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AMC Networks Inc (NASDAQ:AMCX)
Q1 2021 Earnings Call
May 7, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to AMC Networks First Quarter 2021 Earnings Call. [Operator Instructions]

I'd now like to hand the conference over to your host today, Mr. Nick Seibert, Head of Investor Relations.

Nick Seibert -- Head of Investor Relations

Thank you. Good morning, and welcome to the AMC Networks first quarter 2021 earnings conference call. Joining us this morning are Josh Sapan, President and Chief Executive Officer; Ed Carroll, Chief Operating Officer; and Chris Spade, Chief Financial Officer. Today, we will begin with prepared remarks and then we will open the call for questions. If you do not have a copy of today's release it is available on our website at amcnetworks.com.

Before we begin, I would like to remind everyone that this call may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to AMC Networks SEC filings for the discussion of risks and uncertainties. The Company disclaims any obligation to update any forward-looking statements made on this call.

On today's call, we will discuss certain non-GAAP financial measures. The required definitions and reconciliations can be found at the end of the earnings press release issued today.

With that, I would now like to turn the call over to Josh. Good morning, and thank you for joining us. Today, you'll hear prepared remarks from me, from our COO, Ed Carroll, and our CFO, Chris Spade, before we open up the call to questions. I'll spend a few minutes talking about the pivot we continue to make in our fundamental business; Ed will discuss several of our operational highlights; and Chris will review our financial performance, including discussion of our new operating segments which we noted in the earnings press release we issued earlier this morning. With regard to our new operating segments, I'll briefly say that we've made this change in order to best reflect our ongoing business transformation. This includes taking a multi-platform distribution approach to maximizing the value of our compelling content, particularly as we retain more ownership rights to that content. This multi-platform approach today includes monetizing our content across our vibrant and growing streaming platforms, our linear and international channels, as well as through selective content licensing. And we think this new segmentation best represents our operational approach. Our earnings release noted revenue impacts for the first quarter related to content licensing, primarily due to timing of Fear the Walking Dead and one less episode of the Walking Dead. Excluding this impact, total revenue grew low-to-mid single digits for the first quarter, largely driven by streaming revenue growth. Chris will discuss this in greater detail in her remarks. In the first quarter, overall AMC Networks had solid performance, driven by continued momentum from our streaming services supported by our strong content. We continue to maintain a strong financial profile with a solid balance sheet with $1 billion of cash and net leverage of 2.4 times. We have returned to shareholders almost $1.4 billion over the past several years. Our buyback program has retired almost 46% of the shares outstanding since inception. And even with our streaming investments, we expect continued healthy levels of free cash flow. As we indicated on our last call, we doubled the number of our paid streaming subs in 2020 to end the year with more than 6 million paid subscribers in aggregate across our services. I'm very pleased to say that we remain on track to meet the targets we outlined in our prior call and which we forecast that will end 2021 with more than 9 million subscribers. The momentum in our streaming business continues to surpass our original expectations and streaming is now the most significant growth area of our Company. We had a strong quarter across all of our streaming services, with particularly healthy demand for our AMC Plus premium bundled streaming offering, as well as for our Sundance Now and ALLBLK targeted services. By having multiple services, we are able to take advantage of content and marketing opportunities, quarter-to-quarter and service-by-service. As a result, comparatively, we are less impacted by the availability of tentpole events in any one month or quarter, as we grow subscribers interested in the depth of content we offer in each area that we operated in -- operated. As we indicated on our last call, we are on a clear path to more than triple our aggregate subscribers by 2025, at which point we anticipate having between 20 million and 25 million paid subscribers. Our range, which will make streaming, the Company's largest revenue segment and which will be very meaningful for AMC Networks. Each of our offerings serve people's very specific interests and passions with a clear proposition, whether it's British mysteries and dramas with Acorn TV or horror and suspense with Shudder. This reflects a quite differentiated approach to streaming as compared to the larger something for everyone offerings that aim to appeal to every member of the household. And it is wire services are being purchased in addition to and as an absolute compliment to the large general entertainment offerings. Our streaming business model provides us with several critical benefits. First, by targeting specific content areas, we are developing loyal and devoted audiences, who have specific enthusiasm for our material and seek out our services for the depth of content we offer, which they can't get anywhere else. Our targeted approach also enables passionate fan communities to form around our content. These very attractive and unique subscriber dynamics result in high engagement, which in turn contribute to generally lower subscriber acquisition costs and lower churn. In fact, we believe Acorn has among the lowest churn of any U.S. streaming service. In addition, because we offer discrete areas of editorial interest that our subscribers seek out with absolute intention, we believe our services have sustainable long-term stickiness, as well as pricing power. And by enabling our deep library content and expanding our deep libraries of content, we are building loyal and vibrant content communities, which we can continue to grow in multiple ways. Another benefit of our model relates to the efficiency of our content costs. Because we are only focused on the shows that we know our subscribers want, identify with and have affinity for, we don't need massive content pipelines that require billions and in some cases tens of billions of dollars in content spend. Rather by carefully curating and focusing the content offerings in our platforms, the bigger shows work in content -- in concert with our thematic libraries to offer a familiar destination to our subscribers in a world where the content that makes headlines is often shifting from one service to the next week-by-week and month-by-month. This provides us with a very attractive economic model that has inherent deficiencies that continue to hold and build even as we continue to grow these services. This results in high subscriber lifetime value and very strong margin potential for us. Regarding our AMC+ ad-free premium bundled service, I mentioned earlier. It is the newest service in our portfolio that we launched late last year and we are seeing high engagement and strong growth for it. AMC+ is a rich offering that combines the strength and curation of our targeted streaming platforms by including Shudder and Sundance Now, in addition to the high-quality content users know from our linear channels AMC, BBC AMERICA, IFC and SundanceTV, with a focus on two distinct content areas from there. Character-led prestige dramas including shows like Better Call Saul, Killing Eve and Gangs of London and epic world shows with series like A Discovery of Witches and shows in The Walking Dead Universe. It's worth noting that we created AMC+ with the active participation of our MVPD partners, and it is an offering that very much aligns our interests with theirs, as we work together to provide multiple options for their customers. We continue to inhabit the MVPDs basic cable video world with our high-value low-cost linear channels, well now also providing them with high-quality streaming offerings to sell to their broadband-only subscribers. And importantly, through AMC+ we're able to expand the reach of the AMC brand from the roughly 85 million or so U.S. cable video subscribers to a universe in the U.S. that includes every broadband home available now and in the future. Distributor interest in our streaming offerings is evident in the wide distribution we have to date. It includes; Comcast, AT&T, DISH and Sling; digital platforms such as Amazon Channels, Apple TV Channels and Roku. And most recently the addition of YouTube TV, which began offering our streaming services just last month. So this relationship with our MVPDs in which we inhabit two shelves if you will of their stores, represents a significant change and puts us in greater harmony with them. Turning briefly to advertising, if I may. While we had lower inventory due to content shift and continued macro ratings pressures in the quarter, we are seeing a strong scattered marketplace with very healthy demand for high-quality content. Additionally, we are seeing accelerating growth from the evolving AVOD and FAST channel space and we are focused on reaching new audiences with our content. We also continue to focus on making advances in new ad-related technologies and applications, which Ed will speak to in more detail in his remarks. So I'll close my portion by noting that transition of the Company to be the worldwide leader in targeted streaming on the strength of our focused strong content continues on track. The support of our distribution partners, first, the efforts and our advanced advertising strides are providing us with both stability and momentum. We are very confident about our strong programming portfolio, led by our seasoned operating team that has a proven ability to identify, engage and retain targeted audiences. We believe the high viewer engagement, efficient economic model, and pricing our -- of our streaming offerings provide us with really important strategic advantages which when coupled with our valuable linear channel offerings will fuel our growth and will position us extremely well over the near, mid, and long term. With that, I'd like to turn the call over to Ed Carroll to review operational highlights.

Ed Carroll -- Chief Operating Officer

Thanks, Josh. As Josh mentioned, we're continuing to see success with our targeted streaming strategy, which is focused on specific areas of interest in programing genres, as opposed to the broader something for everyone approach that is becoming the norm. More than just acquiring subscribers, we are building communities around our unique services, an important distinction and one that we are finding potent as we acquire and retain customers. This targeted approach allows us to apply performance marketing tactics, targeting specific audiences based on their areas of interest and consumption. Also, valuable to us has been the use of our linear networks to reach potential subscribers, which remains one of the most powerful and efficient marketing channels available.

Josh walked through our individual services, let me just offer a few operational and content highlights. AMC+, our newest and broadest offering had a very successful quarter. AMC+ just launched on the Apple, Amazon, and Roku platforms late last year. So we are in early days, but we're finding a strong appetite for the high-quality dramas from AMC, BBC AMERICA and our other entertainment networks.

Our ability to find and develop original content has differentiated our linear networks for years. We are applying the same skills to streaming with an audience targeted focus that gives us a dedicated lane to succeed in a competitive environment. In the first quarter AMC+ featured six new episodes of The Walking Dead, which were constructed in a way that allowed them to be produced during the COVID lockdown to lessen the time gap between Seasons 10 and 11. We also premiered the widely anticipated second season of A Discovery of witches. Other series that saw strong viewing on AMC+ in the quarter included Gangs of London, The Walking Dead World Beyond and Riviera, as well as earlier AMC original series like Mad Men and Hell on Wheels.

ALLBLK completed a successful rebrand consistent with our aspiration to create the Number 1 streaming service in the world, focused on black content and black storytellers. ALLBLK saw success in the first quarter requests a number of genres, including comedy with the new original series Millennials, about 420 something men who are roommates became the top title of March. A pair of dramas, Double Cross and House Divided continue to have strong utilization as well. And ALLBLK launched a new weekly talk show called Social Society hosted by Kendall Kindle, which features music, comedy and a roundtable with pointed conversations about Black culture and politics.

On Acorn TV, our original series Bloodland starring James Nesbitt was popular in March. Bloodlands a four-part BBC thriller co-executive produced by the creator of Bodyguard. The story follows a veteran detective on a cold case in Northern Ireland involving a serial killer during the troubles. Brokenwood Mysteries and Midsomer Murders were a pair of other dramatic series that experienced high utilization on Acorn during the first quarter.

On Shudder, the original film Host became an extremely popular title, generating a lot of attention among horror and thriller fans. This film started as a short on social media about assumed seance. It was noticed by Shudder and quickly produced as a full-length feature. Also in movie news Shudder will bring its members a coveted lost George Romero film The Amusement Park this summer. In April, Shudder celebrated Halfway to Halloween Month, which is typically its second busiest month of the year. This year's installment featured the return of a Creepshow, the Number 1 original series in Shudder history for a second season. More than half of all Shudder members watched at least one episode of Season 1. So, we're happy to have Creepshow back on the platform.

I think it's worth pausing to note the high utilization of our most popular series among subscribers to our targeted streaming services. Our most popular titles like the ones I've just mentioned are typically watched by 30% to 50% of our viewers within just a few weeks of being made available. This level of interest underscores the natural affinity among our members for the targeted content that we offer. And when we look at our Top 5 most-streamed series on each of our four targeted services in the first quarter, so that would be 20 series, and all 19 of them were produced or co-produced at a cost to the platform in the six figures per episode. One was produced in the low seven figures per episode. I think this underscores the model we have developed at finding and making content with a reasonable level of investment that services a specific audience.

Some of our targeted streaming services, most notably Acorn and Shudder have begun to launch in international markets and we're seeing the same affinities, as we are here in the U.S.. Our plan is to continue to expand into territories where we can model a return on investment.

Turning to production and development. I'm pleased to say that the production of new content through our linear networks and streaming services is back in full swing. We have three series in The Walking Dead universe in production simultaneously for the first time ever, The Walking Dead, Fear the Walking Dead, and The Walking Dead World Beyond. In Boston, we just wrapped production of a highly anticipated new series called Kevin Can F... Himself, starring Annie Murphy in her next television role following Schitt's Creek, this will premiere on AMC+ and AMC in June.

Better Call Saul is in production in Albuquerque and will premiere on AMC+ and AMC early next year. And in Chicago, we are in production on a greedy courtroom and police drama from Peter Moffat, who created the Night Of, it's called 61st Street and stars the remarkable Courtney B. Vance.

Josh mentioned ad sales and the very strong scatter market. Just a few words about our 2021 upfront. You may recall last year we held back inventory in the upfront anticipating a strong scatter market, which did materialize and continued into the first quarter. We are well into upfront conversations and anticipate strong demand and pricing in the coming upfront. We also continue to innovate around advanced advertising, having successfully completed two first-to-market national addressable ad campaigns, working in partnership with the on addressability MVPD consortium, as well as Viseo. We are developing national addressable products, which enable our clients to effectively target consumers with greater precision and allow us to achieve higher CPMs as a result for our business.

So just to sum up, we are pleased with the progress we've made across to our streaming services, we are now back in production across a range of original programming, and we feel the momentum is good heading into the advertising upfront.

Now I'd like to turn the call over to our Chief Financial Officer, Christina Spade for some financial highlights.

Christina Spade -- Chief Financial Officer

Thank you, Ed, and Josh, and good morning everyone. Before I review and discuss our financial performance for Q1 2021, I will review new changes to the presentation of our operating segments. Beginning with the first quarter of 2021, we are reporting under a new operating segment structure. This new structure best reflects AMC Networks focused multi-platform distribution approach to content monetization and our business operations. It also provides the best alignment of revenue and expenses in relation to how we will monetize content investments across linear, streaming and selective licensing platforms.

Today's discussion of our financial results will refer to our new operating segment structure, which includes our two operating segments, Domestic Operations and International and Other. Domestic Operations includes what was formerly known as the National Networks segment, AMC Networks Streaming Services and our Film Distribution businesses. International and Other includes AMC Networks International businesses and the Production Services business, formerly known as Levity and now named 25/7 Media. Prior to this new segmenting, the streaming services including AMC+ resided in the International and Other segment.

Additionally, we are now separately reporting corporate expenses as a distinct reporting component, including corporate management, accounting, tax, treasury, HR facilities, legal and technology. This will improve operating segments margin disclosures by excluding corporate expense allocations from the operating segments.

Going forward in 2021, as we did for year-end and full-year 2020, we plan to provide supplemental revenue and operational performance information at the end of the year, which will include streaming subscribers and streaming revenue for year-end and the full year of 2021.

Now let's turn to the first quarter performance for 2021. I would like to first summarize a few singular items reflected in our quarterly results. These include: first, in March 2021 we divested the live business of Levity, comprised of the Comedy Club and talent management operations, and the associated lease commitments, while retaining the production services business, which is now named 25/7 Media. This transaction generated a non-cash loss of $16.1 million recorded in the consolidated statement of income within impairment and other charges. Having divested the non-core components, 25/7 Media is now more aligned with our core business strategy. Second, we had approximately $9 million of restructuring expenses, including $4.1 million related to severance costs associated with our 2020 restructuring plan and $4.5 million associated with our international business. Lastly, we had a $22 million loss on extinguishment of debt as related to the refinancing that we had previously disclosed.

Moving to our first quarter 2021 financial performance. Total Company revenues were $692 million, representing a 6% decrease from the prior year. Adjusted operating income was $238 million, representing 7% growth from the prior year. Adjusted earnings per share was $2.98. In Q1, the timing of content licensing revenue contributed to an overall consolidated revenue decrease of 6. Excluding the timing impact of content licensing revenue in Q1, total consolidated revenue grew low-to-mid single digits. This growth is largely driven by streaming revenue growth.

We remain firmly on track with previously disclosed targets for the full year of 2021. We saw strong growth in the first quarter from both AMC+ and the targeted streaming services. First quarter streaming subscribers and revenue increased 156% and 131% respectively versus the prior year first quarter. In April, we continued to expand distribution of AMC+ as evidenced by the launch of AMC+ on YouTube TV.

Distribution revenue declines primarily reflected the delayed content licensing from the delay of Fear the Walking Dead to Q3 for 2021 and we also had one fewer episode of The Walking Dead in the quarter. The decrease from content licensing was partly offset by strong streaming revenue growth and better performance at RLJE and IFC films.

Lower advertising revenues reflected lower ratings and COVID related timing impacts, including the absence of Better Call Saul and certain BBC AMERICA nature programing and one less episode of The Walking Dead in Q1 2021 versus Q1 2020. This was partly offset by strong scatter pricing and growing ad supported streaming revenue.

As Josh and Ed have already noted, the ad market is very strong to date for 2021. Consolidated AOI improved as a result of lower program amortization from the absence of some original programing to late to later in 2021, partly offset by increased investment in marketing to drive the growth of AMC+ and the targeted streaming services.

So regarding the performance of our operating segment, Domestic operations revenues of $574 million, decreased 6% from the prior year. Adjusted operating income was $243 million for the quarter, representing 1% growth as compared to the prior year. Domestic operations advertising revenue of $199 million, decreased 7% from last year. This is due to a few key drivers. We experienced a decrease from COVID-related delays and the timing of some original programing, as previously noted. The decrease was partly offset by strong pricing performance for scatter and direct response advertising and robust digital growth. We continue to strategically manage our advertising inventory across linear and digital. We are still seeing a lot of strength in the advertising marketplace in April and now into May. Pandemic influence spending is very strong. We are seeing substantial continued demand in multiple stay-at-home categories, including home entertainment, pet, household fitness, apparel, renovation, and home furnishing.

Domestic operations distribution revenue, which includes the affiliate subscription, streaming and content licensing revenues decreased 6% to $375 million. The decrease was primarily the result of delayed content licensing revenue, which decreased 54% compared to the prior year due to the timing and availability of our scripted programing. The impact of delayed content licensing revenues was offset by 14% subscription revenue growth, driven by strong streaming revenue growth.

Domestic operations adjusted operating income performance for the quarter reflects the discipline of continued expense management, in particular, the strategic reallocation of marketing investments to emphasize streaming growth.

Moving to the International and Other segment. Revenues decreased by $4 million to $121 million. International and Other first quarter revenue trends demonstrate the continued recovery at AMC Networks International and at 25-7 Media. Adjusted operating income increased 32% to $24 million, reflecting the impact of favorable exchange rate and the recovery of some bad debt.

Turning to free cash flow and the balance sheet. Free cash flow for the first quarter of 2021 was $97 million, primarily reflecting the increased programing investment in Q1 2021 due to the welcome return to production from the COVID related delays we had in 2020. Our net debt and finance leases as of the end of the first quarter were approximately $1.9 billion, as compared to $2.3 billion in the prior year period.

Our consolidated net leverage ratio was 2.4 times at the end of the quarter as compared to 2.6 times a year ago. We remain comfortable with our current leverage ratio. In the first quarter as previously disclosed, we completed a series of leverage neutral financing transactions. We secured lower fixed rate and lengthened our maturity profile, with no significant maturities now due until 2024.

There were no repurchases of AMC Networks common stock in the quarter. We will continue to evaluate share buybacks on an opportunistic basis. Our capital allocation policy remains unchanged. First, we will look to invest organically and projects that provide attractive returns to our shareholders, this includes return-based investment in the growth of our streaming services; second, we will maintain leverage that is appropriate for our business outlook; third, disciplined and opportunistic strategic M&A and fourth opportunistic return of capital to our shareholders.

As we look ahead to the reminder of 2021, and based on our current 2021 monthly streaming subscriber growth trends to-date, we see ongoing momentum in the growth of our streaming services. We remain confident in our plan for growth to at least 9 million aggregate streaming subscribers by the end of 2021. It is important to note that subscriber growth will be driven by our strong programming slate in 2021, supported by strategic marketing investments.

We are reiterating our outlook of total company revenue growth in the low single-digits for full-year 2021, driven by streaming revenue growth and offset by linear market dynamics. To drive the growth of the streaming platform, we will continue to invest in programming, marketing and platform enhancements for AMC+ and our targeted streaming services. We continue to expect adjusted operating income to decrease by mid-single digits in 2021. Our free cash flow expectation remains the same. We expect to generate approximately $200 million of free cash flow in 2021. As Ed noted, delayed productions from 2020 are now in full swing in 2021, and we will continue to strategically invest in the growth of our streaming services.

As a final note on the first quarter of 2021, it is encouraging to be in this strong and resilient financial position a year after the pandemic began. As we continue to turn the corner from the pandemic-related impacts to our business, we are extremely well-positioned for long-term growth; growth that will be driven by our differentiated targeted streaming strategy and our ongoing ability to monetize content investments across traditional and growing global distribution platforms.

With that, operator, please open the line for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Kutgun Maral with RBC Capital Markets.

Kutgun Maral -- RBC Capital Markets -- Analyst

Good morning, and thanks for taking the questions. Two topics, if I could. First, on SVOD, I apologize if I missed it, but can you provide any more color on SVOD subscribers existing the first quarter or maybe trends into Q2. And now that it's been about six months or so since you've rolled out AMC+, are you seeing its growth outpace the growth from your other streaming services?

I'm just trying to understand how much of nine million subscribers you expect for year-end might represent AMC+, since I assume that continued mix shift would be accretive to ARPU given it's a higher retail price point. And then I have a follow-up, please.

Ed Carroll -- Chief Operating Officer

So, and this is Ed. On SVOD, I would say most directly to your question, we're seeing a strong and steady growth throughout, both on AMC+ and on the targeted SVODs. The other color I would give you is that, in terms of engagement we're seeing number of streams at an all-time high, very healthy completion rate for our original series. And I would say, particularly the targeted SVODs are exceeding our initial expectations. The model is proving to be even more efficient as we scale. The services are representing not only a destination, but they're forming a community around the content, and that's helping us with both churn and SAC. And so as those communities build, we believe the pricing power in front of us only increases. So, I would sum up by saying we're proceeding along the model. We're feeling good about the results. And we feel we're gaining momentum, both on AMC+ and the targeted SVODs.

Kutgun Maral -- RBC Capital Markets -- Analyst

Got it. Thanks, Ed. And then maybe just to advertising. Digital is becoming a more meaningful contributor especially across AVOD and the vast channel space. Some of your peers include digital ad sales in their BTC or streaming revenue disclosure. So, I'm just trying to make sure we compare your growth appropriately with them, and in that vein is there any chance you could help us think about the magnitude of the digital advertising you're generating or maybe its growth outlook?

Ed Carroll -- Chief Operating Officer

Yes. Well, the digital advertising is the fastest growing segment of our advertising. It's included in the advertising numbers. Our strategy, just to back up, is to be on really all of the major AVOD platforms. So we feel -- in doing that, we have visibility over a large part of the market by virtue on being all the platforms. And we program our own FAST channels with a library of content, so we're able to adjust relatively quickly based upon the number of impressions. So, that continues to grow for us. It's growing at the fastest rate. The impressions continue to grow at a steady pace, and it is included in the total ad sales number.

Kutgun Maral -- RBC Capital Markets -- Analyst

Got it. Thank you.

Operator

Our next question comes from Tim Nollen with Macquarie.

Tim Nollen -- Macquarie -- Analyst

Great, thanks. Couple of questions on streaming, please. Obviously, topic of great interest. Firstly, is it possible to breakout the subscriber numbers between a direct-to-consumer subscriber, some of the times that's just for Shudder, Acorn, or whatever, versus the broadband apps, like AMC+, if you care to provide that kind of detail.

And then secondly, I'm just curious, you mentioned, Ed, about the growth of your streaming services internationally. I'm not that familiar with how well known or popular your content is internationally. If you could just help us understand what is the growth profile for your international streaming services, i.e., is it even better than the U.S. growth potentially because there is demand, and it's not very well penetrated, or is it maybe a tougher hill to climb internationally? Thanks.

Josh Sapan -- President and Chief Executive Officer

Right. So, Tim, starting with the first question on the DTC, I remind you that AMC+ is only offered through partners right now through DISH, through Comcast, through Roku, Amazon, Apple, etc. So, at this point, we don't have a DTC in the market for AMC+ that does not mean that will always be the case. For the targeted SVODs, we do have a DTC in the marketplace and they make up a very significant part of the total subscriber distribution.

On international, we're just starting to expand internationally. Acorn and Sundance now have been available outside the U.S. for about a year. Shudder a bit longer, and mainly in the U.K., Canada, and Australia. So, that represents roughly 10% of the subscribers. And we do see a lot of upside as you would imagine the content that we're making for the targeted SVODs and certainly AMC's track record has broad appeal across the world. And another advantage we think we have is our strong relationships with the platform due to our linear nets across the world. We think that gives us a leg up strategically, and we'll be able to enjoy synergies with our MVPD platforms, similar to what we've done in the U.S. Our next question comes from Michael Nathanson with MoffettNathanson.

Michael Nathanson -- MoffettNathanson -- Analyst

Thanks. Good morning. I have a couple. This has been my recent set of questions, which is just the volatility in U.S. affiliate revenues, they bounce around. So, could somebody help me get like level set, how do we think of the right way to think long-term about just the affiliate feed number that you guys posted been bouncing pretty severely? So, Josh and Chris, help me think about the next couple of years on the right way to think about the inputs to the [Indecipherable] number? Then I have another one.

Josh Sapan -- President and Chief Executive Officer

Sure, Michael. It's Josh. No, I think...

Michael Nathanson -- MoffettNathanson -- Analyst

Hi, Josh.

Josh Sapan -- President and Chief Executive Officer

We have -- we've renewed -- I think we mentioned, we renewed eight affiliate agreements over the past two years. Now there is actually a ninth that occurred since the last quarter. The rates that we are getting rate increases on those linear affiliate agreements. And of course, we're working against a universe that is in decline by call it 6% to 7% a year in the U.S. So, the position we're in is strong, stable, and our services are attractive. In any given 90-day period, you get some different contractual things moving around. But I guess I'd remind you, I think it's important to note that we really do have a high value collection of a limited number of channels. That's very different than 10, 15 channels, broadcast networks that are carrying sports fees. And I think that MVPDs as we go forward are seeing that the price value relationships of the AMC Networks put us pretty closely to the first place in value for what they're putting on linear. What's occurring now is that we're selling streaming services. They're retailing that. And so, they're getting margin on that.

So, we find ourselves actually in a nicer new position of harmony with our MVPDs. So, I would say from a horizon point of view, Michael, I think the situation for us gets better and better, as MVPDs are price sensitive, number one; value sensitive and we have the harmony opportunity of margin for them on the premium services with an attractive price for linear.

Michael Nathanson -- MoffettNathanson -- Analyst

Okay. And Josh, can I ask you -- you want to maybe, and Ed wants to jump in. I remember when you guys bought those international channels, and there was a lot of hope at that time that you'd be able to make a really big business out of international. I wonder stepping back, how does AMC+ fit into the international roll out? And do you see that as potentially the next opportunity and maybe the channel business taking a backseat going forward? So I know as talked about the other SI products, but where's AMC fit into your overtop strategy? And what markets would you think are next for you guys to move into?

Josh Sapan -- President and Chief Executive Officer

Sure, sure. So, a few things if I might if I can expand the answer. We did several acquisitions over the past four years. The International channels 49.9% controlling interest in BBC America. We did the deal for our RLJE, which brought us Acorn and what's now called ALLBLK. The thought if you will and I'll get to the specific of your question about AMC+ internationally, was to be a global company, was to be a global content company that produced material that was an appeal around the world. And that was delivered in the most opportune manner. At the time that was linear, and it's now becoming streaming. So just to emphasize what Ed said, we are just beginning to deploy our streaming services overseas. The happy news there is that your partners, the distribution partners Michael that we have in Spain and Latin America and Eastern Europe are going to become if they're not already the retailers for the streaming services. And we've begun with the targeted services, as I mentioned, and we definitely see AMC plus as next.

In terms of market opportunity, I don't want to get ahead of myself, but I would say that the shows on AMC the linear channel have proven worldwide appeal. Just for instance, The Walking Dead, Fear the Walking Dead, that a whole franchise are among the biggest shows frankly on the planet. When we begin to deploy our streaming services around the planet, we're going to have what we've already seen in streaming, which is market appetite. And then we're going to have an accelerator of interest in the content that's historically been on our linear channels that will come to our streaming channels. And we'll do it in harmony and in part on the infrastructure of what we've done with our linear channel partners. So I think and I would say, the most exciting time for this company is going to be coming in the next 6, 12, 18, 24 months and beyond.

Michael Nathanson -- MoffettNathanson -- Analyst

Okay. Thanks, Josh.

Operator

Our next question comes from Thomas Yeh with Morgan Stanley.

Thomas Yeh -- Morgan Stanley -- Analyst

Hi. Thanks for taking my questions. Given the new segment reporting, which I think also reduces elimination accounting. I was hoping you could give us an update on the path of content licensing monetization, in particular, with the world beyond landing on AMC+. Ed mentioned some strong engagement there. Can you comment on how you assess the returns relative to the trade-offs? And do these early findings increase your appetite to push content more exclusively into your services? And then I have a follow up.

Josh Sapan -- President and Chief Executive Officer

Sure. In general, our world as we described is changing as our streaming platforms grow. The nice news is that we have our hands on the dial. So as we produce new material that we own, it's up to us whether to keep it for our streaming platforms domestically and internationally, or well-or whether to sell it or license it. It's perhaps worth mentioning that one can license for a short period of time, one can license for a long period of time, if you choose to do it, one can license domestically or internationally or in subsets of the international market.

I think it's the case that we will have a bias to keep material for ourselves in order to accelerate the growth of our streaming services. But it's not to say that we won't make a decision depending upon the development of our international streaming deployment, to create a license for a limited period of time in certain geographies, if we think that there's a smart return on that. So, we'll make an economic assessment that involves the strategic and momentum benefit of putting in our own services against selective licensing on third parties taking into account and judging how long we want to do it for and what geographies we might want to do it in.

Thomas Yeh -- Morgan Stanley -- Analyst

It makes sense. And then Josh, you talked about a less event driven path of growth acquisitions for the OTT services. And I think Ed talked about performance marketing tactics as well. Does that mean we should expect top of funnel growth is less tied to the timing of some of the high-profile original content releases? Or should we be thinking about brand versus performance marketing differently than general entertainment services? Thank you.

Josh Sapan -- President and Chief Executive Officer

I think the answer is yes. I think what we are seeing and we've seen it in Sundance Now, which we've operated for years and we've seen it in Acorn, which we've operated now for years and proceeded before as we came through acquisition. It is that as against whole house services, people identify with and like to have a steady deep stream of British content or suspense and horror or ALLBLK or immersive dramas and documentaries on Sundance Now. They are somewhat less sensitive to what's on this week, what's on this month, where is the show of the moment.

So what we find is that for instance on Shudder, which is experiencing very nice growth, shows the hits on Shudder or Creepshow, a movie that we did called Nest, a movie that's up for a Peabody Award in entertainment called Love Raleigh [Phonetic]. And it's up against Euphoria and all this other stuff that's somewhat better known. And so, we have the nature of our subscribers is they come for a depth of content, a steady stream of content, and they are less absolutely sensitive to this week or this month where is the show that is in the headlines.

Thomas Yeh -- Morgan Stanley -- Analyst

Okay. Thank you so much.

Operator

Our next question comes from Michael Morris with Guggenheim.

Michael Morris -- Guggenheim -- Analyst

Hi. Thank you. Good morning, guys. I have two questions, one on advertising and one on streaming profitability. My first question is on the national linear addressable campaigns that you referenced. And the question there is around what the ultimate opportunity is and sort of the incremental contribution of that approach. So as you look at the success that you had there on those two, how big can that be if this continues to work and how much sort of incremental value is there in that linear inventory?

My second question on streaming profitability, Josh, you mentioned strong margin potential for the streaming businesses over time. Most of your peers site margin contraction as a result of their streaming services, whether it's content spend or marketing. So, can you put a little more context around what constitutes strong? Is it as strong as what you've been able to enjoy on the linear side historically or what's the frame of reference for the strength there? Thank you.

Ed Carroll -- Chief Operating Officer

Great. So, Michael, this is Ed, on your advertising question. I think there is great potential for increased ramp-up. And this has certainly been the addressability conversations have certainly been a centerpiece of the upfront. We have fun conversations that we're having now. Just to put it in plain speak, what it allows us to do with the help of the consortium that includes Comcast, Charter and Cox, and Vizio, for example, is when we're serving one spot we're able to target that at a specific demographic work and we can do that down to the household or device level.

So, another household might see another spot and another household might see another spot again. So, it is a way for us to increase our inventory in effect and enjoy higher pricing from each of these advertisers in the process. Now, it does take more work for reasons that are obvious. It does take active cooperation with our MVPD partners, which we see as a strength of ours, but the biggest part of the answer to your question is really the speed at which advertisers want to prioritize this and work with us to deploy this. And I think you will see this scale up in a significant manner in this upfront, based on the conversations we're now having.

Josh Sapan -- President and Chief Executive Officer

Michael, on the subject of, I think, you're talking about margin and investment, if I'm not mistaken on streaming, and here's what I think what's true of our services and it's just a fundamental structural almost genetic difference. We are not looking for moon shots on these streaming services. As we mentioned, we reaffirmed our $9 million year end. We're looking to be between $20 million and $25 million in a few years. And we have the targeted services and AMC+. We've seen growth as Ed mentioned during the last period on both AMC+, and the targeted services. So the playbook we're running is pretty different than whole house services, who, frankly, God bless them have ambition for a quarter of a billion subscribers and more in global share. And they all operate in different systems, some are owned by the sell companies, some have shopping infrastructure, some have many other different characteristics. We have our characteristics, and what we need to do to achieve our objectives is to provide content that the fans, constituents, subscribers, members of our services like. That's frankly cost less. Ed will tell you that of 20 shows that we've had on the air recently, the vast number, it's something like 18 or so. We're under a million under seven figures. So that means we're in a different stratosphere then what other people are doing as we service those very different subscriber base

And there was an earlier question about performance marketing. We're of course engaged in deeply metric-based performance marketing, it's the nature of the bps. So when you combine that which Acorn frankly, has been doing very well for a period of seven years with the inherently lowered necessity or a sort of monster hit on our services to end up with a different set of economics. And there's a very healthy margin opportunity in that.

Michael Morris -- Guggenheim -- Analyst

And so, Josh, if I could. If we think about that business, and the streaming part of your business becoming the largest source of revenue over time, as you referenced. Is it your view that you will kind of go through that change and this evolution with the consistent margin performance, or I don't mean quarter-to-quarter like, I understand that, but I'm just saying, from a big picture perspective, the profitability on the next generation business compared to the sort of legacy business?

Josh Sapan -- President and Chief Executive Officer

It's -- I wouldn't want to promise a number as we go forward. I think it's, we're new or to it, as you know, and it's evolving with some speed. We are very mindful of costs. And I mentioned the nature of the services. So I think I'm going to ask Chris Spade to just comment for a moment, she may be able to elaborate a little bit.

Christina Spade -- Chief Financial Officer

Thanks, Josh. Thanks, Mike. Thanks for the question. It's actually a great question, given the landscape we're in and all the evolution of streaming. From where I sit, I would point back to the guidance where we were very laser focused on not just quarter-by-quarter, but what we're seeing for the full-year, given the strength of our pivot. So, relative to what we're projecting for the P&L, we are going to have growth on the top-line, which is going to be driven by stream growth. So from that standpoint, we said we're going to be up low single-digits.

On the AOI growth, we're going to be down mid single-digits on a percentage basis. And it's not really because if we just look at this year, that's the best we could do. We're making conscious deliberate choice to reinvest in marketing and increase or programming content spent, on the cash flow, we're seeing that.

So what I can tell you is that our goal is not to just spend away. Our goal is to really look at all the expenses we have in total, and then optimize the performance of what's going to drive from a marketing tactic standpoint, from what type of content. Our research tells us, we need to continue to put up for the streaming services. And we're very happy with what we're seeing so far. So we are confident to reiterate our guidance. And I think that honestly, it's going to be the ongoing question not just for us, but for the industry. So thank you for the question.

Michael Morris -- Guggenheim -- Analyst

Thank you. I Appreciate it.

Operator

[Operator Instructions] Our next question comes from Steven Cahall with Wells Fargo.

Steven Cahall -- Wells Fargo -- Analyst

Thanks. So I think now all of your peers are giving quarterly streaming subscriber numbers. Just wondering with the new reporting segmentation if that's something that we might expect going forward? And just kind of thinking about the net ads or the streaming sub-sorry, commentary, I think you were just said over $6 million at year-end. It sounds like you're pretty confident being above $9 million by the end of this year. But the slate is pretty kind of weighted to the second-half of the year. So, is that how we should kind of think about the case of the streaming subscriber growth?

And then just the last one, it sounds like you're leaning into subscriber acquisition this year? So any just updates on profitability of the streaming business for the medium term? Thank you.

Josh Sapan -- President and Chief Executive Officer

Yes, so we are -- I think what we've done is we thought that the most important thing for us to do was to provide a full-year look. I don't know exactly what our peers did, but we several months ago, identified where we'd be at the end of the year. I don't know if they've done that. So we thought that we would give you as much transparency. And Chris just reiterated the key financial metrics associated with that 9 million subscribers. And we thought that was frankly, the best way to keep you appraised of where our minds are on the performance of the business and what the key critical points of achievement are. So we think that that's frankly most sensible, as opposed to frankly opportunistically popping up with a number here and there, that that would be less helpful to you, and absolutely understanding where we were headed. So, I'm actually -- I'll turn it over to Chris, because I think she has a little bit of application on that subject.

Christina Spade -- Chief Financial Officer

Yes, thanks for the question. I do think when we look at our performance for the year you hit on a few key things, which is how the content plays out over the year. And as we know we're turning the corner from COVID. So our production strength is only going to improve, it's not going to weaken. But relative to as we look at the timing of our slate, Q1, Q2, Q3 Q4, we do all in have a strong slate for this year, and we're going to invest in marketing to really drive the growth. But we are laser-focused on the full year and to get to at least the 9 million subs.

We're definitely on track for that. We feel good about where we are. And you know, I think, as we looked at what we did in 2020, streaming was growing fairly significantly. So it had been an international and other. We moved it over to segment to be inclusive in the flywheel of AMC and AMC+ in terms of monetizing all different ways in terms of linear, streaming and selective licensing. And then as we look to the future, As Josh said, our streaming revenue is going to become even more significant. So our reporting will evolve. But in terms of where we are in 2021, I think it sets the table very nicely, which is why we made the segment changes.

Operator

I'm showing no further questions in queue at this time. [Operator Closing Remarks]

Duration: 60 minutes

Call participants:

Nick Seibert -- Head of Investor Relations

Ed Carroll -- Chief Operating Officer

Christina Spade -- Chief Financial Officer

Josh Sapan -- President and Chief Executive Officer

Kutgun Maral -- RBC Capital Markets -- Analyst

Tim Nollen -- Macquarie -- Analyst

Michael Nathanson -- MoffettNathanson -- Analyst

Thomas Yeh -- Morgan Stanley -- Analyst

Michael Morris -- Guggenheim -- Analyst

Steven Cahall -- Wells Fargo -- Analyst

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