AMC Networks leans on advertising as long-term revenue driver

Executives at AMC Networks say the company is focused on cultivate high-value subscribers for its streaming services, including an ad-supported version of its flagship AMC+ service that is expected to launch later this year. 

On a conference call with investors Tuesday, executives affirmed AMC Networks saw a dip in overall direct-to-consumer relationships during the three-month period that ended March 31. Its collective subscriber count stands at 11.5 million, a decrease of 300,000 compared to the end of 2022. 

In addition to AMC+, the company operates Allblk, Acorn TV, HiDive, Sundance Now and Shudder. AMC does not break out subscriber data for each individual service. 

The streaming products helped AMC grow its subscription revenue 1% for the quarter, with overall revenue reported at $717 million. The company said its revenue increase was partially offset by lower revenue from its linear services as customers ditch cable and satellite services for cheaper streaming options. 

To that point, AMC CEO Kristin Dolan affirmed the company is laser-focused on bringing its slate of high-value original series and other programming to viewers across all platforms and devices over the long-term. 

"Our overarching goal is to distribute our shows as broadly as possible, to ensure they are visible to viewers wherever and whenever they want to watch," Dolan, who joined the company in February, said on a conference call Tuesday morning.  

One way to do this is to reduce the price point for AMC+, which currently costs around $10 a month and includes streaming versions of AMC's cable channels. In October, AMC plans to launch a cheaper version of AMC+ that is supported by advertisements; the company has not disclosed a price point for the service, telling investors it will have more details to share on the service during its next financial earnings conference call. 

The ad-supported tier of AMC+ comes several years after the company launched free, ad-supported streaming television (FAST) channels for some of its content, including its popular Walking Dead franchise, IFC comedy shows and reality programs from We TV. Earlier this year, AMC renewed a distribution agreement with Dish Network that included extended carriage of its FAST channels, something the company says will become more common with other pay TV platforms in the future. 

"Our entire distribution ecosystem will be ad-supported, providing us with important new opportunities to drive revenue and grow our business," Dolan affirmed. 

Streaming is one core element of AMC Networks, which began an operational shift a few months ago around the elements of content production and distribution across as many platforms as possible. Dolan said the strategy will increase efficiency at the company at a time when consumer habits are changing, and AMC Networks needs to react accordingly. 

"We are breaking down remaining walls and silos that divided areas and categories of our business, and operating as one focused company, making content and delivering it to viewers across all platforms," Dolan said. 

Content licensing is also an area where AMC is increasing its focus: During Q1 2023, licensing revenues jumped 69% to $103 million, driven in part by AMC's delivery of the dystopian drama series "Silo" to Apple for its streaming television service. 

"The delivery of Silo represented approximately $56 million of content licensing revenue for us in the first quarter of 2023," Patrick O'Connell, AMC's chief financial officer, said on Tuesday, warning that there probably wouldn't be additional revenue or expenses associated with that project for the remainder of the year. 

O'Connell later clarified that the success of its Apple deal doesn't mean AMC is going to take bold risks in terms of green-lighting content that might not make sense for its own cable networks or a third party. Instead, the company plans to leverage viewership data and other insights in determining which content to go after. 

"If there's an economic equation that makes sense, and we can earn a reasonable margin at a reasonable risk, we will take those swings," O'Connell affirmed. "But we don't have to be in the market chasing deals to generate revenue, because we produce for ourselves." 

The projects AMC is leaning on for the future include three different spin-offs of its Walking Dead franchise, the second season of the crime drama "Dark Winds" and a new series called "Parish" starring Giancarlo Esposito. 

"We promoted all of these exciting series last month at our Upfront Event in New York, and we're already seeing strong interests in or early discussions with advertisers," Dolan said.