Revenue dips at AMC Networks, execs bullish on growth of streaming

Executives at AMC Networks expressed optimism over the state of its streaming platforms and associated businesses on Friday, even after the company ended 2023 on a particularly rough note.

On Friday, AMC revealed fourth quarter 2023 revenue dropped to $679 million, a year-over decrease of 30% brought on by lower comparative ratings to 2022 when “The Walking Dead” aired its final season, a continued softness in the advertising market and lower affiliate fees from cable and satellite as subscribers continue to move toward cheaper streaming services.

AMC’s streaming services grew to 11.4 million subscribers and helped bring in $145 million in quarterly revenue during Q4, a figure that also includes cash earned from more than a dozen free, ad-supported streaming channels. The subscriber count was up sequentially from 11.1 million in Q3 2023.

Full year streaming revenue growth of 13% wasn’t enough to fully offset losses from AMC’s core cable and content licensing businesses: full year 2023 affiliate revenue generated from partners dropped 13% on a year-over basis, with around 3% of that loss attributed to the non-renewal of a carriage agreement with streaming service Fubo in early 2023. Content licensing revenue was 68% lower during the quarter and 30% lower for the year as AMC wound down a content distribution deal with Hulu and shipped fewer shows and movies to partners like Apple and Amazon.

Wall Street punished AMC by sending its stock price down 3% in pre-market trading on Friday. Shares of AMC were trading around $13.75 by Friday afternoon, down 22% from the previous day's close.

Executives tried to comfort shaky investors during a conference call on Friday, touting AMC's position as a nimble company that was best positioned to fully capitalize on the shift to streaming with a variety of content and advertising products.

To that end, AMC's Chief Commercial Officer Kim Kelleher said the company's launch of an ad-supported tier for AMC+ was perfectly timed to capture marketing dollars that are moving from traditional linear television channels toward connected platforms.

"It was a difficult quarter, but I think you're seeing the same headwinds that most of our competitors are reporting," Kelleher said. "Yes, we're seeing revenue move into streaming categories, and we launched AMC+ ad-supported at the right time."

Other executives said the company was building on its content distribution agreements with pay television providers to bundle AMC+ with its core linear channels.

AMC CEO Kristen Dolan said the company finalized new carriage deals with a number of partners over the past 12 months, including Dish Network, Altice, Wow! and Rogers in Canada. The company also renewed its agreement with wallet-friendly virtual MVPD streaming service Philo, which will offer subscribers access to AMC+ later this year, Dolan said.

Executives also remain bullish on new connected TV platforms being developed by cable companies.

"The traditional video ecosystem continues to evolve rapidly, and we're leaning into efforts by traditional distributors' customer-centric solutions, such as Charter and Comcast's Xumo," AMC's Chief Financial Officer Patrick O'Connell said on Friday.

Dolan added that AMC also partnered with Comcast on its new streaming television service Now TV, which offers linear access to some cable channels through the Xfinity Stream app for $20 per month. Now TV launched last summer within Comcast's service footprint, and offers Xfinity subscribers access to AMC's flagship linear network along with its other channels like BBC America, BBC World News, IFC, Sundance and We TV.

On the traditional cable and satellite front, Dolan said AMC developed and launched addressable advertising slots within its linear channels last year, and became the first media company to offer biddable, programmatic advertising inventory during Q4.

"These advances make our linear and digital inventory much-more valuable and effective," Dolan said. "Going to market with a programmatic-first approach and a fully converged linear and digital offering lets us enter into broader and more-meaningful advertising partnerships."

Adding to this, Kelleher said one of the first clients to take advantage of the programmatic ad buys was cosmetics giant L'Oreal, who saw better-than-expected performance across AMC's cable channels last quarter.

"L'Oreal has quoted that they saw increases of over 10% from expected performance," Kelleher affirmed.

Heading into the Upfronts, executives said they expect AMC's Audience+ to draw significant interest from buyers. The tool allows marketers to target consumers across AMC's linear networks, subscription video platforms and free, ad-supported streaming channels.

"That brings our partners the most-advanced targeting capabilities seamlessly," Kelleher said. "It really simplifies the transaction, and offers a true cross-platform targeting within our of our inventories — live, linear, VOD and CTV — all together. We see a huge opportunity to automate the sale of addressable going forward and think this will be an area of large growth and yield."