AMC Networks Hits 10.8M Streaming Subs, U.S. Ad Revenue Drops in Second Quarter
AMC Networks, the cable networks and streaming company that operates the likes of AMC, AMC+, IFC, BBC America, Acorn TV and Shudder, reported a 5 percent drop in U.S. advertising revenue in the second quarter, but said it grew its streaming subscribers in the period to end June with 10.8 million, up from 9.5 million as of the end of March and ahead of its forecast.
Earlier in the year, it had projected it would add 400,000 to 500,000 streaming subscribers during the second quarter. Early Friday, the company said the better-than-expected growth was “driven by the AMC+ premium streaming bundle launch in Spain and strong content offerings.”
AMC’s streaming strategy focuses on AMC+ and niche services, which it says come with lower content costs than broad-based entertainment services, but attract loyal subscribers. In May, the company mentioned plans to increase prices of its AcornTV and ALLBLK streaming services by $1.
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Among the company’s key content launches in the second quarter were the final season of Better Call Saul and the second half of season 7 of Fear the Walking Dead.
U.S. ad revenue fell to $202 million amid “lower linear ratings,” partially offset by higher “AMC Originals impressions, pricing and digital growth.”
AMC Networks’ total second-quarter revenue fell 4 percent to $738 million despite a 20 percent gain in streaming revenue, or 36 percent on a normalized basis, which was more than offset by “several timing impacts in the quarter, including expected lower affiliate, content licensing and advertising revenues, and unfavorable foreign exchange translation.”
Quarterly operating income jumped 125 percent to $153 million after the prior-year quarter included impairment and other charges of $143 million “associated with a one-time litigation-related settlement payment.” Adjusted operating income decreased 22 percent to $196 million, though, “due to the timing of increased investments in content and marketing to drive subscriber and streaming revenue growth.”
AMC is led by interim CEO Matt Blank, but the company said early Friday that current COO and CFO Christina Spade would take over the CEO role in early September.
On a morning analyst call, Spade, in her role as CFO, reported AMC Networks continued to drive into expanding genre streaming services, with continuing subscriber growth, as it manages legacy cable networks, even as the streaming space faces headwinds.
She added the company was expanding internationally in a disciplined way. AMC will work with local partners to launch quickly in new markets, an example being AMC+ entering Spain with partners Orange Vodafone — where the AMC channel will become part of a skinny bundle for pay TV, broadband and some mobile customers — and Amazon Prime video channels.
The international expansion is key to AMC Networks reaching its longer-term guidance of 20 million to 25 million total subscribers by 2025. “It’s an attractive distribution mix for us and demonstrates our ability to enter new markets thoughtfully, with minimal investment and the importance of distribution innovation and flexibility,” Spade added about the market entry into Spain.
Going forward, Amazon and Apple have become key international distribution partners for AMC as it builds on its brand presence with existing cable channels and expands into Latin America. “We really are starting from the standpoint of maximizing the results from our distribution partnerships. And then we have the tech stack in place… that is transferable so that for our current direct to consumer offering, we can also pretty quickly get that up and running,” Spade said.
