergencies, inflation, international conflict and recession, have in the past caused and could in the future cause economic downturns, which have led and 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. Events such as these have in the past adversely impacted, and may in the future adversely impact, our results of operations, cash flows and financial position.
Consolidated Results of Operations
The amounts presented and discussed below represent 100% of each operating segment's revenues, net and expenses. Where we have management control of an entity, we consolidate 100% of such entity in our consolidated statements of income (loss) notwithstanding that a third-party owns an interest, which may be significant, in such entity. The noncontrolling owner's interest in the operating results of consolidated subsidiaries are reflected in net income or loss attributable to noncontrolling interests in our consolidated statements of income (loss).
Years Ended December 31, 2024 and 2023
The following table sets forth our consolidated results of operations for the periods indicated.
Years Ended December 31, Change
(In thousands) 2024 2023 2024 vs. 2023
Revenues, net:
Subscription $ 1,472,051 $ 1,561,061 (5.7) %
Advertising 676,634 715,646 (5.5) %
Content licensing and other 272,629 435,170 (37.4) %
Total revenues, net 2,421,314 2,711,877 (10.7) %
Operating expenses:
Technical and operating (excluding depreciation and amortization)
1,132,593 1,327,500 (14.7) %
Selling, general and administrative 781,329 764,087 2.3 %
Depreciation and amortization 98,015 107,402 (8.7) %
Impairment and other charges 399,513 96,689 n/m
Restructuring and other related charges 49,464 27,787 78.0 %
Total operating expenses 2,460,914 2,323,465 5.9 %
Operating income (loss) (39,600) 388,412 n/m
Other income (expense):
Interest expense (166,186) (152,703) 8.8 %
Interest income 36,803 37,018 (0.6) %
Loss on extinguishment of debt, net (105) - n/m
Miscellaneous, net (5,409) 23,279 n/m
Total other income (expense) (134,897) (92,406) 46.0 %
Net income (loss) from operations before income taxes
(174,497) 296,006 n/m
Income tax (expense) benefit (43,490) (94,606) (54.0) %
Net income (loss) including noncontrolling interests
(217,987) 201,400 n/m
Net (income) loss attributable to noncontrolling interests
(8,559) 14,064 n/m
Net income (loss) attributable to AMC Networks' stockholders
$ (226,546) $ 215,464 n/m
Percentage changes in the table above deemed "n/m" are not meaningful.
Revenues
Subscription revenues decreased 4.9% in our Domestic Operations segment primarily due to a decline in affiliate revenues, partially offset by an increase in streaming revenues. Subscription revenues decreased 10.8% in our International segment primarily due to the non-renewal of an AMCNI distribution agreement in the United Kingdom ("U.K.") in the fourth quarter of 2023. We expect the linear subscriber declines to continue, consistent with the declines across the cable ecosystem.
Advertising revenues decreased 11.4% in our Domestic Operations segment primarily due to linear ratings declines and continued lower demand in the entertainment advertising marketplace, partially offset by digital and advanced advertising revenue growth. Advertising revenues increased 41.0% in our International segment primarily due to the recognition of retroactive adjustments reported by a third party of $20.8 million, digital and advanced advertising growth in the U.K. and increased ratings and growth across Central and Northern European advertising markets. We expect advertising revenue to continue to decline as the advertising market gravitates toward other distribution platforms.
Content licensing and other revenues decreased 19.3% in our Domestic Operations segment primarily due to the availability of deliveries in the period. Content licensing and other revenues decreased 87.5% in our International segment due
to the divestiture of the 25/7 Media production services business on December 29, 2023. In 2023, we recognized $91.5 million of revenue from 25/7 Media. We expect content licensing revenues to vary in 2025 based on the timing and availability of our programming to distributors.
Technical and operating expenses (excluding depreciation and amortization)
The components of technical and operating expenses are primarily content expenses, which include the amortization of program rights, such as those for original programming, feature films and licensed series, and participation and residual costs. Technical and operating expenses also include other direct programming costs, such as, distribution and production related costs and program delivery costs, such as transmission, encryption, hosting, and formatting.
Technical and operating expenses (excluding depreciation and amortization) decreased 11.2% in our Domestic Operations segment primarily due to lower participation and residual costs and the impact in 2023 associated with the delivery of the remaining episodes of Silo, an AMC Studios produced series. Technical and operating expenses (excluding depreciation and amortization) decreased 33.3% in our International segment primarily due to the divestiture of the 25/7 Media production services business on December 29, 2023.
There may be significant changes in the level of our technical and operating expenses due to original programming costs and/or content acquisition costs. As competition for programming increases, costs for content acquisition and original programming are expected to increase.
Selling, general and administrative expenses
The components of selling, general and administrative expenses primarily include sales, marketing, research and advertising expenses, employee related costs and costs of non-production facilities.
Selling, general and administrative expenses increased 3.4% in our Domestic Operations segment primarily due to higher marketing and subscriber acquisition expenses partially offset by lower employee related costs. Selling, general and administrative expenses decreased 7.9% in our International segment primarily due to the divestiture of the 25/7 Media production services business on December 29, 2023.
There have been and may continue to be significant changes in the level of our selling, general and administrative expenses due to the timing of promotions and marketing of original programming series.
Impairment and other charges
Impairment and other charges of $399.5 million for the year ended December 31, 2024 primarily consisted of a $268.7 million goodwill impairment charge in the Domestic Operations reporting unit, $102.0 million of goodwill impairment charges at AMCNI, and $29.2 million of long-lived asset impairment charges at BBCA.
In December 2024, in connection with the preparation of our fourth quarter financial information, we performed our annual goodwill impairment test and concluded that the estimated fair values of the Domestic Operations and AMCNI reporting units declined to less than their carrying amounts. The decrease in the estimated fair values reflected current and expected trends across the media industry, including continued softness in the domestic linear marketplace and across the international television broadcasting markets, resulting in lower expected future cash flows, as well as a decrease in the valuation multiples used to estimate fair values using the market approach for the Domestic Operations reporting unit. As a result, we recognized impairment charges of $268.7 million related to the Domestic Operations reporting unit and $34.0 million related to the AMCNI reporting unit, included in Impairment and other charges in the consolidated statements of income (loss).
During the second quarter of 2024, we determined that a triggering event had occurred with respect to our decline in stock price, which required an interim goodwill impairment test to be performed. Accordingly, we performed quantitative assessments for all reporting units. Based on the valuations performed, we concluded that the estimated fair value of the AMCNI reporting unit declined to less than its carrying amount. As a result, we recognized an impairment charge of $68.0 million related to the AMCNI reporting unit, included in Impairment and other charges in the consolidated statements of income (loss).
Additionally during the second quarter of 2024, given continued market challenges and linear declines, we determined that sufficient indicators of potential impairment of long-lived assets existed at BBCA, and concluded that the carrying amount of the BBCA asset group was not recoverable. The carrying value of the BBCA asset group exceeded its fair value, and accordingly an impairment charge of $15.7 million was recorded for identifiable intangible assets and $13.5 million for other long-lived assets, which is included in Impairment and other charges in the consolidated statements of income (loss) within the Domestic Operations operating segment.
Impairment and other charges of $96.7 million for the year ended December 31, 2023 primarily consisted of $65.4 million of long-lived assets impairment charges at BBCA and 25/7 Media, and $21.7 million of goodwill impairment charges at 25/7 Media.
In June 2023, given the impact of market challenges at 25/7 Media, specifically relating to reduced demand for new content and series cancellations from third parties, we revised our outlook for the 25/7 Media production services business, resulting in lower expected future cash flows. As a result, we determined that sufficient indicators of potential impairment of long-lived assets and goodwill existed at 25/7 Media. We performed a recoverability test and determined that the carrying amount of the 25/7 Media asset group was not recoverable. The carrying value of the asset group exceeded its fair value, therefore an impairment charge of $24.9 million was recorded ($23.0 million for identifiable intangible assets and $1.9 million for goodwill), which is included in Impairment and other charges in the consolidated statements of income (loss) within the International operating segment.
In December 2023, in connection with the preparation of our fourth quarter financial information, we performed our annual goodwill impairment test and concluded that the estimated fair value of the 25/7 Media reporting unit further declined from the interim assessment performed. The decrease in the estimated fair value reflected the continued decline in market conditions and business outlook and contemplation of concurrent negotiations with the noncontrolling interest holders for the sale of our remaining interest. As a result, we recognized an impairment charge of $19.8 million, reflecting a write-down of substantially all of the goodwill associated with the 25/7 Media reporting unit.
During the fourth quarter of 2023, given continued market challenges and linear declines, we revised our outlook for our BBCA linear programming network, resulting in lower expected future cash flows. As a result, we determined that sufficient indicators of potential impairment of long-lived assets existed at BBCA. We performed a recoverability test and determined that the carrying amount of the BBCA asset group was not recoverable. The carrying value of the asset group exceeded its fair value, therefore an impairment charge of $42.4 million was recorded for identifiable intangible assets and other long-lived assets.
Restructuring and other related charges
Restructuring and other related charges were $49.5 million for the year ended December 31, 2024, consisting of $44.2 million of content impairments and $5.3 million of severance and employee-related costs. Following the purchase of the remaining interest in BBCA in November 2024, the Company completed a strategic programming assessment and recorded a restructuring charge of $43.2 million pertaining to certain scripted original programming that no longer aligned with the channel's go-forward strategy. The remaining content impairments were recorded in connection with We TV shifting to a reduced originals strategy.
Restructuring and other related charges were $27.8 million for the year ended December 31, 2023, with the majority of such costs related to the Plan that commenced in November 2022 that was designed to achieve significant cost reductions in light of “cord cutting” and the related impacts being felt across the media industry as well as the broader economic outlook. The Plan encompassed initiatives that included, among other things, strategic programming assessments and organizational restructuring costs. The Plan was intended to improve the organizational design of the Company through the elimination of certain roles and centralization of certain functional areas of the Company. The programming assessments pertained to a broad mix of owned and licensed content, including legacy television series and films that are no longer in active rotation on the Company’s linear or streaming platforms.
During the year ended December 31, 2023, we completed the Plan and recorded restructuring and other related charges of $27.8 million, consisting primarily of charges relating to severance and other personnel costs, and our exit during the third quarter of 2023 of a portion of office space at our corporate headquarters in New York and office space in Silver Spring, Maryland and Woodland Hills, California. In connection with exiting a portion of our New York office space, we recorded impairment charges of $11.6 million, consisting of $9.1 million for operating lease right-of use assets and $2.5 million for leasehold improvements.
Operating income
The decrease in operating income was primarily attributable to additional impairment and other charges of $302.8 million, a decrease in revenues of $290.6 million, and additional restructuring charges of $21.7 million, partially offset by a decrease in technical and operating expenses of $194.9 million.
Interest expense
The increase in interest expense was primarily due to an increase in average interest rates associated with the Company's 10.25% Senior Secured Notes due 2029 refinancing the Company's 4.75% Senior Notes due 2025, partially offset by the impact of a lower outstanding debt balance.
Interest income
The decrease in interest income was primarily attributable to lower interest income from our money market mutual fund accounts and bank deposits, partially offset by interest received in connection with retroactive adjustments reported by a third party.
Loss on extinguishment of debt, net
In August 2024, we voluntarily prepaid $35.0 million of borrowings under the Term Loan A Facility (as defined below), resulting in the recognition of a $0.4 million charge to write off a portion of the associated unamortized discount and deferred financing costs.
In June 2024, we repurchased $15.0 million of our outstanding 4.25% Senior Notes due 2029 through open market repurchases, at a discount of $4.9 million, and retired the repurchased notes. We recorded a $4.7 million gain which reflects the discount, net of $0.2 million to write off a portion of the unamortized discount and deferred financing costs associated with the notes.
In April 2024, we completed a cash tender offer (the "Offer") to purchase any and all outstanding 4.75% Senior Notes due 2025 and redeemed all 4.75% Senior Notes due 2025 that remained outstanding after completion of the Offer at a price of 100.000% of their principal amount, plus accrued and unpaid interest to, but not including, the redemption date. In connection with the Offer and redemption, we recorded a charge of $3.1 million to write off the remaining unamortized discount and deferred financing costs associated with the 4.75% Senior Notes due 2025.
In April 2024, we entered into Amendment No. 3 ("Amendment No. 3") to the Second Amended and Restated Credit Agreement, dated as of July 28, 2017 (as amended to date and by Amendment No. 3, the "Credit Agreement"). In connection with Amendment No. 3, we made a $165.6 million partial prepayment of the Term Loan A facility under the Credit Agreement (the “Term Loan A Facility”), bringing the total principal amount outstanding under the Term Loan A Facility to $425 million, and reduced the revolving credit facility under the Credit Agreement (the “Revolving Credit Facility”) to $175 million. In connection with the partial prepayment of the Term Loan A Facility and reduction of the revolving loan commitments, we recorded a charge of $1.3 million to write off a portion of the unamortized discount and deferred financing costs associated with the Credit Agreement.
Miscellaneous, net
The decrease in miscellaneous, net was primarily related to the impact of foreign currency fluctuations and costs incurred in connection with the second quarter refinancing transactions.
Income tax benefit (expense)
Income tax expense was $43.5 million for 2024 on income (loss) from operations before income taxes of $(174.5) million, representing a negative effective tax rate. The effective tax rate differs from the federal statutory rate of 21% due primarily to tax expense of $33.7 million related to a write-down of a state investment tax credit receivable, tax expense related to foreign operations of $18.9 million and tax expense of $16.0 million resulting from nondeductible goodwill impairment charges. Other items resulting in variances from the federal statutory rate of 21% primarily consist of tax expense of $8.1 million related to the expiration of foreign tax credits, tax expense of $4.5 million related to non-deductible compensation expense, state and local income tax expense of $1.2 million, and a tax benefit of $2.2 million resulting from a net decrease in valuation allowances primarily related to foreign deferred tax assets.
Income tax expense was $94.6 million for 2023, representing an effective tax rate of 32%. The effective tax rate differs from the federal statutory rate of 21% due primarily to state and local income tax expense of $10.5 million, tax expense related to foreign operations of $3.4 million, tax expense of $10.6 million resulting from a net increase in valuation allowances primarily related to foreign deferred tax assets, $3.8 million of tax expense related to nontaxable loss attributable to noncontrolling interests and tax expense of $5.2 million related to non-deductible compensation expense.
Segment Results of Operations
Our segment operating results are presented based on how we assess operating performance and internally report financial information. We use segment adjusted operating income as the measure of profit or loss for our operating segments. See the "Non-GAAP Financial Measures" section below for our definition of Adjusted Operating Income and a reconciliation from Operating Income to Adjusted Operating Income on a segment and consolidated basis.
Domestic Operations
The following table sets forth our Domestic Operations segment results for the periods indicated.
Years Ended December 31, Change
(In thousands) 2024 2023 2024 vs. 2023
Revenues, net:
Subscription $ 1,275,127 $ 1,340,207 (4.9) %
Advertising 561,301 633,823 (11.4) %
Content licensing and other 276,561 342,557 (19.3) %
Total revenues, net 2,112,989 2,316,587 (8.8) %
Technical and operating expenses (excluding depreciation and amortization)(a)
990,434 1,115,948 (11.2) %
Selling, general and administrative expenses(b)
518,654 501,501 3.4 %
Majority-owned equity investees AOI 15,678 13,606 15.2 %
Segment adjusted operating income $ 619,579 $ 712,744 (13.1) %
(a) Technical and operating expenses excludes cloud computing amortization
(b) Selling, general and administrative expenses excludes share-based compensation expenses and cloud computing amortization
Revenues
Subscription revenues decreased primarily due to a 13.2% decline in affiliate revenues, partially offset by a 6.6% increase in streaming revenues. Affiliate revenues decreased primarily due to basic subscriber declines and, to a lesser extent, contractual rate decreases in connection with renewals. Streaming revenues increased due to year-over-year subscriber growth and price increases.
Subscription revenues include revenues related to the Company's streaming services of $603.0 million and $565.6 million for 2024 and 2023, respectively. Aggregate paid subscribers3 to our streaming services increased 8.3% to 12.4 million at December 31, 2024 compared to 11.4 million at December 31, 2023.
Advertising revenues decreased primarily due to linear ratings declines and continued lower demand in the entertainment advertising marketplace, partially offset by digital and advanced advertising revenue growth.
Content licensing and other revenues decreased due to the availability of deliveries in the period, including $56.1 million of revenue associated with the 2023 delivery of the remaining episodes of Silo, an AMC Studios produced series, the delivery of fewer episodes of Fear the Walking Dead in 2024 compared to 2023, and the impact of $20.3 million recognized in 2023 associated with the early termination of an output agreement that resulted in the acceleration of revenue into 2023. These decreases were partially offset by the delivery in 2024 of 15 AMC branded shows in connection with a content licensing agreement with Netflix and the sale of our rights and interests to Killing Eve in 2024.
3 A paid subscription is defined as a subscription to a direct-to-consumer service or a subscription received through distributor arrangements, in which we receive a fee for the distribution of our streaming services.
The following table presents subscriber information for our national programming networks at December 31, 2024 and 2023:
Estimated U.S. Subscribers as measured by Nielsen
(In thousands) December 31,
2024 December 31,
National Programming Networks:
AMC 59,800 65,100
We TV 58,800 63,700
BBCA 55,600 60,000
IFC 51,700 56,200
SundanceTV 49,500 53,900
Technical and operating expenses (excluding depreciation and amortization)
Technical and operating expenses (excluding depreciation and amortization) decreased primarily due to lower participation and residuals costs, the impact in 2023 associated with the delivery of the remaining episodes of Silo, an AMC Studios produced series, and lower program rights amortization. The decrease in program rights amortization is consistent with the decrease in content licensing revenue for Fear the Walking Dead and the early termination of an output agreement, that resulted in the acceleration of program rights amortization into 2023, which were partially offset by the impact of the slate of AMC originals premiering in 2024.
Program rights amortization expense includes write-offs of $20.0 million and $14.5 million for the years ended December 31, 2024 and 2023, respectively, for programming that was substantively abandoned. Programming write-offs are based on management's periodic assessment of programming usefulness.
Selling, general and administrative expenses
Selling, general and administrative expenses increased primarily due to higher marketing and subscriber acquisition expenses related to our streaming services, partially offset by lower employee related costs due to a decrease in allocated corporate overhead costs.
Segment adjusted operating income
The decrease in segment adjusted operating income was primarily attributable to the revenue headwinds in our linear businesses, partially offset by a decrease in technical and operating expenses.
International
The following table sets forth our International segment results for the periods indicated.
Years Ended December 31, Change
(In thousands) 2024 2023 2024 vs. 2023
Revenues, net:
Subscription $ 196,924 $ 220,854 (10.8) %
Advertising 115,333 81,823 41.0 %
Content licensing and other 12,771 101,799 (87.5) %
Total revenues, net 325,028 404,476 (19.6) %
Technical and operating expenses (excluding depreciation and amortization) 148,539 222,757 (33.3) %
Selling, general and administrative expenses(a)
111,584 121,171 (7.9) %
Segment adjusted operating income $ 64,905 $ 60,548 7.2 %
(a) Selling, general and administrative expenses excludes share-based compensation expenses
Revenues
Subscription revenues decreased primarily due to the non-renewal of an AMCNI distribution agreement in the U.K. in the fourth quarter of 2023.
Advertising revenues increased primarily due to the recognition of retroactive adjustments reported by a third party for $20.8 million, digital and advanced advertising growth in the U.K, and increased ratings and growth across Central and Northern European advertising markets.
Content licensing and other revenues decreased due to the divestiture of the 25/7 Media production services business on December 29, 2023. 25/7 Media generated $91.5 million of content licensing and other revenue during the year ended December 31, 2023.
Technical and operating expenses (excluding depreciation and amortization)
Technical and operating expenses (excluding depreciation and amortization) decreased primarily due to the divestiture of the 25/7 Media production services business on December 29, 2023. 25/7 Media incurred $72.1 million of technical and operating expenses during the year ended December 31, 2023. The remaining decrease was primarily attributable to $3.1 million of lower content expenses, primarily driven by content cost savings associated with the non-renewal of an AMCNI distribution agreement in the U.K. in the fourth quarter of 2023, partially offset by increased program investment across Central and Northern European markets.
Selling, general and administrative expenses
Selling, general and administrative expenses decreased primarily due to the divestiture of the 25/7 Media production services business on December 29, 2023, partially offset by increased selling expenses at AMCNI, including commissions. 25/7 Media incurred $15.3 million of selling, general and administrative expenses during the year ended December 31, 2023.
Segment adjusted operating income
The increase in segment adjusted operating income was primarily due to the recognition of retroactive adjustments reported by a third party for $20.8 million, partially offset by the impact of the non-renewal of an AMCNI distribution agreement in the U.K. and the divestiture of the 25/7 Media production services business on December 29, 2023. 25/7 Media generated $4.1 million of adjusted operating income during the year ended December 31, 2023.
Corporate / Inter-segment Eliminations
The following table sets forth our Corporate / Inter-segment Eliminations results for the periods indicated.
Years Ended December 31, Change
(In thousands) 2024 2023 2024 vs. 2023
Revenues, net $ (16,703) $ (9,186) 81.8 %
Technical and operating expenses (excluding depreciation and amortization)(a)
(9,767) (11,934) (18.2) %
Selling, general and administrative expenses(b)
114,975 105,936 8.5 %
Segment adjusted operating loss $ (121,911) $ (103,188) 18.1 %
(a) Technical and operating expenses excludes cloud computing amortization
(b) Selling, general and administrative expenses excludes share-based compensation expenses and cloud computing amortization
Revenues, net
Revenue eliminations are primarily related to Domestic Operations revenues recognized for licensing sales to the International segment.
Technical and operating expenses (excluding depreciation and amortization)
Technical and operating expense eliminations are primarily related to AMCNI programming amortization for content acquired from the Domestic Operations segment.
Selling, general and administrative expenses
Selling, general and administrative expenses increased primarily due to higher employee related costs, including higher allocated overhead costs and compensation incurred in connection with an executive officer's separation agreement.
Liquidity and Capital Resources
Overview
Our operations typically generate positive net cash flow from operating activities. However, each of our programming businesses has substantial programming acquisition and production expenditure requirements.
Our primary source of cash typically includes cash flow from operations. Sources of cash also include amounts available under our Revolving Credit Facility and, subject to market conditions, access to capital and credit markets. Although we currently believe that amounts available under our Revolving Credit Facility will be available when and if needed, we can provide no assurance that access to such funds will not be impacted by adverse conditions in the financial markets. The obligations of the financial institutions under our Revolving Credit Facility are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others. As a public company, we may have access to capital and credit markets, although adverse conditions in the financial markets have in the past impacted, and are expected in the future to impact, access to those markets. See the "Debt Financing Agreements" section below for details of our debt transactions in 2023 and 2024.
In October 2023, we entered into an agreement enabling us to sell certain customer receivables to a financial institution on a recurring basis for cash. The transferred receivables will be fully guaranteed by a bankruptcy-remote entity and the financial institution that purchases the receivables will have no recourse to our other assets in the event of non-payment by the customers. We can sell an indefinite amount of customer receivables under the agreement on a revolving basis, but the outstanding balance of unpaid customer receivables to the financial institution cannot exceed the initial program limit of $125.0 million at any given time. We have not yet sold any customer receivables under this agreement.
Our principal uses of cash include the production, acquisition and promotion of programming, technology investments, debt service and payments for income taxes. We continue to invest in original programming, the funding of which generally occurs at least nine months in advance of a program's airing.
On November 1, 2024, we acquired the remaining 50.1% of the BBC America joint-venture that we had not previously owned for $42.0 million in cash. As a result, the carrying amount of the noncontrolling interest was reduced to zero, reflecting our 100% ownership of the BBC America business. Additionally, in connection with the transaction, we terminated our prior program license agreement with BBC Studios, resulting in a significant reduction of contractual programming commitments. We entered into a new program license agreement with BBC Studios for $40.0 million, all of which was paid at closing.
During 2024, $77.0 million of cash and cash equivalents, previously held by foreign subsidiaries, was repatriated to the United States. Our consolidated cash and cash equivalents balance of $784.6 million, as of December 31, 2024, includes $111.5 million held by foreign subsidiaries. Of this amount, approximately $8.0 million is expected to be repatriated to the United States with the remaining amount continuing to be reinvested in foreign operations. Tax expense related to the repatriated amount, as well as the expected remaining amount to be repatriated, has been accrued in the current period and the Company does not expect to incur any significant, additional taxes related to the remaining balance.
We believe that a combination of cash-on-hand, cash generated from operating activities, availability under our Revolving Credit Facility and our accounts receivable monetization program, borrowings under additional financing facilities and, when we have access to capital and credit markets, proceeds from the issuance of new debt, will provide sufficient liquidity to service the principal and interest payments on our indebtedness, along with our other funding and investment requirements over the next twelve months and over the longer term. However, we do not expect to generate sufficient cash from operations to repay the entirety of the outstanding balances of our debt at the applicable maturity dates. As a result, we will be dependent upon our ability to access the capital and credit markets in order to repay, refinance, repurchase through privately negotiated transactions, open market repurchases, tender offers or otherwise or redeem the outstanding balances of our indebtedness.
Our 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 termination date and may be suspended or discontinued at any time. For the year ended December 31, 2024, we did not repurchase any of our Class A Common Stock. As of December 31, 2024, we had $135.3 million of authorization remaining for repurchase under the Stock Repurchase Program.
Failure to raise significant amounts of funding to repay our outstanding debt obligations at their respective maturity dates would adversely affect our business. In such a circumstance, we would need to take other actions including selling assets, seeking strategic investments from third parties or reducing other discretionary uses of cash. See Item 1A, "Risk Factors - Risks Related to Our Debt" in this Annual Report. In addition, economic or market disruptions could lead to lower demand for our services, such as loss of subscribers and lower levels of advertising. These events would adversely impact our results of operations, cash flows and financial position.
Cash Flow Discussion
The following table is a summary of cash flows provided by (used in) operating, investing and financing activities for the periods indicated:
Years Ended December 31,
(In thousands) 2024 2023
Cash provided by operating activities $ 375,615 $ 203,919
Cash used in investing activities (40,376) (24,322)
Cash used in financing activities (110,223) (544,435)
Net increase (decrease) in cash and cash equivalents $ 225,016 $ (364,838)
Operating Activities
Net cash provided by operating activities for 2024 and 2023 amounted to $375.6 million and $203.9 million, respectively.
In 2024, net cash provided by operating activities primarily resulted from $1,211.2 million of net income before amortization of program rights, impairment charges, depreciation and amortization, and other non-cash items, partially offset by payments for program rights of $932.3 million. Changes in all other assets and liabilities during the year resulted in a net cash inflow of $96.7 million.
In 2023, net cash provided by operating activities primarily resulted from $1,421.5 million of net income before amortization of program rights, depreciation and amortization, and other non-cash items, partially offset by payments for program rights of $1,079.9 million and restructuring initiatives of $112.6 million. Changes in all other assets and liabilities during the year resulted in a net cash outflow of $25.1 million.
Investing Activities
Net cash used in investing activities for 2024 and 2023 was $40.4 million and $24.3 million, respectively.
In 2024, net cash used in investing activities primarily consisted of capital expenditures of $44.8 million.
In 2023, net cash used in investing activities primarily consisted of capital expenditures of $35.2 million, partially offset by proceeds from the sale of investments of $8.6 million and the return of capital from investees of $2.1 million.
Financing Activities
Net cash used in financing activities for 2024 and 2023 was $110.2 million and $544.4 million, respectively.
In 2024, net cash used in financing activities primarily related to long-term debt refinancing transactions, the Convertible Notes issuance, principal payments on the Term Loan A Facility, the purchase of the remaining 50.1% interest of the BBC America joint-venture that we had not previously owned for $42.0 million, and distributions to noncontrolling interests of $24.0 million.
In 2023, net cash used in financing activities primarily consisted of principal payments on long-term debt of $458.4 million (including $400.0 million of 5.00% Notes due April 2024, $24.7 million of 4.75% Notes due August 2025, and $33.7 million on the Term Loan A Facility), distributions to noncontrolling interests of $72.9 million, taxes paid in lieu of shares issued for equity-based compensation of $7.3 million, principal payments on finance leases of $4.2 million, and the purchase of noncontrolling interests of $1.3 million.
Debt Financing Agreements
The Company's principal amount of long-term debt consists of:
(In thousands) December 31, 2024 December 31, 2023
Senior Secured Credit Facility:(a)
Term Loan A Facility $ 365,625 $ 607,500
Senior Notes:
4.75% Senior Notes due August 2025 - 774,729
10.25% Senior Secured Notes due January 2029 875,000 -
4.25% Senior Notes due February 2029 985,010 1,000,000
4.25% Convertible Senior Notes due February 2029 143,750 -
Principal amount of debt $ 2,369,385 $ 2,382,229
(a) Represents the aggregate principal amount of the debt, with maturities of Term Loan A (Non-Extended) (as defined below) of $90.0 million due February 2026, Term Loan A (Extended) (as defined below) of $275.6 million due April 2028, and undrawn $175.0 million Revolving Credit Facility due April 2028. Total undrawn revolver commitments are available to be drawn for general corporate purposes of the Company.
On April 9, 2024, AMC Networks entered into Amendment No. 3 to the Credit Agreement, among AMC Networks and its subsidiary, AMC Network Entertainment LLC (“AMC Network Entertainment”), as the initial borrowers, certain of AMC Networks' subsidiaries, as restricted subsidiaries, Bank of America, N.A., as an L/C Issuer, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, Collateral Agent and an L/C Issuer.
In connection with Amendment No. 3, AMC Networks made a $165.6 million partial prepayment of the Term Loan A Facility, bringing the total principal amount outstanding under the Term Loan A Facility to $425 million, and reduced the Revolving Credit Facility to $175 million. In addition, pursuant to Amendment No. 3, the maturity date of $325 million principal amount of loans under the Term Loan A Facility as well as all of the commitments under the Revolving Credit Facility has been extended to April 9, 2028 (referred to as "Term Loan A (Extended)"). The maturity date of the remaining $100 million principal amount of loans under the Term Loan A Facility continues to be February 8, 2026 (referred to as "Term Loan A (Non-Extended)"). Amendment No. 3 also includes certain other modifications to covenants and other provisions of the Credit Agreement. During each of the second, third and fourth quarters of 2024, we repaid $8.1 million of borrowings under the Term Loan A Facility in accordance with the terms of the Credit Agreement. In addition, we also voluntarily prepaid $35.0 million of borrowings under the Term Loan A Facility during the third quarter of 2024. In March 2024, we also repaid $16.9 million of borrowings under the Term Loan A Facility in accordance with the previous agreement.
On April 9, 2024, AMC Networks issued $875 million aggregate principal amount of 10.25% Senior Secured Notes due 2029 (the “Secured Notes”). AMC Networks received net proceeds of $863.0 million, after deducting initial purchasers' discounts. The Secured Notes are guaranteed by AMC Network Entertainment and AMC Networks' subsidiaries that guarantee the Credit Agreement.
On April 22, 2024, AMC Networks completed the Offer to purchase any and all outstanding 4.75% Senior Notes due 2025 and redeemed all 4.75% Senior Notes due 2025 that remained outstanding after completion of the Offer at a price of 100.000% of their principal amount, plus accrued and unpaid interest to, but not including, the redemption date.
On June 21, 2024, the Company completed a private unregistered offering of $143.8 million aggregate principal amount of its 4.25% Convertible Senior Notes due 2029 (the “Convertible Notes”), which amount includes the full exercise of the initial purchasers’ option to purchase additional Convertible Notes. The Company received net proceeds of $139.4 million, after deducting initial purchasers' discounts. The Convertible Notes are guaranteed by each of the Company’s existing and future domestic subsidiaries that guarantee the Company’s credit facilities and the Company’s 4.25% Senior Notes due 2029 and the Secured Notes, subject to certain exceptions, on a senior, unsecured basis.
In June 2024, the Company repurchased $15.0 million of its outstanding 4.25% Senior Notes due 2029 through open market repurchases, at a discount of $4.9 million, and retired the repurchased notes.
The Credit Agreement generally requires AMC Networks Inc. and its restricted subsidiaries on a consolidated basis to comply with a maximum total net leverage ratio of 5.75:1.00 from the Amendment No. 3 effective date through March 31, 2026, after which the maximum total net leverage ratio changes to 5.50:1.00. As of December 31, 2024, the total net leverage ratio was approximately 3.85:1.00. In addition, the Credit Agreement requires a minimum interest coverage ratio of 2.00:1.00 for AMC Networks Inc. and its restricted subsidiaries until September 30, 2026, after which the minimum interest coverage ratio changes to 2.25:1.00. As of December 31, 2024, the interest coverage ratio was approximately 3.12:1.00. All borrowings
under the Credit Agreement are subject to the satisfaction of customary conditions, including the absence of a default and accuracy of representations and warranties.
AMC Networks was in compliance with all of its debt covenants as of December 31, 2024.
Additional information regarding our outstanding indebtedness, including its significant terms and provisions, is discussed in Note 9 to the accompanying consolidated financial statements included in this Annual Report on Form 10-K and is incorporated herein by reference.
Supplemental Guarantor Financial Information
The following is a description of the terms and conditions of the guarantees with respect to the outstanding notes for which AMC Networks is the issuer.
Note Guarantees
Debt of AMC Networks as of December 31, 2024 included $875.0 million of 10.25% Senior Secured Notes due 2029, $985.0 million of 4.25% Senior Notes due 2029, and $143.8 million of 4.25% Convertible Senior Notes due 2029 (collectively, the “notes”). The notes were issued by AMC Networks and are unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of AMC Networks’ existing and future domestic restricted subsidiaries, subject to certain exceptions (each, a “Guarantor Subsidiary,” and collectively, the “Guarantor Subsidiaries”). The obligations of each Guarantor Subsidiary under its note guarantee are limited as necessary to prevent such note guarantee from constituting a fraudulent conveyance under applicable law. A guarantee of the notes by a Guarantor Subsidiary is subject to release in the following circumstances: (i) any sale or other disposition of all of the capital stock of a Guarantor Subsidiary to a person that is not (either before or after giving effect to such transaction) a restricted subsidiary, in compliance with the terms of the applicable indenture; (ii) the designation of a restricted subsidiary as an “Unrestricted Subsidiary” under the applicable indenture; or (iii) the release or discharge of the guarantee (including the guarantee under the AMC Networks’ credit agreement) which resulted in the creation of the note guarantee (provided that such Guarantor Subsidiary does not have any preferred stock outstanding at such time that is not held by AMC Networks or another Guarantor Subsidiary).
Foreign subsidiaries of AMC Networks do not and will not guarantee the notes.
The following tables present the summarized financial information specified in Rule 1-02(bb)(1) of Regulation S-X for AMC Networks and each Guarantor Subsidiary. The summarized financial information has been prepared in accordance with Rule 13-01 of Regulation S-X.
Summarized Financial Information
Income Statement
(In thousands) Year Ended December 31, 2024 Year Ended December 31, 2023
Parent Company Guarantor Subsidiaries Parent Company Guarantor Subsidiaries
Revenues $ - $ 1,764,795 $ - $ 1,935,082
Operating expenses - 1,693,206 - 1,559,083
Operating income $ - $ 71,589 $ - $ 375,999
Income (loss) before income taxes $ (199,080) $ (21,569) $ 284,660 $ 444,647
Net income (loss) (226,546) (32,249) 215,464 435,328
Balance Sheet December 31, 2024 December 31, 2023
(In thousands) Parent Company Guarantor Subsidiaries Parent Company Guarantor Subsidiaries
Assets
Amounts due from subsidiaries $ 4,483 $ 82,342 $ - $ -
Current assets 31,727 1,386,554 61,931 1,156,533
Non-current assets 3,467,276 2,718,427 3,676,129 3,301,046
Liabilities and equity:
Amounts due to subsidiaries $ 80,983 $ 733 $ 54,627 $ 2,456
Current liabilities 168,903 473,418 173,031 666,783
Non-current liabilities 2,474,505 228,778 2,516,977 224,051
Critical Accounting Policies and Estimates
In preparing our consolidated financial statements, we are required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. These estimates and assumptions can be subjective and complex and, consequently, actual results could differ materially from our estimates and assumptions. We base our estimates on historical experience, known or expected trends and other assumptions that we believe are reasonable under the circumstances.
We believe the following critical accounting policies comprise the more significant judgments and estimates used in the preparation of our consolidated financial statements:
Program Rights
We amortize and test for impairment of capitalized film and television costs based on whether the content is predominantly monetized individually or as a group.
Program rights that are expected to be predominantly monetized on our networks and streaming services with other programming are considered monetized as a group. Licensed and owned original programming, including feature films and television series are amortized on a straight-line or accelerated basis based on viewership patterns on our streaming services and the projected program usage of the rights on our networks, over a period not to exceed the respective license periods.
The projected program usage is based on the Company's current expectation of future exhibitions taking into account historical usage and viewership patterns of similar content. The determination of the projected program usage requires significant judgment. Accordingly, the Company periodically reviews estimates of its projected program usage and viewership patterns and revises its assumptions if necessary, which could impact the timing of amortization expense. Any adjustments to the assumptions are applied prospectively in the period of the change.
For content that is predominantly monetized as a group, unamortized costs are tested for impairment whenever events or changes in circumstances indicate that the fair value of the group may be less than its unamortized costs. Groups are tested for impairment by comparing the present value of the discounted cash flows of the group to the aggregate unamortized costs of the group. If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess and allocated to individual titles within the group on a pro rata basis using the relative carrying value of the titles. Program rights with no future programming usefulness are substantially abandoned, resulting in the write-off of remaining unamortized cost.
Program rights that are expected to be predominantly monetized through licensing agreements are considered to be monetized individually and are amortized to technical and operating expense over their estimated useful lives, commencing upon the first usage, based on attributable revenue for airings to date as a percentage of total projected attributable revenue ("ultimate revenue") under the individual-film-forecast-computation method.
Ultimate revenues are estimated based on the levels of revenue generated from similar content in comparable markets, projected program usage, and the levels of historical and expected programming market acceptance. The determination of ultimate revenues requires significant judgment. Accordingly, the Company periodically reviews its ultimate revenue estimates and revises its assumptions if necessary, which could impact the timing of amortization expense. Any adjustments are applied prospectively as of the beginning of the fiscal year of the change.
For content that is predominantly monetized on an individual basis, a television program or feature film is tested for impairment when events or circumstances indicate that its fair value may be less than its unamortized cost. Individual titles are tested for impairment by comparing the present value of the discounted cash flows of the title to the unamortized costs of the title. If the unamortized costs exceed the present value of discounted cash flows, an impairment charge is recorded for the excess. Program rights with no future programming usefulness are substantially abandoned, resulting in the write-off of remaining unamortized cost.
Program rights write-offs of $20.7 million and $17.3 million were included in technical and operating expense for the years ended December 31, 2024 and 2023, respectively, for programming that was substantively abandoned. Refer to Note 4 for amounts recorded to restructuring expense in connection with the Company’s strategic programming assessments.
Useful Lives of Affiliate Intangible Assets
The carrying amount of our affiliate relationships acquired in business combinations as of December 31, 2024 was $154.0 million. Useful lives of affiliate relationships (ranging from 6 to 25 years) are initially determined based upon weighted average remaining terms of agreements in place with major distributors when purchase accounting is applied, plus an assumption for expected renewals. We periodically update our assumption for expected renewals based on recent experience and known or expected trends. We have historically been successful in renewing our major affiliation agreements and expect to renew such agreements in the future. However, if renewal trends deteriorate in the future (e.g., failure to renew, or renewals with significantly shorter terms), we may revise the remaining useful lives of affiliate intangible assets, resulting in higher amortization expenses in future periods. See Note 7 to the accompanying consolidated financial statements included in this Annual Report on Form 10-K for additional details.
Goodwill
Goodwill is not amortized, but instead is tested for impairment at the reporting unit level annually as of December 1, or more frequently upon the occurrence of certain events or substantive changes in circumstances. The annual goodwill impairment test allows for the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined, on the basis of qualitative factors, that the fair value of a reporting unit is, more likely than not, less than its carrying value, the quantitative impairment test is required. The quantitative impairment test calculates any goodwill impairment as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill.
For our annual impairment test, we performed quantitative impairment tests for all reporting units. The impairment test for goodwill requires judgment related to the identification of reporting units, the assignment of assets and liabilities to reporting units including goodwill, and the determination of fair value of the reporting units. The quantitative impairment test evaluates whether the carrying value of a reporting unit exceeds its estimated fair value. We estimate the fair value of our reporting units based on the present value of future cash flows (“Discounted Cash Flow Method”) and the total enterprise value multiples of publicly traded comparable companies (“Market Comparables Method”). The Discounted Cash Flow Method requires us to make various assumptions regarding the timing and amount of future cash flows, including revenue growth rates, operating margins, and programming and working capital investments for a projection period, plus the terminal value of the business at the end of the projection period. The assumptions about future cash flows are based on internal forecasts, which incorporates our long-term business plans and historical trends and are subject to a greater degree of uncertainty in times of adverse economic conditions. The terminal value is estimated based on a perpetual growth rate, which is based on historical and projected inflation and economic indicators, as well as industry growth projections. A discount rate is determined for the reporting unit based on the risks of achieving the future cash flows, including risks applicable to the industry and market as a whole, as well as the capital structure of comparable entities. The Market Comparables Method incorporates revenue and earnings multiples from publicly traded companies with operations and other characteristics similar to each reporting unit. The selected multiples consider each reporting unit’s relative growth, profitability, size, and risk relative to the selected publicly traded companies.
The carrying amount of goodwill, by operating segment is as follows:
(In thousands) December 31, 2024
Domestic Operations $ 80,038
International 166,266
$ 246,304
Based on our annual and interim impairment tests for goodwill during 2024, we recorded total impairment charges of $268.7 million related to our Domestic Operations reporting unit and $102.0 million related to our AMCNI reporting unit. See Note 7 to the accompanying consolidated financial statements included in this Annual Report on Form 10-K for additional details.
Recently Issued Accounting Pronouncements
The information regarding recently issued accounting pronouncements is discussed in Note 2 to the accompanying consolidated financial statements included in this Annual Report on Form 10-K and is incorporated herein by reference.
Non-GAAP Financial Measures
Internally, we use AOI and Free Cash Flow as the most important indicators of our business performance, and evaluate management's effectiveness with specific reference to these indicators.
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 share-based compensation expenses or benefit, depreciation and amortization, impairment and other charges (including gains or losses on sales or dispositions of businesses), restructuring and other related charges, cloud computing amortization 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. 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 operating income (loss) to AOI for the periods indicated:
Year Ended December 31, 2024
(In thousands) Domestic Operations International Corporate / Inter-segment Eliminations Consolidated
Operating income (loss) $ 194,295 $ (56,604) $ (177,291) $ (39,600)
Share-based compensation expenses 11,099 3,250 11,702 26,051
Depreciation and amortization 38,124 16,255 43,636 98,015
Impairment and other charges 297,509 102,004 - 399,513
Restructuring and other related charges 49,422 - 42 49,464
Cloud computing amortization 13,452 - - 13,452
Majority owned equity investees AOI 15,678 - - 15,678
Adjusted operating income (loss) $ 619,579 $ 64,905 $ (121,911) $ 562,573
Year Ended December 31, 2023
(In thousands) Domestic Operations International Corporate / Inter-segment Eliminations Consolidated
Operating income (loss) $ 583,542 $ (9,624) $ (185,506) $ 388,412
Share-based compensation expenses 13,765 3,388 8,512 25,665
Depreciation and amortization 46,494 18,127 42,781 107,402
Impairment and other charges 51,966 44,723 - 96,689
Restructuring and other related charges 3,350 3,934 20,503 27,787
Cloud computing amortization 21 - 10,522 10,543
Majority owned equity investees AOI 13,606 - - 13,606
Adjusted operating income (loss) $ 712,744 $ 60,548 $ (103,188) $ 670,104
We define Free Cash Flow, which is a non-GAAP financial measure, as net cash provided by operating activities less capital expenditures, all of which are reported in our Consolidated Statement of Cash Flows. We believe the most comparable GAAP financial measure of our liquidity is net cash provided by operating activities. We believe that Free Cash Flow is useful as an indicator of our overall liquidity, as the amount of Free Cash Flow generated in any period is representative of cash that is available for debt repayment, investment, and other discretionary and non-discretionary cash uses. We also believe that Free Cash Flow is one of several benchmarks used by analysts and investors who follow the industry for comparison of our liquidity with other companies in our industry, although our measure of Free Cash Flow may not be directly comparable to similar measures reported by other companies.
The following is a reconciliation of net cash provided by operating activities to Free Cash Flow for the periods indicated:
Year Ended December 31,
(In thousands) 2024 2023
Net cash provided by operating activities
$ 375,615 $ 203,919
Less: capital expenditures
(44,775) (35,207)
Free cash flow
$ 330,840 $ 168,712
Supplemental Cash Flow Information Year Ended December 31,
2024 2023
Restructuring initiatives $ (13,295) $ (112,550)
Distributions to noncontrolling interests
(23,992) (72,876)

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Fair Value of Debt
Based on the level of interest rates prevailing at December 31, 2024, the fair value of our fixed rate debt of $1.84 billion was lower than its carrying value of $1.98 billion by $134.7 million. The fair value of these financial instruments is estimated based on reference to quoted market prices for these or comparable securities. A hypothetical 100 basis point decrease in interest rates prevailing at December 31, 2024 would increase the estimated fair value of our fixed rate debt by approximately $9.2 million to approximately $1.85 billion.
Managing our Interest Rate Risk
As of December 31, 2024, we have $2.4 billion of debt outstanding (excluding finance leases), of which $365.6 million is outstanding under our loan facility and is subject to variable interest rates. A hypothetical 100 basis point increase in interest rates prevailing at December 31, 2024 would increase our annual interest expense by approximately $3.7 million. The interest rate paid on approximately 85% of our debt (excluding finance leases) as of December 31, 2024 is fixed.
Managing our 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 subsidiaries' respective functional currencies (non-functional currency risk), such as affiliation agreements, programming contracts, certain trade receivables and accounts payable (including intercompany amounts) that are denominated in a currency other than the applicable functional currency. Changes in exchange rates with respect to amounts recorded in our consolidated balance sheets related to these items will result in unrealized (based upon period-end exchange rates) or realized foreign currency transaction gains and losses upon settlement of the transactions. Moreover, to the extent that our revenue, costs and expenses are denominated in currencies other than our respective functional currencies, we will experience fluctuations in our revenue, costs and expenses solely as a result of changes in foreign currency exchange rates.
To manage foreign currency exchange rate risk, we enter into foreign currency contracts from time to time with financial institutions to limit our exposure to fluctuations in foreign currency exchange rates. We do not enter into foreign currency contracts for speculative or trading purposes.
The Company recognized foreign currency transaction gains (losses) of $(7.0) million and $8.4 million for the years ended December 31, 2024 and 2023, respectively, related to foreign currency transactions. Unrealized foreign currency
transaction gains or losses are computed based on period-end exchange rates and are non-cash in nature until such time as the amounts are settled. Such amount is included in miscellaneous, net in the consolidated statements of income (loss).
We also are exposed to fluctuations of the U.S. dollar (our reporting currency) against the currencies of our operating subsidiaries when their respective financial statements are translated into U.S. dollars for inclusion in our consolidated financial statements. Cumulative translation adjustments are recorded in accumulated other comprehensive income (loss) as a separate component of equity. Any increase (decrease) in the value of the U.S. dollar against any foreign currency that is the functional currency of one of our operating subsidiaries will cause us to experience unrealized foreign currency translation losses (gains) with respect to amounts already invested in such foreign currencies. Accordingly, we may experience a negative impact on our comprehensive income (loss) and equity with respect to our holdings solely as a result of changes in foreign currency exchange rates.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
The Financial Statements required by this Item 8 appear beginning on page 69 of this Annual Report, and are incorporated by reference herein.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of the Company's management, including our principal executive officer (our Chief Executive Officer) and our principal financial officer (our Chief Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation as of December 31, 2024, the Company's principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer) concluded that the Company's disclosure controls and procedures are effective.
(b) Management's Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining effective internal control over financial reporting, as such term is defined under the Securities Exchange Act of 1934 Rule 13a-15(f). The Company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including the principal executive officer (our Chief Executive Officer) and our principal financial officer (our Chief Financial Officer), we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2024.
(c) Attestation Report of Independent Registered Public Accounting Firm
The effectiveness of the Company's internal control over financial reporting as of December 31, 2024 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their attestation report appearing on page.
(d) Changes in Internal Control over Financial Reporting
During the three months ended December 31, 2024, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
Information relating to our directors, executive officers, corporate governance and insider trading policies and procedures will be included in our definitive Proxy Statement for our 2025 Annual Meeting of Stockholders, which will be filed within 120 days of the year ended December 31, 2024 (the "2025 Proxy Statement"), which is incorporated herein by reference.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
Information relating to executive compensation will be included in the 2025 Proxy Statement, which is incorporated herein by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information relating to the beneficial ownership of our common stock and related stockholder matters will be included in the 2025 Proxy Statement, which is incorporated herein by reference.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information relating to certain relationships and related transactions and director independence will be included in the 2025 Proxy Statement, which is incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services.
Information relating to principal accountant fees and services will be included in the 2025 Proxy Statement, which is incorporated herein by reference.
Part IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents filed as part of the Form 10-K:
The following items are filed as part of this Annual Report:
(1)The financial statements as indicated in the index set forth on page 69.
(2)Financial statement schedule:
Schedule II-Valuation and Qualifying Accounts
Schedules other than that listed above have been omitted, since they are either not applicable, not required or the information is included elsewhere herein.
(3) Exhibits:
The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Annual Report.