How AMC Networks Thinks About Licensing and Developing Content for Other Buyers

Caitlin Huston
·3 min read

The television industry is at the beginning of an era that can be termed “the great rebundling,” said AMC Networks CFO Patrick O’Connell.

Speaking at a J.P. Morgan conference on Tuesday, O’Connell pointed to the Disney-Charter deal as a model for streaming services moving forward. He argued with more bundling, and more ad-supported linear networks being added to the paid TV ecosystem, these packages will be a better value for customers, rather than subscribing to several streaming services, which have been raising prices and cutting down content spend.

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“It’s going to take some time for that to fully play out over the course of 18 to 24 months of affiliate cycle renewals, but we think the tide is turning,” O’Connell said. “And in the interim, what we’re doing at AMC is ensuring that we’re de-risking our financial profile, in light of the fact that the business model was shifting in this way. Notwithstanding the fact that we think we’re net winners in this regard.”

AMC Networks, he argued, “overdelivers audience vis-à-vis our current affiliate share” in its linear business, which he believes can translate to the streaming business. This argument comes after the company recently reported fourth-quarter earnings that saw an increase of 2.7 percent in its streaming subscribers, to reach 11.4 million, and a drop in U.S. ad sales by 23 percent year over year, amid what the company saw as a  tough advertising market and an ongoing decline in linear TV ratings.

The company notably owns The Walking Dead franchise and the Anne Rice universe, in addition to more than 7,500 TV episodes and more than 1,500 movies domestically, and licensing content. Its studio business gives it the option to “not just program our own networks but have optionality around driving programming elsewhere,” O’Connell said. That was the case with the television show Silo, which AMC Studios produces after originally developing it for AMC.

While he called that deal a “one-off,” since the margins on that business and the risk profile in that business can vary based on the deal, O’Connell said the company may consider it for the “right sort of economic and risk profile.”

“We always have the option to do that. It’s not necessarily baked into our guidance, but to the extent that we’ve got projects internally that may or may not make sense for us or if something else comes to the fore, we could obviously lean further into that business,” he said.

As for how the company thinks about balancing licensing out its content versus keeping it on its own platforms, O’Connell said the company is “executing a classical media playbook” where it will take the first-window domestic rights, with some exclusive content on AMC+ and live on the AMC Network, and then look to see where else that content could go.

“We had done, I think, a lot less of that than others over the last few years. And so we had the benefit of releasing some of that content into the wild onto other platforms in the last 12 to 18 months. And that’s the play that we’ll continue to run,” he said.

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