SEC Filing | AMC Networks Inc.

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amcx-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2023


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 1-35106

AMC Networks Inc.

(Exact name of registrant as specified in its charter)


Delaware		27-5403694
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

11 Penn Plaza,
New York,	NY	10001
(Address of principal executive offices)		(Zip Code)

(212) 324-8500

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.01 per share

AMCX

The

NASDAQ

Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company (as defined in Exchange Act Rule 12b-2).


Large accelerated filer	þ	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of shares of common stock outstanding as of October 27, 2023:


Class A Common Stock par value $0.01 per share			32,073,020
Class B Common Stock par value $0.01 per share			11,484,408

AMC NETWORKS INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Income			2
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Statements of Stockholders' Equity			4
Condensed Consolidated Statements of Cash Flows			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3. Quantitative and Qualitative Disclosures About Market Risk			42
Item 4. Controls and Procedures			43
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			44
Item 2. Unregistered Sales of Equity Securities , Use of Proceeds, and Issuer Purchases of Equity Securities			44

Item 6. Exhibits			44
SIGNATURES			45

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)


	September 30, 2023		December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	955,187	$	930,002
Accounts receivable, trade (less allowance for doubtful accounts of $9,581 and $8,725)	657,656		722,185
Current portion of program rights, net	11,978		10,807
Prepaid expenses and other current assets	276,284		286,875
Total current assets	1,901,105		1,949,869
Property and equipment, net of accumulated depreciation of $390,887 and $344,906	172,897		202,034
Program rights, net	1,807,549		1,762,939
Intangible assets, net	300,763		354,676
Goodwill	640,143		643,419
Deferred tax assets, net	15,542		13,618
Operating lease right-of-use assets	81,783		108,229
Other assets	471,003		599,052
Total assets	$	5,390,785	$	5,633,836
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	103,575	$	172,009
Accrued liabilities	373,403		419,065
Current portion of program rights obligations	257,508		374,115
Deferred revenue	69,796		134,883
Current portion of long-term debt	459,063		33,750
Current portion of lease obligations	36,822		36,411
Total current liabilities	1,300,167		1,170,233
Program rights obligations	146,924		200,869
Long-term debt, net	2,334,216		2,778,703
Lease obligations	99,116		124,799
Deferred tax liabilities, net	117,687		112,642
Other liabilities	84,988		139,108
Total liabilities	4,083,098		4,526,354
Commitments and contingencies
Redeemable noncontrolling interests	225,400		253,669
Stockholders' equity:
Class A Common Stock, $0.01 par value, 360,000 shares authorized, 66,666 and 66,118 shares issued and 32,073 and 31,525 shares outstanding, respectively	666		661
Class B Common Stock, $0.01 par value, 90,000 shares authorized, 11,484 shares issued and outstanding	115		115
Preferred stock, $0.01 par value, 45,000 shares authorized; none issued	—		—
Paid-in capital	372,925		360,251
Accumulated earnings	2,342,914		2,105,641
Treasury stock, at cost (34,593 and 34,593 shares Class A Common Stock, respectively)	(1,419,882)		(1,419,882)
Accumulated other comprehensive loss	(246,052)		(239,798)
Total AMC Networks stockholders' equity	1,050,686		806,988
Non-redeemable noncontrolling interests	31,601		46,825
Total stockholders' equity	1,082,287		853,813
Total liabilities and stockholders' equity	$	5,390,785	$	5,633,836

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues, net	$	636,954	$	681,843	$	2,033,029	$	2,132,025
Operating expenses:
Technical and operating (excluding depreciation and amortization)	284,900		293,459		933,590		903,468
Selling, general and administrative	187,232		207,972		567,136		670,444
Depreciation and amortization	28,009		29,735		79,629		79,556
Impairment and other charges	5,400		—		30,282		—
Restructuring and other related charges	10,563		—		22,537		—
Total operating expenses	516,104		531,166		1,633,174		1,653,468
Operating income	120,850		150,677		399,855		478,557
Other income (expense):
Interest expense	(38,757)		(34,308)		(115,304)		(97,085)
Interest income	11,686		3,625		26,944		8,552

Miscellaneous, net	(2,211)		(1,546)		12,518		3,540
Total other expense	(29,282)		(32,229)		(75,842)		(84,993)
Income from operations before income taxes	91,568		118,448		324,013		393,564
Income tax expense	(23,671)		(28,456)		(82,725)		(103,118)
Net income including noncontrolling interests	67,897		89,992		241,288		290,446
Net income attributable to noncontrolling interests	(4,473)		(5,326)		(4,015)		(18,163)
Net income attributable to AMC Networks' stockholders	$	63,424	$	84,666	$	237,273	$	272,283

Net income per share attributable to AMC Networks' stockholders:
Basic	$	1.44	$	1.96	$	5.42	$	6.32
Diluted	$	1.44	$	1.94	$	5.40	$	6.23

Weighted average common shares:
Basic	43,951		43,238		43,786		43,070
Diluted	44,041		43,732		43,905		43,707

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income including noncontrolling interests	$	67,897	$	89,992	$	241,288	$	290,446
Other comprehensive income (loss):
Foreign currency translation adjustment	(27,860)		(54,896)		(6,216)		(125,229)




Comprehensive income	40,037		35,096		235,072		165,217
Comprehensive income attributable to noncontrolling interests	(3,389)		(3,136)		(4,053)		(13,114)
Comprehensive income attributable to AMC Networks' stockholders	$	36,648	$	31,960	$	231,019	$	152,103

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

(unaudited)


	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		AMC Networks Stockholders’ Equity		Noncontrolling Interests		Total Stockholders' Equity
Balance, June 30, 2023	$	666	$	115	$	366,553	$	2,279,490	$	(1,419,882)	$	(219,276)	$	1,007,666	$	32,585	$	1,040,251
Net income attributable to AMC Networks’ stockholders	—		—		—		63,424		—		—		63,424		—		63,424
Net income attributable to non-redeemable noncontrolling interests	—		—		—		—		—		—		—		417		417


Distribution to noncontrolling member	—		—		—		—		—		—		—		(317)		(317)

Other comprehensive income (loss)	—		—		—		—		—		(26,776)		(26,776)		(1,084)		(27,860)
Share-based compensation expenses	—		—		6,378		—		—		—		6,378		—		6,378



Net share issuances under employee stock plans	—		—		(6)		—		—		—		(6)		—		(6)
Balance, September 30, 2023	$	666	$	115	$	372,925	$	2,342,914	$	(1,419,882)	$	(246,052)	$	1,050,686	$	31,601	$	1,082,287


	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		AMC Networks Stockholders’ Equity		Noncontrolling Interests		Total Stockholders' Equity
Balance, June 30, 2022	$	660	$	115	$	341,403	$	2,285,664	$	(1,419,882)	$	(243,292)	$	964,668	$	48,778	$	1,013,446
Net income attributable to AMC Networks’ stockholders	—		—		—		84,666		—		—		84,666		—		84,666
Net income attributable to non-redeemable noncontrolling interests	—		—		—		—		—		—		—		883		883


Distributions to noncontrolling member	—		—		—		—		—		—		—		(407)		(407)




Other comprehensive income (loss)	—		—		—		—		—		(52,706)		(52,706)		(2,190)		(54,896)

Share-based compensation expenses	—		—		7,050		—		—		—		7,050		—		7,050

Net share issuances under employee stock plans	1		—		(1,249)		—		—		—		(1,248)		—		(1,248)
Balance, September 30, 2022	$	661	$	115	$	347,204	$	2,370,330	$	(1,419,882)	$	(295,998)	$	1,002,430	$	47,064	$	1,049,494

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

(unaudited)


	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		AMC Networks Stockholders’ Equity		Noncontrolling Interests		Total Stockholders' Equity
















Balance, December 31, 2022	$	661	$	115	$	360,251	$	2,105,641	$	(1,419,882)	$	(239,798)	$	806,988	$	46,825	$	853,813
Net income attributable to AMC Networks’ stockholders	—		—		—		237,273		—		—		237,273		—		237,273
Net income (loss) attributable to non-redeemable noncontrolling interests	—		—		—		—		—		—		—		(13,111)		(13,111)


Distributions to noncontrolling member	—		—		—		—		—		—		—		(2,151)		(2,151)

Other comprehensive income (loss)	—		—		—		—		—		(6,254)		(6,254)		38		(6,216)
Share-based compensation expenses	—		—		19,908		—		—		—		19,908		—		19,908



Net share issuances under employee stock plans	5		—		(7,234)		—		—		—		(7,229)		—		(7,229)
Balance, September 30, 2023	$	666	$	115	$	372,925	$	2,342,914	$	(1,419,882)	$	(246,052)	$	1,050,686	$	31,601	$	1,082,287


	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		AMC Networks Stockholders’ Equity		Noncontrolling Interests		Total Stockholders' Equity
Balance, December 31, 2021	$	655	$	115	$	347,971	$	2,098,047	$	(1,419,882)	$	(175,818)	$	851,088	$	51,584	$	902,672
Net income attributable to AMC Networks’ stockholders	—		—		—		272,283		—		—		272,283		—		272,283
Net income attributable to non-redeemable noncontrolling interests	—		—		—		—		—		—		—		5,192		5,192
Distributions to noncontrolling member	—		—		—		—		—		—		—		(3,366)		(3,366)
Purchase of noncontrolling interest, net of tax	—		—		(3,066)		—		—		—		(3,066)		(1,297)		(4,363)


Other comprehensive income (loss)	—		—		—		—		—		(120,180)		(120,180)		(5,049)		(125,229)
Share-based compensation expenses	—		—		23,862		—		—		—		23,862		—		23,862


Net share issuances under employee stock plans	6		—		(21,563)		—		—		—		(21,557)		—		(21,557)
Balance, September 30, 2022	$	661	$	115	$	347,204	$	2,370,330	$	(1,419,882)	$	(295,998)	$	1,002,430	$	47,064	$	1,049,494

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) / (unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income including noncontrolling interests	$	241,288	$	290,446
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	79,629		79,556
Impairment and other charges	24,882		—
Share-based compensation expenses related to equity classified awards	19,671		23,862
Non-cash restructuring and other related charges	11,916		—
Amortization of program rights	626,685		610,099
Amortization of deferred carriage fees	15,662		24,747
Unrealized foreign currency transaction loss (gain)	7,778		(1,098)
Amortization of deferred financing costs and discounts on indebtedness	5,876		5,778

Bad debt expense	2,106		2,035
Deferred income taxes	2,973		46,292
Gain on investments	—		(4,084)

Other, net	(4,881)		(7,854)
Changes in assets and liabilities:
Accounts receivable, trade	48,570		99,711
Prepaid expenses and other assets	146,321		(18,174)
Program rights and obligations, net	(844,332)		(1,065,937)
Income taxes payable	16,198		13,181
Deferred revenue	(65,548)		66,822
Deferred carriage fees, net	(4,725)		(22,285)
Accounts payable, accrued liabilities and other liabilities	(198,930)		(106,506)
Net cash provided by operating activities	131,139		36,591
Cash flows from investing activities:
Capital expenditures	(28,392)		(33,510)
Return of capital from investees	696		1,771

Acquisition of investments	(283)		(5,002)

Loans to investees	—		(2,456)
Principal payment received on loan to investee	180		720
Proceeds from sale of investments	8,565		9,854
Net cash used in investing activities	(19,234)		(28,623)
Cash flows from financing activities:
Payments for financing costs	(342)		—
Principal payments on long-term debt	(25,313)		(25,313)
Deemed repurchases of restricted stock units	(7,229)		(21,557)

Principal payments on finance lease obligations	(3,134)		(2,606)

Distributions to noncontrolling interests	(47,546)		(28,232)
Purchase of noncontrolling interests	(1,343)		(2,500)
Net cash used in financing activities	(84,907)		(80,208)
Net increase (decrease) in cash and cash equivalents from operations	26,998		(72,240)
Effect of exchange rate changes on cash and cash equivalents	(1,813)		(29,051)
Cash and cash equivalents at beginning of period	930,002		892,221
Cash and cash equivalents at end of period	$	955,187	$	790,930

See accompanying notes to condensed consolidated financial statements.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Description of Business and Basis of Presentation

Description of Business

AMC Networks Inc. ("AMC Networks") and its subsidiaries (collectively referred to as the "Company," "we," "us," or "our") own and operate entertainment businesses and assets. The Company is comprised of two operating segments:

•Domestic Operations: Includes our programming services, which consist of our five national programming networks, our global streaming services, our AMC Studios operation and IFC Films. Our national programming networks are AMC, WE tv, BBC AMERICA, IFC, and SundanceTV. Our global streaming services consist of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, ALLBLK, and HIDIVE) and AMC+. Our AMC Studios operation produces original programming for our programming networks and third parties and also licenses programming worldwide, and IFC Films is our film distribution business. The operating segment also includes AMC Networks Broadcasting & Technology, 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, our production services business.

Basis of Presentation

Principles of Consolidation

The consolidated financial statements include the accounts of AMC Networks and its subsidiaries in which a controlling financial interest is maintained or variable interest entities ("VIEs") in which the Company has determined it is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

Investments in business entities in which the Company lacks control but does have the ability to exercise significant influence over operating and financial policies are accounted for using the equity method of accounting.

Unaudited Interim Financial Statements

These condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and Article 10 of Regulation S-X of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the Company's consolidated financial statements and notes thereto for the year ended December 31, 2022 contained in the Company's Annual Report on Form 10-K (our "2022 Form 10-K") filed with the SEC. The condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q are unaudited; however, in the opinion of management, such financial statements reflect all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods presented.

The results of operations for interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 2023.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates and judgments inherent in the preparation of the consolidated financial statements include the useful lives and methodologies used to amortize and assess recoverability of program rights, the estimated useful lives of intangible assets and the valuation and recoverability of goodwill and intangible assets.

Note 2. Revenue Recognition

Transaction Price Allocated to Future Performance Obligations

As of September 30, 2023, other than contracts for which the Company has applied the practical expedients, the aggregate amount of transaction price allocated to future performance obligations was not material to our consolidated revenues.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Contract Balances from Contracts with Customers

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers.


(In thousands)	September 30, 2023		December 31, 2022
Balances from contracts with customers:
Accounts receivable (including long-term receivables within Other assets)	$	765,333	$	1,003,505
Contract assets, short-term (included in Prepaid expenses and other current assets)	2,364		48,594

Contract liabilities, short-term (Deferred revenue)	69,796		134,883
Contract liabilities, long-term (Deferred revenue included in Other liabilities)	181		683

Revenue recognized for the nine months ended September 30, 2023 and 2022 relating to the contract liabilities at December 31, 2022 and 2021 was $102.6 million and $63.1 million, respectively.

In October 2023, the Company entered into an agreement enabling it 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 the Company's other assets in the event of non-payment by the customers. The Company 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. As of the date of this report, the Company has not yet sold any customer receivables under this agreement.

Note 3. Net Income per Share

The following is a reconciliation between basic and diluted weighted average common shares outstanding:


(In thousands)	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Basic weighted average common shares outstanding	43,951	43,238	43,786	43,070
Effect of dilution:

Restricted stock units	90	494	119	637
Diluted weighted average common shares outstanding	44,041	43,732	43,905	43,707

As of September 30, 2023 and September 30, 2022, 1.9 million and 0.9 million, respectively, of restricted stock units have been excluded from diluted weighted average common shares outstanding, as their impact would have been anti-dilutive.

Stock Repurchase Program

The Company's Board of Directors previously authorized a program to repurchase up to $1.5 billion of its outstanding shares of common stock (the "Stock Repurchase Program"). The Stock Repurchase Program has no pre-established closing date and may be suspended or discontinued at any time. For the three and nine months ended September 30, 2023 and 2022, the Company did not repurchase any shares of its Class A Common Stock. As of September 30, 2023, the Company had $135.3 million of authorization remaining for repurchase under the Stock Repurchase Program.

Note 4. Restructuring and Other Related Charges

On November 28, 2022, the Company commenced a restructuring plan (the “Plan”) 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 encompasses initiatives that include, among other things, strategic programming assessments and organizational restructuring costs. The Plan is 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 pertain to a broad mix of owned and licensed content, including legacy television series and films that will no longer be in active rotation on the Company’s linear or streaming platforms.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

During the third quarter of 2023, the Company substantially completed the Plan and exited a portion of its office space in its corporate headquarters in New York and office space in Silver Spring, Maryland and Woodland Hills, California. In connection with exiting a portion of the New York office, the Company 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. Fair values used to determine the impairment charge were determined using an income approach, specifically a discounted cash flow ("DCF") model. The DCF model includes significant assumptions about sublease income and enterprise specific discount rates. Given the uncertainty in determining assumptions underlying the DCF approach, actual results may differ from those used in the valuations.

As a result of the Plan, the Company recorded restructuring and other related charges of $10.6 million and $22.5 million for the three and nine months ended September 30, 2023, consisting primarily of charges relating to exiting a portion of office space in New York and severance and other personnel costs.

There were no restructuring and other related charges for the three and nine months ended September 30, 2022.

The following table summarizes the restructuring and other related charges (credits) recognized by operating segment:


(In thousands)	Three Months Ended September 30,		Nine Months Ended September 30,
	2023			2023
Domestic Operations	$	(783)		$	3,940
International and Other	(4)			1,642
Corporate / Inter-segment eliminations	11,350			16,955
Total restructuring and other related charges	$	10,563		$	22,537

The following table summarizes the accrued restructuring and other related costs:


(In thousands)	Severance and Employee-Related Costs		Content Impairments and Other Exit Costs		Total
Balance at December 31, 2022	$	37,150	$	74,724	$	111,874
Charges (credits), net	13,444		9,093		22,537
Cash payments	(40,285)		(61,305)		(101,590)
Non-cash adjustments	—		(11,916)		(11,916)
Other	(56)		1,481		1,425
Balance at September 30, 2023	$	10,253	$	12,077	$	22,330

Accrued restructuring and other related costs of $20.1 million and $2.2 million are included in Accrued liabilities and Other liabilities, respectively, in the consolidated balance sheet at September 30, 2023. Accrued restructuring and other related costs of $108.0 million and $3.9 million are included in Accrued liabilities and Other liabilities, respectively, in the consolidated balance sheet at December 31, 2022.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Note 5. Program Rights

Total capitalized produced and licensed content by predominant monetization strategy is as follows:


	September 30, 2023
(In thousands)	Predominantly Monetized Individually		Predominantly Monetized as a Group		Total
Owned original program rights, net:
Completed	$	198,647	$	537,260	$	735,907
In-production and in-development	—		284,783		284,783
Total owned original program rights, net	$	198,647	$	822,043	$	1,020,690

Licensed program rights, net:
Licensed film and acquired series	$	1,276	$	570,027	$	571,303
Licensed originals	2,084		134,300		136,384
Advances and content versioning costs	—		91,150		91,150
Total licensed program rights, net	3,360		795,477		798,837
Program rights, net	$	202,007	$	1,617,520	$	1,819,527

Current portion of program rights, net					$	11,978
Program rights, net (long-term)					1,807,549
					$	1,819,527


	December 31, 2022
(In thousands)	Predominantly Monetized Individually		Predominantly Monetized as a Group		Total
Owned original program rights, net:
Completed	$	215,496	$	322,248	$	537,744
In-production and in-development	45,098		294,086		339,184
Total owned original program rights, net	$	260,594	$	616,334	$	876,928

Licensed program rights, net:
Licensed film and acquired series	$	3,092	$	642,768	$	645,860
Licensed originals	5,373		171,418		176,791
Advances and content versioning costs	—		74,167		74,167
Total licensed program rights, net	8,465		888,353		896,818
Program rights, net	$	269,059	$	1,504,687	$	1,773,746

Current portion of program rights, net					$	10,807
Program rights, net (long-term)					1,762,939
					$	1,773,746

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Amortization of owned and licensed program rights, included in Technical and operating expenses in the condensed consolidated statements of income, is as follows:


	Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
(In thousands)	Predominantly Monetized Individually		Predominantly Monetized as a Group		Total		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total

Owned original program rights	$	21,116	$	63,800	$	84,916	$	101,947	$	165,547	$	267,494
Licensed program rights	485		110,898		111,383		2,620		356,571		359,191
Program rights amortization	$	21,601	$	174,698	$	196,299	$	104,567	$	522,118	$	626,685


	Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
(In thousands)	Predominantly Monetized Individually		Predominantly Monetized as a Group		Total		Predominantly Monetized Individually		Predominantly Monetized as a Group		Total

Owned original program rights	$	33,728	$	35,534	$	69,262	$	128,072	$	82,850	$	210,922
Licensed program rights	12,597		131,350		143,947		29,838		369,339		399,177
Program rights amortization	$	46,325	$	166,884	$	213,209	$	157,910	$	452,189	$	610,099

For programming rights predominantly monetized individually or as a group, the Company periodically reviews the programming usefulness of licensed and owned original program rights based on several factors, including expected future revenue generation from airings on the Company's networks and streaming services and other exploitation opportunities, ratings, type and quality of program material, standards and practices, and fitness for exhibition through various forms of distribution. If events or changes in circumstances indicate that the fair value of a film predominantly monetized individually or a film 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. Program rights with no future programming usefulness are substantively abandoned resulting in the write-off of remaining unamortized cost. There were no significant program rights write-offs included in technical and operating expenses for the three and nine months ended September 30, 2023 or 2022.

In the normal course of business, the Company may qualify for tax incentives through eligible investments in productions. Receivables related to tax incentives earned on production spend were $191.7 million and $143.1 million as of September 30, 2023 and December 31, 2022, respectively, recorded in Prepaid expenses and other current assets, and $84.6 million and $104.5 million as of September 30, 2023 and December 31, 2022, respectively, recorded in Other assets.

Note 6. Investments

The Company holds several investments in and loans to non-consolidated entities which are included in Other assets in the condensed consolidated balance sheet.

Equity Method Investments

Equity method investments were $82.7 million and $79.6 million at September 30, 2023 and December 31, 2022, respectively.

Marketable Equity Securities

There were no investments in marketable equity securities at September 30, 2023 or December 31, 2022.

There were no realized or unrealized gains or losses on marketable equity securities for the three and nine months ended September 30, 2023. No gains or losses were recorded on marketable equity securities for the three months ended September 30, 2022, and $4.1 million of gains were recorded for the nine months ended September 30, 2022, included in miscellaneous, net in the condensed consolidated statements of income. In April 2022, the Company sold its interest in a marketable equity security for $9.9 million.

Non-marketable Equity Securities

Investments in non-marketable equity securities were $41.3 million and $42.7 million at September 30, 2023 and December 31, 2022, respectively. No gains or losses were recorded on non-marketable equity securities for the three months ended September 30, 2023, or the three and nine months ended September 30, 2022. During the nine months ended

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

September 30, 2023, the Company recognized impairment charges of $1.7 million on certain investments, which were included in miscellaneous, net in the consolidated statements of income.

Note 7. Goodwill and Other Intangible Assets

The carrying amount of goodwill, by operating segment is as follows:


(In thousands)	Domestic Operations		International and Other		Total
December 31, 2022	$	349,292	$	294,127	$	643,419


Impairment charge	—		(1,877)		(1,877)
Amortization of "second component" goodwill	(560)		—		(560)
Foreign currency translation	—		(839)		(839)
September 30, 2023	$	348,732	$	291,411	$	640,143

As of September 30, 2023 and December 31, 2022, accumulated impairment charges in the International and Other segment totaled $165.7 million and $163.8 million, respectively.

The $1.9 million impairment charge for International and Other relates to the 25/7 Media reporting unit. See "Impairment Test of Long-Lived Assets and Goodwill" below for more details.

The reduction of $0.6 million in the carrying amount of goodwill for Domestic Operations is due to the realization of a tax benefit for the amortization of "second component" goodwill at SundanceTV. Second component goodwill is the amount of tax deductible goodwill in excess of goodwill for financial reporting purposes. In accordance with the authoritative guidance at the time of the SundanceTV acquisition, the tax benefits associated with this excess are applied to first reduce the amount of goodwill, and then other intangible assets for financial reporting purposes, if and when such tax benefits are realized in the Company's tax returns. All remaining tax benefits were realized during the second quarter of 2023.

The following tables summarize information relating to the Company's identifiable intangible assets:


(In thousands)	September 30, 2023
	Gross		Accumulated Amortization		Net		Estimated Useful Lives
Amortizable intangible assets:
Affiliate and customer relationships	$	633,525	$	(410,571)	$	222,954	6 to 25 years
Advertiser relationships	46,282		(37,598)		8,684		11 years
Trade names and other amortizable intangible assets	105,441		(56,216)		49,225		3 to 20 years

Total amortizable intangible assets	785,248		(504,385)		280,863
Indefinite-lived intangible assets:
Trademarks	19,900		—		19,900
Total intangible assets	$	805,148	$	(504,385)	$	300,763

(In thousands)	December 31, 2022
	Gross		Accumulated Amortization		Net
Amortizable intangible assets:
Affiliate and customer relationships	$	634,000	$	(373,240)	$	260,760
Advertiser relationships	46,282		(34,443)		11,839
Trade names and other amortizable intangible assets	105,338		(43,161)		62,177

Total amortizable intangible assets	785,620		(450,844)		334,776
Indefinite-lived intangible assets:
Trademarks	19,900		—		19,900
Total intangible assets	$	805,520	$	(450,844)	$	354,676

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Aggregate amortization expense for amortizable intangible assets for the three months ended September 30, 2023 and 2022 was $9.8 million and $10.2 million, respectively, and for the nine months ended September 30, 2023 and 2022 was $30.7 million and $31.2 million, respectively. Estimated aggregate amortization expense for intangible assets subject to amortization for each of the following five years is:


(In thousands)
Years Ending December 31,
2023	$	40,454
2024	39,128
2025	37,420
2026	33,076
2027	28,272

Impairment Test of Long-Lived Assets and Goodwill

25/7 Media is our production services business and is part of our International and Other operating segment. See "Item 1. Business - International and Other" in our 2022 Form 10-K for further details. During the second quarter of 2023, given the impact of market challenges at 25/7 Media, specifically as it relates to reduced demand for new content and series cancellations from third parties, the Company revised its outlook for the 25/7 Media business, resulting in lower expected future cash flows. As a result, the Company determined that sufficient indicators of potential impairment of long-lived assets existed at 25/7 Media. The Company 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 $23.0 million was recorded for identifiable intangible assets, which is included in impairment and other charges in the consolidated statement of income within the International and Other operating segment. Fair values used to determine the impairment charge were determined using an income approach, specifically a DCF model, and a market comparables approach. The DCF model includes significant assumptions about revenue growth rates, long-term growth rates and enterprise specific discount rates. Given the uncertainty in determining assumptions underlying the DCF approach, actual results may differ from those used in the valuations.

During the second quarter of 2023, the Company also determined that a triggering event had occurred with respect to the 25/7 Media reporting unit, which required an interim goodwill impairment test to be performed. Accordingly, the Company performed a quantitative assessment using an income approach, specifically a DCF model, and a market comparables approach. Based on the valuations performed, a $1.9 million goodwill impairment charge was recorded, which is included in impairment and other charges in the consolidated statement of income, within the International and Other operating segment.

Note 8. Accrued Liabilities

Accrued liabilities consist of the following:


(In thousands)	September 30, 2023		December 31, 2022
Employee related costs	$	81,235	$	97,362
Participations and residuals	152,030		138,384
Interest	22,006		37,105
Restructuring and other related charges	20,055		107,998
Other accrued expenses	98,077		38,216
Total accrued liabilities	$	373,403	$	419,065

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Note 9. Long-term Debt

The Company's long-term debt consists of the following:


(In thousands)	September 30, 2023		December 31, 2022
Senior Secured Credit Facility: (a)
Term Loan A Facility	$	615,938	$	641,250
Senior Notes:

5.00% Notes due April 2024	400,000		400,000
4.75% Notes due August 2025	800,000		800,000
4.25% Notes due February 2029	1,000,000		1,000,000

Total long-term debt	2,815,938		2,841,250
Unamortized discount	(15,246)		(18,718)
Unamortized deferred financing costs	(7,413)		(10,079)
Long-term debt, net	2,793,279		2,812,453
Current portion of long-term debt	459,063		33,750
Noncurrent portion of long-term debt	$	2,334,216	$	2,778,703

(a)The Company's revolving credit facility remains undrawn at September 30, 2023. Total undrawn revolver commitments are available to be drawn for general corporate purposes of the Company.

During the nine months ended September 30, 2023, the Company repaid a total of $25.3 million of the principal amount of the Term Loan A Facility in accordance with the terms of the agreement.

In April 2023, the Company entered into Amendment No. 2 ("Amendment No. 2") to the Second Amended and Restated Credit Agreement (the "Credit Agreement"). Amendment No. 2 (i) reduced the aggregate principal amount of the revolving loan commitments under the Credit Agreement from $500 million to $400 million, (ii) replaced the interest rate based on London Interbank Offered Rate with an interest rate based on the Secured Overnight Financing Rate, (iii) increased the Company's ability to incur additional debt in the future to provide additional flexibility for future financings, including increasing the amount of the incremental debt basket to the greater of $1.2 billion and the amount that would not cause the senior secured leverage ratio to exceed 3.00 to 1.00 on a pro forma basis and (iv) made certain other modifications to the Credit Agreement. The maturity date of the Term Loan A Facility and revolving credit facility under the Credit Agreement is February 8, 2026. In connection with the modification of the revolving loan commitments, the Company recorded $0.6 million to write-off a portion of the unamortized deferred financing costs, which is included in interest expense within the consolidated statements of income for the nine months ended September 30, 2023.

On November 3, 2023, the Company gave notice of its intention to redeem the remaining $400 million outstanding principal amount of its 5.00% senior notes due 2024 (the “2024 Notes”) on December 12, 2023 (the “Redemption Date”). The 2024 Notes will be redeemed at a redemption price of 100.000% of the principal amount of the 2024 Notes plus accrued and unpaid interest to, but excluding, the Redemption Date.

Other Debt

During the second quarter of 2023, a majority owned subsidiary of the Company extended its credit facility totaling $4.5 million to July 21, 2024. The facility bears interest at the greater of 3.5% or the prime rate plus 1%. There were no outstanding borrowings under the credit facility as of September 30, 2023.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

Note 10. Leases

The following table summarizes the leases included in the condensed consolidated balance sheets as follows:


(In thousands)	Balance Sheet Location	September 30, 2023		December 31, 2022
Assets
Operating	Operating lease right-of-use assets	$	81,783	$	108,229
Finance	Property and equipment, net	10,159		10,982
Total lease assets		$	91,942	$	119,211
Liabilities
Current:
Operating	Current portion of lease obligations	$	32,313	$	32,207
Finance	Current portion of lease obligations	4,509		4,204
		$	36,822	$	36,411
Noncurrent:
Operating	Lease obligations	$	83,551	$	105,768
Finance	Lease obligations	15,565		19,031
		$	99,116	$	124,799

Total lease liabilities		$	135,938	$	161,210

In connection with exiting a portion of its office space in New York in the third quarter of 2023, the Company recorded an impairment charge of $9.1 million for operating lease right-of use assets. Refer to Note 4, Restructuring and Other Related Charges for additional details.

Note 11. Fair Value Measurement

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:

•Level I - Quoted prices for identical instruments in active markets.

•Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level III - Instruments whose significant value drivers are unobservable.

AMC NETWORKS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(unaudited)

The following table presents for each of these hierarchy levels, the Company's financial assets and liabilities that are measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022:


(In thousands)	Level I		Level II			Level III		Total
At September 30, 2023:
Assets
Cash equivalents	$	89,539	$	—		$	—	$	89,539



Foreign currency derivatives	—		6,070			—		6,070

Liabilities

Foreign currency derivatives	—		3,613			—		3,613


At December 31, 2022:
Assets
Cash equivalents	$	80,000	$	—		$	—	$	80,000



Foreign currency derivatives	—		536			—		536

Liabilities					</