Seth Zaslow - Senior Vice President-Investor Relations Joshua W. Sapan - President & Chief Executive Officer Sean S. Sullivan - Chief Financial Officer & Executive Vice President Edward A. Carroll - Chief Operating Officer.

Michael C. Morris - Guggenheim Securities LLC Anthony DiClemente - Nomura Securities International, Inc. Michael B. Nathanson - MoffettNathanson LLC Todd Juenger - Sanford C. Bernstein & Co. LLC Vasily D. Karasyov - CLSA Americas LLC Benjamin E. Mogil - Stifel, Nicolaus & Co., Inc. Alexia S.

Quadrani - JPMorgan Securities LLC Ryan Fiftal - Morgan Stanley & Co. LLC.

Ladies and gentlemen, thank you for standing by, and welcome to the AMC Networks' Third Quarter 2015 Earnings Conference Call. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn today's conference over to Seth Zaslow, Senior Vice President of Investor Relations. Please go ahead..

Josh Sapan, President and Chief Executive Officer; Ed Carroll, Chief Operating Officer; and Sean Sullivan, Chief Financial Officer. Following a discussion of the company's third quarter 2015 results, we will open the call for questions. If you don't have a copy of today's earnings release, it is available on our website at amcnetworks.com.

This call can also be accessed via our website. Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Investors are cautioned that any such forward-looking statements are not guarantees of the future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to the company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties.

The company disclaims any obligation to update the forward-looking statements that may be discussed during this call. Further, we will discuss non-GAAP financial information.

We believe the presentation of non-GAAP results provides you with useful supplemental information concerning the company's ongoing operations and is appropriate in your evaluation of the company's performance.

Please refer to the press release and related footnotes for GAAP information and a reconciliation of GAAP to non-GAAP information, which we'll refer to on this call. With that, I would now like to turn the call over to Josh..

Good morning and thank you all for joining us. AMC Networks had an exceptionally strong third quarter, with total revenue and adjusted operating cash flow growth driven by the success of our high quality content and our ability to monetize it in multiple ways.

For a bit of background, since becoming a public company nearly five years ago, we've consistently delivered strong financial results for our shareholders. Our performance has enabled us to continue to execute on our strategic priorities and pursue initiatives that we believe will help ensure the long-term health and vitality of our business.

We continue to invest in quality content for our five National Networks and we increasingly own and control more of that content, which opens up new growth opportunities that in turn fuel our financial performance as we exploit those opportunities.

Last year, as most of you know, we used our strong financial position to acquire a stake in BBC AMERICA, one of TV's strongest brands and an investment that also provides us access to a new content pipeline through the larger BBC.

Our success has enabled us to expand globally by investing in a collection of international channels, which we now call AMC Networks International. This segment now accounts for approximately 20% of our total revenue, further diversifying our overall revenue makeup.

During this quarter, we extended The Walking Dead franchise with a companion series, Fear the Walking Dead, which we premiered simultaneously to AMC viewers on AMC channels and others around the world.

In addition to becoming the number one series premiere in cable history in the U.S., the series broke viewership records in key regions outside the U.S.

It helped further establish AMC as a global brand and it drove distributor demand in new territories, including notably the UK, where we launched on the British Telecom platform a major channel introduction in the hard to crack fairly mature UK market.

We believe our focus on producing and owning great content, content that viewers really care about most and don't want to miss, is the reason that we continue to create value for our shareholders, and we believe our strategy is what will best position us to deliver sustainable performance over the long term.

Before I review AMC's third quarter highlights, I'd like to talk for a minute about The Walking Dead. We continue to be quite pleased with its performance. Last month, The Walking Dead returned for its sixth season and for the fourth consecutive year, it holds the top spot as the number one show on TV among the key demo adults 18 to 49.

The competition for live viewing has been particularly intense this season. The show has gone head-to-head each week against both Sunday Night Football and Baseball playoffs, with delivery modestly down versus the prior year.

Yet this season, which we think is one of the most creatively ambitious is quickly becoming one of the most talked about, with growing viewership in the most recent weeks, three and four. Turning to our operational highlights for the third quarter.

We're very pleased with the performance of our National Networks, which overall achieved strong year-over-year ratings increases. Along with that growing viewership, we continue to see strong demand for our programming from advertisers.

Ad revenue for our National Networks was up more than 50% in the quarter, something we're pleased with given broader industry trends. AMC had a particularly strong third quarter, led by the premier Fear the Walking Dead, which debuted in August. As I mentioned earlier, this show became the biggest series premiered in cable TV history.

In addition, season one ended as the highest rated first season of any series in cable history for total viewers and amongst all key demos. We look forward to the show returning next year with 15 episodes, more than twice as many as season one.

With Fear the Walking Dead, AMC now is home to three of the top five cable series premiers of all time in live same day viewing, along with Better Call Saul, which premiered earlier this year and The Walking Dead.

Although extending franchises is something that has proved to be quite elusive if one takes a look at the sort of overall history of TV, we have navigated it successfully with the broader Walking Dead world and Breaking Bad, Better Call Saul, and all of its characters.

We take pride in that and we take comfort in it because we think it's a delicate creative task, a very important one, and a particularly important one for our success in a changing environment.

AMC also recently renewed a number of other series that will return to the channel, including the critically admired Halt and Catch Fire and Humans, which had a particularly impressive debut over the summer. The network also ordered a 10-episode series for a show called Preacher based on a popular comic book franchise.

The excellent creative team behind the series includes Seth Rogen and showrunner Sam Catlin from Breaking Bad, and there's already high anticipation around the show, which we will debut next year. Coming soon on Sunday, November 15, AMC will premiere the new martial arts drama called Into the Badlands.

This series is quite unique unlike anything else on TV and we're pleased to bring a completely new genre to our air. At BBC AMERICA, we continue to have a vital and vibrant programming lineup and we're pleased with the channel's performance.

September marked a new high in audience delivery, driven by the enduring franchise Doctor Who, which return to more viewers in the key adult 18 to 49 demo than ever before, and garnered more social engagement than most broadcast shows.

In what is somewhat amazingly its 52nd season with now 12 Doctors now featuring Peter Capaldi wonderfully in the title role that premiere ranks among the top 10 returning cable drama premieres this season. WE tv continues to perform very well and achieved an excellent quarter amongst all key demos in prime.

While WE tv doesn't always get the critical attention of some of our other networks, the channel has had great success nurturing its core audience, which made it a top two and three network on Thursday and Friday nights, respectively, during the quarter.

Growing its audience more than 20% year-over-year, We tv is bucking industry trends, growing at a faster rate than most competitors.

IFC had ratings gains among its key target demo in the quarter with widespread critical acclaim and attention for its new series called Documentary Now! The showing is among the network's best performing new series and has been renewed for two more seasons.

For those of you not familiar with it, it is produced by and stars some of the biggest names in comedy including Fred Armisen, Bill Hader and Seth Meyers. Looking ahead, IFC is preparing for the return next year with fan favorite, Portlandia as well as returning series called The Increasingly Poor Decisions of Todd Margaret from comedian David Cross.

SundanceTV had its best quarter ever, quite an achievement in prime with programming that resonates with a notably affluent audience.

The network has differentiated itself with a lineup of compelling rich dramas, including two very widely acclaimed shows, one called The Returned, a French drama, whose second season premiered this past weekend to great notices, and the beautifully crafted and recently renewed original series, Rectify, which will return for a fourth season next year.

Our global business continues to perform well. As I mentioned earlier, Fear the Walking Dead was significant for us, as it allowed us through a show that we own to realize some of the global content plans that we had when we expanded internationally through channel acquisitions.

We remain focused on exporting and monetizing our original content overseas, ensuring that our series, such as Into the Badlands and Humans and the upcoming mini-series, The Night Manager, starring Hugh Laurie and Tom Hiddleston, are available in a first-window to AMC viewers worldwide. We also continue to grow distribution for those networks.

As I mentioned earlier, we launched AMC in the UK and, in the quarter, we also expanded Sundance channel's distribution in France. So, with that overview, I'd like to turn the call now over to Sean Sullivan, our CFO..

Thanks. And good morning. As Josh highlighted, our results in the third quarter were strong. The company delivered healthy revenue, AOCF, and free cash flow. We're optimistic about the outlook for the remainder of 2015, and I'll touch on that after reviewing the third quarter results.

In summary, the third quarter delivered total company revenue growth of 22% and AOCF growth of 34%. Results in the quarter exceeded our expectations, primarily due to favorability in advertising revenue at the National Networks. I'll touch on this in more detail as I go through our results.

Also as a reminder, the comparability of our results was affected by the BBC AMERICA transaction, which closed in October 2014. With that, let's turn to our operating segments. At the National Networks, revenues increased 31% or $124 million. AOCF increased 45% or $58 million versus the prior-year period to a total of $187 million.

Advertising revenues increased 52% for the quarter to a total of $210 million. A portion of this increase related to the inclusion of BBC AMERICA. Excluding BBCA, advertising growth increased almost 40% over the prior-year period.

AMC was the primary driver, as it benefited from the performance of its original programming, most notably Fear the Walking Dead. Results at WE tv, IFC, and Sundance were also strong, with each network reporting double-digit growth over the prior-year period.

Distribution revenues at the National Networks increased 20% or $52 million to a total of $311 million versus the third quarter of 2014. Affiliate fee growth for the quarter was approximately 20% on a reported basis. Excluding the BBC AMERICA contribution, growth was in the low double-digits.

As we've highlighted on previous calls, the core affiliate fee growth rate benefited from rate-resets we achieved in connection with several of our recent renewals.

Distribution revenue growth for the third quarter also reflected a double-digit year-over-year increase in non-affiliate revenues, due principally to ancillary revenues from the digital and international licensing of our scripted original programs, most notably The Walking Dead and Hell on Wheels on SVOD, as well as the international distribution of Fear the Walking Dead and Halt and Catch Fire.

The timing and amount of some of these items with our non-affiliate revenue stream resulted in approximately $5 million of upside relative to our expectations. Moving to expenses. In the aggregate, expenses in the third quarter were essentially in line with what we had anticipated in early August when we reported our second quarter earnings.

Total expenses increased 25% or $66 million versus the prior-year period. Excluding the impact of BBC AMERICA, expenses increased in the mid-teens compared to the third quarter of 2014. Technical and operating expenses increased 21% or $38 million compared to the prior-year period to $224 million.

The year-over-year variance principally related to the impact of BBC AMERICA as well as our continued investment in original programming across all of our networks. In the quarter, we recorded $12 million in charges, primarily related to our decision to write-off programming at Sundance and WE tv.

This amount compares to write-offs of $9 million in the third quarter of 2014. SG&A expenses were $118 million in the quarter, an increase of 32% or $28 million versus the prior-year period. The increase primarily related to the consolidation of BBC AMERICA.

As to the other domestic networks, AMC, WE, IFC and Sundance, marketing costs increased year-over-year due to the timing of originals, notably Fear the Walking Dead on AMC and several new shows on IFC, including Documentary Now! Moving to our International and Other segment, consistent with our expectations, revenues for the third quarter decreased $9 million to $114 million.

AOCF for the third quarter decreased $6 million to a total of $7 million versus the prior year. The decrease in revenues primarily reflected a $13 million negative impact from foreign exchange as well as a year-over-year decline at our IFC Films business.

The results at IFC Films reflected the absence of revenue related to the theatrical performance of Boyhood, which benefited the prior-year period. These declines were partially offset by an increase in revenue on a constant currency basis at our international networks.

As for AOCF, the results in the third quarter reflected a negative impact of $3 million related to foreign exchange as well as an increase in programming rights, amortization at AMC Networks International as compared to the prior-year period.

Moving to net income, total company net income from continuing operations for the third quarter was $73 million or $0.99 per diluted share compared to $54 million or $0.74 per diluted share in the prior-year period.

Adjusted EPS for the third quarter of 2015 was $1.09 per diluted share, excluding the impact of amortization of acquisition-related intangibles. EPS and adjusted EPS for the third quarter of 2015 included $8 million in miscellaneous expense related to foreign currency transaction losses and $3 million in restructuring charges.

In terms of free cash flow, the company reported $252 million in free cash flow for the nine months ended September 2015. For the nine months, tax payments were $146 million, cash interest was $98 million, and capital expenditures were $49 million.

Program rights amortization for the nine-month period was $526 million and program rights payments were $616 million, resulting in a use of cash of $90 million. This compares to a use of cash for programming of $52 million for the prior-year period. Turning to the balance sheet. As of September 30, AMC Networks had a net debt position of $2.4 billion.

Our leverage ratio based on LTM AOCF of $835 million was 2.9 times. When adjusted for consolidated entities that are less than 100% owned, such as BBC AMERICA, this ratio increases slightly about 10 basis points. In terms of capital allocation, we expect to continue to delever through a combination of AOCF growth and free cash flow generation.

There continues to be no change in our strategy or approach to capital allocation. Primary focus remains investment in our core business, as we believe this will continue to allow us to grow AOCF on a sustainable basis and will generate the greatest return for our shareholders over the long term.

Looking forward, we remain optimistic about the outlook for the company's performance. With regard to our quarterly performance, we anticipate continued variability as a consequence of specific timing of our investment in content and the airing of our shows.

In addition, as we mentioned in our last call, in the fourth quarter, we will begin to lap the impact of the BBC AMERICA transaction. At the National Networks, in terms of advertising, we expect solid growth in the fourth quarter on a year-over-year basis, driven by the timing of our programming lineup and increased pricing for our Marquee series.

With respect to distribution, in the fourth quarter, we expect our normalized affiliate growth, that is excluding the impact of BBC AMERICA, to be in the double-digits, broadly in line with the rate of growth we experienced in the third quarter of the year.

As for the non-affiliate revenue, we anticipate continued year-over-year growth in the fourth quarter. But similar to prior periods, we expect the sequential decline in terms of absolute dollars relative to the third quarter due to the timing of the availability of content.

On the cost side, we expect to see an increase in year-over-year growth rate and expenses as compared to the first nine months of the year due most notably to an increase in programming and marketing, given the timing of the airing of our shows.

These factors in aggregate are expected to impact AOCF growth at the National Networks for the fourth quarter, subject to the current advertising market including scatter, as well as the premier of some of our upcoming originals. For the full year 2015, we continue to expect broadly stable AOCF margins in the National Networks.

At our International and Other segment, fourth quarter revenue and AOCF are expected to be relatively flat with the prior period as foreign currency headwinds are anticipated to be largely offset by growth in the underlying business. As for 2016, we'll have more to say on our next call, but we feel good about how the business is positioned.

So with that, we'd like to move to the question-and-answer portion of the call. Operator, if you could please open the call for questions..

Certainly. Your first question comes from the line of Michael Morris with Guggenheim Securities..

Thank you. Good morning, guys. Two questions. First, Josh, you addressed The Walking Dead ratings a bit, but there is clearly some sensitivity in the marketplace about how audience, perhaps some audience decline could impact the value of the company.

So can you talk a little bit more about, maybe how the audience is relative to your initial expectations and your thoughts on the sensitivity of the value of the company relative to that particular program? And then I have a follow-up on subscribers..

Oh, sure. So we are, overall, Mike pleased with The Walking Dead, perhaps not surprisingly remains the biggest show on television in season six. We treat The Walking Dead in the broadest sense as a franchise. And although of course it's a TV show, we try to think franchise, and that has led us to a few things that I think are important.

Number one, a insistent focus on creative excellence which happily all the people involved have I think over delivered on and I think the world would sort of agree.

And the notion of franchise I feel just in response to your question, compelled to say that led us to Fear the Walking Dead and as I mentioned in my prepared remarks, it's sort of delicate to do what is commonly called spin-off in television. They had a checker history.

We tried not to look at it as spin-off, we really tried to respect the world created by the creators and to make it as rich, as sustainable, as enduring and as character driven as possible. And I actually think that the groups involved really achieved that.

So it broadly, Walking Dead met our expectations and is meeting our expectations, you're familiar with the numbers and Fear the Walking Dead, we were extremely pleased with. We think it's creatively, all I can say is excellent and its reception was superb and some of that's reflected in the numbers.

So we look forward to treating it with care, with a clear eyed view toward how things play-out in the world and we have expectations that it has a good life – a very good life and the important thing for us do is to treat it as carefully as we can. And so that's my best answer to your question..

Thanks, Josh. And then with respect to the subscriber numbers that you provided in your press release, they come from Nielsen. We know that that may differ from what you're seeing.

But can you talk a little more about that? I mean, it looks like AMC Network had a 2% decline in its subscriber base over the past year? And is that consistent with what's driving your financial performance? Thanks..

Yeah. Mike, the broader subscriber question, if I may, is probably really what you're I think asking about and as you know better than me, this quarter was a better quarter for the MVPD universe with large and the prior one, we're obviously participants in that. It's a nice change to see in terms of sort of trend.

The specifics for each of our channels differ a bit. They each have different levels of penetration against what is commonly called, the full available basic universe. And so, we're pleased with the trend that was stabilized over the past 90 days.

It is important to us and we have of course views of it as we go forward and we try to make those views conservative, reasonable and to invest appropriately against them..

Thank you, Josh..

Your next question comes from the line of Anthony DiClemente with Nomura Securities..

Hi, thanks a lot. Good morning. Hope you guys are doing well better than we are after a week like this. But I have two questions for Josh, one for Josh and one for Sean. Josh, just a follow up on those subscriber numbers.

I presume that Sling TV and Sony PlayStation Vue that those online video distributor subscribers are not included in the Nielsen numbers.

Can you guys just maybe confirm that? And then just more broadly, can you talk about your learnings in terms of your participation in Sling TV and PlayStation Vue? And what you see in terms of the future of online video distribution or online bundles if you will? And then I'll follow up with Sean after. Thanks..

Sure, Anthony. So on the second part of your question first. We are participants in both Sling and Sony's activities. We think that they are adjacent to and ultimately consistent with a bundled approach to the video world that we're in and so we did choose to participate in them.

And our view is to continue to participate in like-minded and like-structured multi-channel video offerings from our current distributors and potentially from new ones depending upon their effectiveness. So we like that.

I actually – I'm going to refer you to Nielsen to give you a defined answer on their sampling, their count, their methodology and their manner. I wouldn't want to be a surrogate and speak for their methodologies.

So, we like everyone else participates in Nielsen calculations and I just would refer you to them for questions about methodology, projection, inclusion, and exclusion, if you don't mind..

Will do. Fair, very fair enough. And then for Sean, the company and you have done an excellent job in delivering those broadly stable margins that you talked about this year, in 2015. Of course investors care about that trajectory as we start to think about 2016. And so, I wonder what you can tell us about that at this early stage.

And as part of the question, my assumption on The Walking Dead is that because it's an AMC owned property, the amortization of that is matched on an accounting basis with the revenue generated from Walking Dead.

And so as opposed to a straight line amortization, it would be accelerated, which I think, even in the case of a revenue decline for Walking Dead would argue for margin stability into 2016 and 2017. So, can you just help us and investors with that or clarify or confirm that assumption? Thanks, Sean..

Sure, Anthony. So on the second part of your question, yes, The Walking Dead, just like Fear the Walking Dead are owned. We do do the ultimate method of accounting on owned originals as articulated in our public filing. So the matching of the revenue and the amortization of that is occurring in those shows. So, I'll allow you to conclude as you may.

I think the trends, the historical trends shouldn't necessarily differ from the future, but again, there is a revenue attribution element to it. As it relates to, again, the broadly stable margins, I commented about the fourth quarter.

I think, this management team has been consistent in articulation of how we view the business, how we view the investment in content and the impact of the timing and premiere of shows, and how that may impact any margin in a particular 90-day period.

So I think that should inform your view of 2016, but I'm certainly not going to comment further about what it looks like at this point..

Great, thank you very much..

Your next question comes from the line of Michael Nathanson of MoffettNathanson..

I have two for Josh on strategy. Josh, I know how much you enjoy Rectify, you've talked about Rectify. When you look at it, how it debuts on Sundance, the ratings are pretty low given the quality of the show. So I know your strategy about building other networks.

But do you ever rethink the strategy of launching shows on AMC's main network to kind of build awareness and then put them down to Sundance, because it seems like you're not getting the lift on a kind of show like that that you probably deserve?.

I think I'll respond and Ed can too, because he has engineered some unique things between our shows and actually we have – it's a good question. It is of course a challenge that we deal with.

We have shows that we think are extremely strong and some of them don't frankly meet our ratings expectations and it does provoke questions about platform – platform strength, exposure, I'll just say broadly and I'll turn it over to Ed.

We have thought that it is very wise at minimum to experiment and actually go further and try and do everything from premiering online to utilizing our other channels for simultaneous premieres in order to boost exposure and sampling and create opportunity. Ed has actually engineered a couple of things that you may want to hear about..

Yeah. Michael, I'll just add. We did develop Rectify with Sundance Channel in mind. Frankly, we're not sure that Rectify would be deemed a broad enough show for AMC's audience, and the cost structure of Rectify complemented that thinking.

And the other point I'll make is one that you raised, which is cross promoting on our networks is something we look to do.

You probably don't recall, but we premiered Rectify, we dual premiered it on AMC and on Sundance, actually coming out of an episode of Mad Men and we have since stunted episodes of Rectify on AMC for just that purpose, to raise its profile and to bring audience over to sample Sundance Channel..

But what's interesting – the ratings didn't hold up as much as you probably thought over the summer given that, right? It was – it's strange how it ended given the quality of the show?.

Yeah. Look, I think the ratings for Rectify – Sundance is a smaller universe, but the ratings for Rectify were strong enough to justify a season four. We think it does a lot to raise the channel's profile. It's a very upscale show. We know advertisers like it.

And it's really – when you see Sundance included – Rectify included in the list of top 10 series for the year on many critical lists, it's really done a lot to raise the profile of the Sundance Channel..

Okay. Thanks..

It's interesting, Michael, not to take up too much time, it's a subject that we really like. So, I hope we don't bore you and everyone else with a long response to it. But it is – I'll answer slightly more broadly, the sort of a little bit of history of TV has sometimes shows that have a life that pops when it's least expected.

It's not common, but it does occur. There are examples of shows that in their secondary life become revered and actually live more greatly than their first life.

I could point to nothing on our air, but I think Friday Night Lights went into its odd sharing arrangement on network television and DIRECTV probably got more attention and I don't know exactly what happened to the ratings, but it sort of had a resurgence of interest.

So, we continue to toy with what we can do when we have quality material and how we can boost it and it doesn't form a lot of where we think opportunities go as people view on, I mean it, new devices, new ways as things that are in a, so called digital library where the increasing on demand capability of cable television can be meaningful as well as SVOD, so it's a rich area, I'm going to take up too much time and irritate everybody on the call with too much on this except to say, it's subject, we like a lot, we think about and we think that great content probably has more upside than it may even be – than the system maybe acknowledging today..

Okay. Thank you, Josh. Thank you, Ed..

Your next question comes from the line of Todd Juenger of Sanford Bernstein..

Hi, good morning. I suspect the question I'm going to tee up may also elicit longer than usual response, so I'll probably just keep it to this one. The topic of SVOD, which you just mentioned, has been an important and much debated topic for many years.

As I'm sure, you're aware, it's back, front and center this week and especially, yesterday and so there is – there are those who hold a philosophy that says maybe the industry should rethink about how quickly they are willing to put shows on to that window or platform and then maybe thinking about creating a longer delay if those shows show up their all in an effort to, I think, increase the perceived or actual value of the linear view.

On the other hand, your particular franchises and networks, I think in point is evidence that in your case, I think you believe that SVOD has in many cases helped the performance of your shows in your linear networks.

So given this change and given changes made by big strategic players this week, I would love your current thoughts on how you think about the SVOD window? How you think about the tradeoffs between putting content there soon versus later versus putting content in other on demand places? I told it would be a long answer, it was actually a very long question, sorry about that.

I'd love to hear your thoughts. Thanks..

So, thanks. It's a really – obviously, it's a good question, Todd. And we've been fairly consistent in our thinking since we engaged in SVOD exploitation. When we first considered it, we thought it was wise to balance to say, it's simply time and money.

And so, we created a year more or less delay between our linear premiere and SVOD availability at the time that was considered very conservative.

A number of our brethren were making material available 24 hours later, seven days later, two weeks later, we resisted that and we were steadfast in insisting on that year to some degree to our detriment perhaps economically, because we thought it was highly appropriate and strategic to balance time, availability and money.

So we think that what we arrived at was largely right in an environment and against the backdrop that was clearly emerging and was unknowable.

And what we saw was that in some instances, we think we got a benefit in terms of increased exposure, which resulted in increase linear ratings and one could have a long discussion about every other effect that may have occurred or be occurring. Our view today is that our approach was a measured one and an appropriate one.

I don't know if perfect is an available answer.

And I like to think that we resisted some of the activities of others, which included a lot of rapid movement from one day to a week, to no, I'm not doing it, to no, I am doing it, to no, I'm only doing library, to no, I'm not doing library, I'm not doing new, and we've been consistent in what we've done and we've watched the data and we think our approach is appropriate.

We'll obviously continue to monitor it. People's behavior and their perceptions – and their perceptions of value are emerging as SVOD proliferates, as cable TV so-called prices and packaging change and we'll monitor it. But we think for today, we are engaging in it appropriately..

Thanks. If you don't mind, I do have a very quick follow-up. If you could just remind us, the new output deal with Hulu Plus, I guess I'll call it new. If you can remind us what you've said about how long that lasts and what is defined in that in terms of content availability and windowing.

I'm sure it's rather complicated, but a simplified answer if you can give one would be great. Thanks..

I would just say broadly the windowed holdbacks are consistent with what they were in the Netflix deal, and we won't say and we've never said how long the deal lasts. We did say that Fear the Walking Dead is the first show in it. And then a number of the scripted series that come from the networks will fall into it as well..

Excellent. Thank you, guys..

Your next question comes from the line of Vasily Karasyov of CLSA..

Thank you. Good morning. I think my question is for Ed and Sean.

Can you please help us understand the correlation with your ratings, especially for your Marquee shows and advertising revenue growth? I don't think you ever had to call out make-goods since you became a public company and yet you benefit from ratings that one would say are higher than base case assumptions going into it.

So how correlated those revenues are? And, say, 10%, 20% decline in live-plus-same-day for a couple of episodes of The Walking Dead, how impactful is it on the top line?.

Yeah. This is Ed. It's hard to directly correlate. I would say, we've done a pretty good job of estimating our shows. There is an art to it. And we have a model and we look at a high end and a mid range and a low end in terms of new premieres and in terms of returning series. And I think our track record has been pretty good.

One of the things that's very helpful and when you look at the BBC acquisition is we now have a stable of more scripted shows and many of them appeal to affluent audiences and we're able to work with advertisers to move impressions around and I think we've done a good job at that. And then, I guess, the last point I would make is on CPMs.

I think our sales force has done an excellent job of growing CPMs. And you mentioned The Walking Dead, its unique appeal to 18 to 49s and a subset of that, 18 to 34-year-old males, looks much, much stronger by comparison as other networks have had trouble appealing to and holding that audience.

So that's sort of the best indication of the factors I can give you that correlate..

And if you look at the past quarter, the September quarter, would you be willing to give us color on volume versus pricing growth drivers for advertising revenue in the quarter?.

I don't think we'll get into one factor versus another and specifics..

Well, thank you very much..

Your next question comes from the line of Ben Mogil with Stifel..

Yeah. Thanks for taking my question. So one on a follow-up on Todd and then one new question. The follow-up to Todd's question was about the holdback and the windowing.

I'm kind of curious, when you look at Hulu that has the ad-supported and you look at Netflix, that's not, when I say, which one do you have a preference for, I'm curious your views on how you think about sort of different shows on different of those two services and sort of retraining the customer to see advertising.

And sort of as a follow-up to that, you've had – FX has been out there sort of saying there's almost too much TV out there. There's obviously a ton of scripted programming out there on all the platforms.

Curious how you sort of think when you look into 2016 and the new shows you're launching, how you sort of cut through the clutter, if you will? Thanks..

Yeah.

So I think – I can answer that I think – as Ed mentioned, I think we think broadly of Netflix and Hulu similarly in that their SVOD services, they have different obviously United States distribution, Netflix being substantially bigger at the moment and that itself has potential implications that we'll monitor over time that are probably obvious.

It's bigger and more widely available. You could argue that that will be good or bad depending upon what you're trying to accomplish. The nature of the services I don't think have – in terms of their construction have by themselves necessarily meaningful impact on who and what they are and how it affects our channels.

So I think probably distribution, size or degrees of ubiquity or lack of it are probably more important.

On the subject of the so-called landscape and being meaningful in the landscape, which is somewhat different than it was, for instance, eight or 10 years ago when we launched open-ended scripted programming and we're among the first, if not the first, to do it on basic cable in the manner that we did.

Indeed, there are more entrants in it and that does cause everyone, including ourselves, to think about what matters and how you get found and how you're meaningful and what makes you attractive.

It's an interesting question because it at its – a sort of spasmodic reaction is to retreat and to go with the familiar and that probably has a degree of merit. Meaning, if you are extending a franchise, as we are, you begin with a leg-up because the characters of the world is known and you can take advantage of that.

And indeed, we have and indeed we do, and indeed we will. We did it with Walking Dead – through The Walking Dead and Better Call Saul. I think at the same time, these increasingly selective consumers are very aware, they're smart and they're talking more and more and more about what's good on TV.

And so a liability is that you're up against more entrants and a benefit is that you've got a tuned-up consumer population that's discussing it more in social conversation than they might have been in the past. And that's a damn rich opportunity.

So we premiered Humans – so Doctor Who comes back super strong, The Walking Dead is doing extremely well, Fear the Walking Dead premieres very strong, Better Call Saul surpasses many people's expectations, and Humans comes into the fray and does extremely well. What does that mean? It means it's good.

It probably means it has points of accessibility, but it means it's good. So we sort of look at it as both a challenge and a huge opportunity because you're playing to an extremely interested audience. And you got to get it right.

And so we spend an awful lot of time, attention and energy getting it right in source material and creative development in the manner in which we market and introduce material and in its perception of distinctiveness. Sorry, that's a vague answer. That's just how we approach it.

But I will tell you, there is much upside as there is challenge in the environment..

No, that's – I mean, that's a very, very fair answer. And I think your comments on the engagement are very interesting. Thanks again, Josh..

Yeah..

Your next question comes from the line of Alexia Quadrani of JPMorgan..

Thank you. I just had a quick question for – maybe not quick, but for Josh. I know no one has a crystal ball, but you obviously have a lot more insights than we have here.

If you were to fast forward, I don't know, a few years out, how do you see your revenue mix differently in the sense that you think a notably larger amount comes from non-traditional subscription fees, such as the Sony or the Sling, et cetera., the over-the-top providers versus terrestrial cable? Are you more in the camp where you don't see the ecosystem really changing that quickly?.

I guess, Alexia, the first thing I might say is to point to the past, if I may, just for a second, and point out we did in my prepared remarks that a dramatically increased percentage of our revenue now comes, compared to the past, not from United States advertising or affiliate fees at all.

It comes from international channels that we operate around the globe and it comes from the exploitation of content that we now operate, which effectively makes us, the common word is, studio. So we have diversified our revenue mix dramatically over the past 24 months and 36 months. It actually doesn't look at all like it used to look.

In terms of the more specific question you asked about – I think you meant – you were talking about domestic conventional if you want to call them MVPDs, by which we might include satellite, cable and telco versus the newer entrants. It's a little hard to know.

If your timeframe is two years, I would say it's not dramatically different from how it looks today. We'll learn an awful lot from the entrants who are extending – who are incumbent and extending their distribution outside of their current format from the new entrants.

I think to-date it probably looks like it's slightly additive, but not moving all that fast..

Okay. Thank you very much..

Operator, why don't we take one last question, please?.

Your final question comes from the line of Ryan Fiftal of Morgan Stanley..

Great. Thank you. Good morning. I have one for Josh and one for Sean, if I can squeeze them in here at the end. Josh, going back following up on The Walking Dead, so live-plus-three ratings have been down double-digits, but Nielsen doesn't capture all of the monetized viewing.

So is there anything else you could share on performance of any other types of monetized viewing outside of those first three days that we might be missing is outside of the servers? And in the same vein, maybe rough order of magnitude, how should we think about how monetization fades as you go from the first three days to seven days to maybe later VOD viewing?.

I'm not sure that I'm going to offer you any incremental insight beyond what is available today. You have all the statistics. We see meaningful viewership in the three days afterwards. You see the relationship between live-same-day and C3, you see the relationship between live-same-day and C7.

Increasingly some of the broadcasters and others are paying a lot of attention to that. So that's what's in evidence. So really you see what we see. It is certainly a strong show in every regard and all of that benefits its strength and its momentum and its monetization..

Okay. Thank you. And then, Sean, I think you reiterated the broadly stable margin guide for National Networks and, I guess, I'm just bluntly – I mean, how broad is broad? I mean, I think year-to-date margins are up 400 basis points and you sounded positive about top line growth in 4Q.

So I'm struggling to understand how margins could be stable this year. Thank you..

Right. So Ryan, I think I'll guide you got back to the comments I made. As you know or just to reinforce, we have a new show premiering in the fourth quarter Into the Badlands and, obviously, some meaningful marketing spend against that as we launch the show. So that's what I'm guiding to.

There's variability quarter-to-quarter based on the timing and the dollars relative to it. So I think our past experience and our past results hopefully are guiding how we're managing the business, how you should be viewing our financial results, and the variability that will occur..

Okay. Thank you..

Well, thank you, everyone, for joining us on today's call and for your interest in AMC Networks. Operator, you can now conclude the call..

Thank you for participating in today's conference. You may now disconnect..