UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 19, 2021
Commission File Number: 1-35106
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(212 ) 324-8500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| The | Stock Market LLC | |||||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01 Regulation FD Disclosure
In the first quarter of 2021, AMC Networks Inc. (the "Company" or "our") changed its presentation of operating segments, reflecting a reorganized operating structure focused on a multi-platform distribution approach to content monetization. The Company's streaming services and IFC Films, previously included in the International and Other segment, are now included within the Domestic Operations segment (formerly referred to as the National Networks segment). In addition, certain corporate overhead costs are no longer allocated to the operating segments.
The new reporting structure consists of the following two operating segments:
•Domestic Operations: Includes activities of our five national programming networks, our streaming services, our AMC Studios operation, IFC Films and AMC Broadcasting & Technology. Our national programming networks are AMC, WE tv, BBC AMERICA, IFC, and SundanceTV. Our streaming services consist of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, and ALLBLK), AMC+ and other streaming initiatives. Our AMC Studios operation produces original programming for our programming networks and also licenses such programming worldwide. IFC Films is our film distribution business and AMC Networks Broadcasting & Technology is our technical services business, which primarily services most of the national programming networks.
•International and Other: Includes AMC Networks International ("AMCNI"), our international programming businesses consisting of a portfolio of channels around the world and 25/7 Media (formerly Levity), our production services business.
Exhibit 99.1 contains unaudited segment financial information for 2020 and 2019 under the new segment structure. The changes in the segment structure discussed above affect only the manner in which the results for the Company's operating segments were previously reported and have no impact on the Company's previously reported consolidated financial statements or results of operations.
The information contained in this Item 7.01, including Exhibit 99.1 incorporated herein by reference, is furnished and shall not be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | ||||||||||
| 99.1 | |||||||||||
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document) | ||||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AMC Networks Inc. | ||||||||||||||
| Date: | By: | /s/ Christina Spade | ||||||||||||
| Christina Spade | ||||||||||||||
| Executive Vice President and Chief Financial Officer | ||||||||||||||
Exhibit 99.1
SEGMENT REPORTING CHANGES
This document provides recast segment financial information for 2020 and 2019 to reflect the following:
In the first quarter of 2021, AMC Networks (the "Company" or "our") changed its presentation of operating segments, reflecting a reorganized operating structure focused on a multi-platform distribution approach to content monetization. The Company's streaming services and IFC Films, previously included in the International and Other segment, are now included within the Domestic Operations segment (formerly referred to as the National Networks segment). In addition, certain corporate overhead costs are no longer allocated to the operating segments. These changes have no effect on the Company's consolidated financial statements or results of operations.
The new reporting structure consists of the following two operating segments:
•Domestic Operations: Includes activities of our five national programming networks, our streaming services, our AMC Studios operation, IFC Films and AMC Broadcasting & Technology. Our national programming networks are AMC, WE tv, BBC AMERICA, IFC, and SundanceTV. Our streaming services consist of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, and ALLBLK), AMC+ and other streaming initiatives. Our AMC Studios operation produces original programming for our programming networks and also licenses such programming worldwide. IFC Films is our film distribution business and AMC Networks Broadcasting & Technology is our technical services business, which primarily services most of the national programming networks.
•International and Other: Includes AMC Networks International ("AMCNI"), our international programming businesses consisting of a portfolio of channels around the world and 25/7 Media (formerly Levity), our production services business.
1
SUMMARY OF RECAST SEGMENT RESULTS
The following is a summary of segment revenues, operating income (loss), and adjusted operating income (loss) presented under the new segment reporting structure for the periods presented:
| Year Ended | Quarter Ended | Year Ended | |||||||||||||||||||||||||||||||||
| December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2020 | ||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||
| Domestic Operations | $ | 2,563,250 | $ | 611,893 | $ | 562,932 | $ | 546,865 | $ | 659,711 | $ | 2,381,401 | |||||||||||||||||||||||
| International and Other | 527,916 | 124,828 | 90,682 | 111,398 | 126,322 | 453,230 | |||||||||||||||||||||||||||||
| Inter-segment Eliminations | (30,845) | (2,346) | (7,323) | (4,248) | (5,758) | (19,675) | |||||||||||||||||||||||||||||
| $ | 3,060,321 | $ | 734,375 | $ | 646,291 | $ | 654,015 | $ | 780,275 | $ | 2,814,956 | ||||||||||||||||||||||||
| Operating Income (Loss) | |||||||||||||||||||||||||||||||||||
| Domestic Operations | $ | 884,054 | $ | 224,601 | $ | 217,586 | $ | 179,259 | $ | 113,425 | $ | 734,871 | |||||||||||||||||||||||
| International and Other | (83,948) | 4,361 | (125,562) | 3,061 | 8,775 | (109,365) | |||||||||||||||||||||||||||||
| Corporate / Inter-segment Eliminations | (174,829) | (55,992) | (43,222) | (42,843) | (40,805) | (182,862) | |||||||||||||||||||||||||||||
| $ | 625,277 | $ | 172,970 | $ | 48,802 | $ | 139,477 | $ | 81,395 | $ | 442,644 | ||||||||||||||||||||||||
Adjusted Operating Income(1) | |||||||||||||||||||||||||||||||||||
| Domestic Operations | $ | 986,331 | $ | 241,033 | $ | 236,353 | $ | 205,614 | $ | 144,954 | $ | 827,954 | |||||||||||||||||||||||
| International and Other | 67,336 | 17,843 | 15,583 | 8,917 | 6,382 | 48,725 | |||||||||||||||||||||||||||||
Corporate / Inter-segment Eliminations (2) | (109,677) | (36,422) | (26,658) | (29,040) | (17,948) | (110,068) | |||||||||||||||||||||||||||||
| $ | 943,990 | $ | 222,454 | $ | 225,278 | $ | 185,491 | $ | 133,388 | $ | 766,611 | ||||||||||||||||||||||||
(1) Adjusted Operating Income (AOI) is the primary financial measure the Company uses to evaluate segment performance. 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. See below for a reconciliation of operating income (loss) to AOI.
(2) Corporate overhead costs include such costs as executive salaries and benefits, costs of maintaining corporate headquarters, facilities and common support functions (such as human resources, legal, finance, strategic planning and information technology).
Inter-segment eliminations are primarily licensing revenues recognized between the Domestic Operations and International and Other segments.
2
The following tables present the Company's operating results and a reconciliation to segment AOI under the new segment reporting structure for the periods presented:
Domestic Operations
| Year Ended | Quarter Ended | Year Ended | |||||||||||||||||||||||||||||||||
| (unaudited, in thousands) | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||
| Advertising | $ | 904,253 | $ | 213,226 | $ | 187,434 | $ | 164,178 | $ | 236,639 | $ | 801,477 | |||||||||||||||||||||||
| Distribution and other | 1,658,997 | 398,667 | 375,498 | 382,687 | 423,072 | 1,579,924 | |||||||||||||||||||||||||||||
| 2,563,250 | 611,893 | 562,932 | 546,865 | 659,711 | 2,381,401 | ||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
Technical and operating (excluding depreciation and amortization) | 1,199,159 | 263,348 | 235,335 | 260,330 | 371,153 | 1,130,166 | |||||||||||||||||||||||||||||
| Selling, general and administrative | 409,878 | 111,512 | 97,506 | 87,025 | 146,801 | 442,844 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 41,299 | 10,950 | 11,301 | 15,799 | 12,524 | 50,574 | |||||||||||||||||||||||||||||
| Restructuring and other related charges | 28,860 | 1,482 | 1,204 | 4,452 | 15,808 | 22,946 | |||||||||||||||||||||||||||||
| Total operating expenses | 1,679,196 | 387,292 | 345,346 | 367,606 | 546,286 | 1,646,530 | |||||||||||||||||||||||||||||
| Operating income | 884,054 | 224,601 | 217,586 | 179,259 | 113,425 | 734,871 | |||||||||||||||||||||||||||||
| Share-based compensation expense (benefit) | 26,153 | 2,724 | 4,844 | 4,437 | (1,400) | 10,605 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 41,299 | 10,950 | 11,301 | 15,799 | 12,524 | 50,574 | |||||||||||||||||||||||||||||
| Restructuring and other related charges | 28,860 | 1,482 | 1,204 | 4,452 | 15,808 | 22,946 | |||||||||||||||||||||||||||||
| Majority-owned equity investees AOI | 5,965 | 1,276 | 1,418 | 1,667 | 4,597 | 8,958 | |||||||||||||||||||||||||||||
| Adjusted operating income | $ | 986,331 | $ | 241,033 | $ | 236,353 | $ | 205,614 | $ | 144,954 | $ | 827,954 | |||||||||||||||||||||||
3
International and Other
| Year Ended | Quarter Ended | Year Ended | |||||||||||||||||||||||||||||||||
| (unaudited, in thousands) | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||
| Advertising | $ | 89,659 | $ | 19,364 | $ | 14,810 | $ | 18,924 | $ | 21,241 | $ | 74,339 | |||||||||||||||||||||||
| Distribution and other | 438,257 | 105,464 | 75,872 | 92,474 | 105,081 | 378,891 | |||||||||||||||||||||||||||||
| 527,916 | 124,828 | 90,682 | 111,398 | 126,322 | 453,230 | ||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
Technical and operating (excluding depreciation and amortization) | 332,241 | 80,136 | 54,190 | 77,356 | 88,999 | 300,681 | |||||||||||||||||||||||||||||
| Selling, general and administrative | 132,884 | 27,458 | 21,818 | 26,044 | 31,492 | 106,812 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 34,983 | 8,896 | 7,563 | 4,937 | 5,069 | 26,465 | |||||||||||||||||||||||||||||
| Impairment and other charges (credits) | 106,603 | — | 130,411 | — | (8,184) | 122,227 | |||||||||||||||||||||||||||||
| Restructuring and other related charges | 5,153 | 3,977 | 2,262 | — | 171 | 6,410 | |||||||||||||||||||||||||||||
| Total operating expenses | 611,864 | 120,467 | 216,244 | 108,337 | 117,547 | 562,595 | |||||||||||||||||||||||||||||
| Operating income (loss) | (83,948) | 4,361 | (125,562) | 3,061 | 8,775 | (109,365) | |||||||||||||||||||||||||||||
| Share-based compensation expense | 4,545 | 609 | 909 | 919 | 551 | 2,988 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 34,983 | 8,896 | 7,563 | 4,937 | 5,069 | 26,465 | |||||||||||||||||||||||||||||
| Impairment and other charges | 106,603 | — | 130,411 | — | (8,184) | 122,227 | |||||||||||||||||||||||||||||
| Restructuring and other related charges | 5,153 | 3,977 | 2,262 | — | 171 | 6,410 | |||||||||||||||||||||||||||||
| Adjusted operating income | $ | 67,336 | $ | 17,843 | $ | 15,583 | $ | 8,917 | $ | 6,382 | $ | 48,725 | |||||||||||||||||||||||
4
Corporate / Inter-segment Eliminations
| Year Ended | Quarter Ended | Year Ended | |||||||||||||||||||||||||||||||||
| (unaudited, in thousands) | December 31, 2019 | March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2020 | |||||||||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||||||||||||
| Advertising | $ | (79) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||
| Distribution and other | (30,766) | (2,346) | (7,323) | (4,248) | (5,758) | (19,675) | |||||||||||||||||||||||||||||
| (30,845) | (2,346) | (7,323) | (4,248) | (5,758) | (19,675) | ||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
Technical and operating (excluding depreciation and amortization) | (24,415) | 575 | (7,023) | (3,869) | (18,939) | (29,256) | |||||||||||||||||||||||||||||
| Selling, general and administrative | 136,682 | 45,680 | 35,840 | 35,698 | 41,946 | 159,164 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 24,816 | 6,884 | 7,041 | 6,812 | 6,830 | 27,567 | |||||||||||||||||||||||||||||
| Restructuring and other related charges | 6,901 | 507 | 41 | (46) | 5,210 | 5,712 | |||||||||||||||||||||||||||||
| Total operating expenses | 143,984 | 53,646 | 35,899 | 38,595 | 35,047 | 163,187 | |||||||||||||||||||||||||||||
| Operating loss | (174,829) | (55,992) | (43,222) | (42,843) | (40,805) | (182,862) | |||||||||||||||||||||||||||||
| Share-based compensation expense | 33,435 | 12,179 | 9,482 | 7,037 | 10,617 | 39,315 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 24,816 | 6,884 | 7,041 | 6,812 | 6,830 | 27,567 | |||||||||||||||||||||||||||||
| Restructuring and other related charges | 6,901 | 507 | 41 | (46) | 5,210 | 5,712 | |||||||||||||||||||||||||||||
| Cloud computing amortization | — | — | — | — | 200 | 200 | |||||||||||||||||||||||||||||
| Adjusted operating loss | $ | (109,677) | $ | (36,422) | $ | (26,658) | $ | (29,040) | $ | (17,948) | $ | (110,068) | |||||||||||||||||||||||
5