David Joyce: Great. Thank you.
Operator: Thank you. And one moment please for our next question. Next question will come from the line of Michael Nathanson of MoffettNathanson. Your line is open.
Luke Landis: Hi. This is Luke Landis on for Michael. I wanted to ask, in your current bundled deals with linear distributors, is there any way to allocate the breakdown to streaming versus linear channels? And how you expect that to shift in the years ahead?
Kristin Dolan: It’s Kristin. At this point, I think we look at our relationships holistically. And as we noted, we’ve included AMC+ with every single partner, traditional as well as a lot of the newer players into the space like Amazon, Apple, Roku, YouTube. So I think this will evolve over time how it gets sort of bifurcated and trifurcated. But just to restate, our goal is always to offer the most flexibility that allows our partners to be successful and to get our content in front of as many people opportunistically in any way that they would like to consume it. So utilizing our content across brands, across platforms, across technologies, and then both in ad-supported and non-ad-supported ways, but it’s not specifically broken out yet in a way that we can articulate publicly.
Luke Landis: Thank you.
Operator: Thank you. Again one moment please for our next question. Our next question will come from Brett Feldman of Goldman Sachs. Your line is open.
Brett Feldman: Great. Thanks. Two, if you don’t mind. First, on free cash flow and the outlook for growing free cash flow. I was hoping you could give us some insights into how you think the cash flow equation is going to evolve, meaning, right now, you guys are really doing a terrific job on the cost side of it, and that’s clearly supporting a strong cash flow profile. How much longer do you think that cost programs can support growth in free cash flow? And how are you thinking about the path to long-term revenue growth? I think, most people would agree it is sort of essential to sustaining cash flow growth over the long term. And then the second is you’ve really been at the forefront of bundling your streaming services in with other streamers, and you’ve had some good early success there.
There’s been this constant conversation about when are we going to see more of that happening broadly across the category. I’m curious what your insights are there. As you’ve done this, what have you found has worked? And do you see some emerging catalysts that are likely to create more of a bundling initiatives and natural facilitators? Sort of an open-ended question, but I think you guys have the unique advantage on this. Thank you.
Patrick O’Connell: Hi Brett, it’s Patrick. I’ll start on the free cash flow question. Listen, we’ve been taking steps over the course of the last three to four quarters, frankly, to set ourselves up in this way. And so we’ll have essentially doubled run rate free cash flow from ’22 into ’23, and we feel quite good about continuing to grow that into ’24. Obviously, the biggest lever we’ve had to pull there is on the programming side. And so we’ve set up the ’23, ’24, and we’re looking towards ’25 slates in order to ensure that, that run rate continues. Obviously, there are revenue challenges in the business. We expect those to continue into 2024, particularly on the traditional side of the business. One of the ways we’ve been able to grow free cash flow is not just on expense management, which, to your point, is finite.
But I would also point at our efficiency on the marketing front. And so that’s been one lever that we’ve pulled this year that’s been particularly effective for us. And obviously, we’ve moderated the growth in our streaming subscribers, and that’s decelerated to a degree, but it’s been offset by significant increases in the efficiency of that marketing spend. So we’re being much more tactical in spending against CPAs where we see value. And so I think to the extent we continue to do that. And frankly, as the ecosystem evolves towards bundles and we can have more sort of innovative and imaginative kind of revenue streams, as Kristin alluded to, I think from that, obviously, AOI and free cash flow growth will continue.
Kristin Dolan: On the bundling side, Brett, I would just say there’s real opportunity here around pricing and packaging. We are, as we’ve stated before, a pure-play programmer. So we have, I think, more flexibility to experiment. We have long-standing relationships in the industry, so it’s kind of fun to get together and brainstorm and think about opportunities and put them in the marketplace. And then sort of — as part of an answer to both of your questions, our goal here is really to get to be sort of a lean-mean distribution machine to create great content and get it out everywhere we possibly can. And that’s our ability to be innovative, our ability to move quickly, our ability to partner and engage with people on all different types of ideas and then culminate that with really intense utilization of data and technology to really understand the opportunities, articulate and attribute what the results were and then kind of roll those forward into expansion of the opportunities around bundling, around technological distribution, around ad-supported capabilities, are all, again, bright future spots that we see.
In addition to the efficiencies that we’re finding in the organization in just getting smarter and more nimble and faster in everything that we do. So we’ve made a lot of progress there. I think we have more opportunities to do so in ways that benefit the company without cutting bone.
Brett Feldman: Thank you.
Operator: Thank you. And one moment please for our next question. Our next question will come from Thomas Yeh of Morgan Stanley. Your line is open.
Thomas Yeh: Thanks so much. I wanted to ask more about the Max experiment, especially in the contrast to the comments about the lower industry appetite for licensing. It seems like it was more promotional than economic in nature. Wondering if there is any opportunity to monetize that more directly in the future. And do you think the value lies more in driving attention to your own services as opposed to kind of a direct licensing?
Kristin Dolan: I’d say it’s a combination of both. I mean, we did see, obviously, as we said, we’re thrilled with the volume of viewership of our titles on Max, including things that were not current. So we’ve got a lot of exposure for our brands. We then saw uptick again in utilization on AMC+ of the current seasons of shows like Dark Winds, and some of the other shows that we put on Max. And then we’re — the experiment just ended a couple of days ago. So we’re now working with Warner Bros. on results from them to see how we can again sort of parlay this forward and think about ways that we can opportunistically continue to expand the visibility of our content and partner with others to help kind of serve the customer best and bundles. Everything old is new again when you talk about bundles. And whether it’s a triple play of telecommunications offerings or a neatly packaged set of programming offering as it benefits the consumer, and we want to play in that space.
