AMC Networks anticipates 5.5 million streaming subscribers by year-end including its new AMC+ premium offering — way ahead of internal projections and likely to generate $200 million in streaming revenue for 2020, the company behind The Walling Dead Universe said Monday.
Lower distribution and ad revenue, the latter being part COVID related, continued to squeeze earnings and profits at U.S. linear networks for the third quarter ended in September.
Total revenue dipped 9% to $654 million as national networks declined 17% — the five nets being AMC, WE tv, BBC AMERICA, IFC and SundanceTV. Third-quarter net income was $62 million ($1.17 per diluted share), compared with $117 million ($2.07 per share) the year before.
The numbers are in line with secular video trends in linear TV as providers, in particular satellite providers, continue to shed subscribers.
CEO Josh Sapan described the ongoing dance to finetune relationships and products with providers who are generally losing linear subscribers but racing ahead with broadband, offering a window for new platforms. “We ae focused on a holistic relationship with our MVPD partners,” who see us an an integrated provider “on both sides of their house” … if they shift more to Internet, we are there with SVOD.”
AMC+ which bundles channels and library fare continues to strike key distribution deals including with AppleTV and Amazon Fire.
AMC expects 5 to 5.5 million paid subscribers in aggregate by year-end 2020 for its portfolio of streaming services including AMC+, Acorn TV, Shudder, Sundance Now, UMC and IFC Films Unlimited. It expects in excess of 4 million paid subscribers in aggregate for its four SVOD services: Acorn TV, Shudder, Sundance Now and UMC, also by year end.
Sapan said that was a number the company never expected to hit until 2022. As such, he anticipated streaming revenue would reach $200 million this year — repping 100% growth year over year.
Doug Creutz at Cowen in an early note to investors said “AMC remains exposed to the challenging advertising environment and incremental deterioration in MVPD subscriber trends” but he noted that the reported numbers still beat expectations and reiterated a ‘market perform’ rating.
The stock was up 3% Monday morning, outpacing the broader market.
Domestic advertising revenue fell 15.5% with AMC citing the timing of the airing of original programming as well as the impact ofthe COVID-19 pandemic, which resulted in lower demand.
AMC said it believes the COVID-19 pandemic “has had a material impact on its operations but does not expect the pandemic and its related economic impact to affect the company’s liquidity position” or its ongoing ability to meet its financial requirements.
In a statement with the numbers, CEO Josh Sapan said AMC “delivered solid results in the 3rd quarter and we continue to maintain a strong financial profile, with a solid balance sheet, very good liquidity and healthy levels of free cash flow.” The company’s debt is under control and it has been buying back stock aggressively, which Wall Street likes.
Sapan said: “AMC Networks is fast becoming the global leader in SVOD services for targeted audiences, with our Acorn TV, Shudder, Sundance Now and UMC services set to exceed 4 million subscribers by year-end, outperforming our expectations. With the addition of our new AMC+ premium SVOD offering, we expect to have 5.0 to 5.5 million total SVOD subscribers, in aggregate, by the end of the year. Our strong content also continues to resonate with viewers, with AMC home to 4 of the top 6 cable dramas in 2020 among adults 25-54, including our newest series in The Walking Dead Universe, The Walking Dead: World Beyond ranking as the #1 freshman cable drama of the year operating income decreased 23.6% to $159 million.”