AMC Networks Execs See Streaming As Top Revenue Source By 2025, Hail Return Of ‘The Walking Dead’ Production After Mixed Q1 Financial Report – Update

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UPDATED with executive comments. AMC Networks execs expressed continued confidence in their niche streaming strategy and hailed the full return of production for shows like the company’s core franchise The Walking Dead.

The comments Friday during a first-quarter earnings call with Wall Street analysts followed the release of so-so results for the period ending March 31. Revenue posted a bigger-than-expected 6% downturn, but earnings beat analysts’ forecasts.

Production for linear networks and streaming platforms “is back in full swing,” COO Ed Carroll said. For the first time ever, he noted, three TWD series are in production at the same time: along with the mothership franchise, the trio includes Fear the Walking Dead and The Walking Dead: The World Beyond.

The streaming portfolio, which includes niche outlets Acorn, Shudder and ALLBLK, is starting to expand outside the U.S. Carroll said early signs show “the same affinity” as in the U.S. CEO Josh Sapan said Acorn’s churn — the industry term for how many subscribers cancel their subscriptions — is among the lowest of any U.S. SVOD service in the U.S., but he did not offer exact numbers.

Several times throughout the call, Sapan, Carroll and CFO Christina Spade emphasized the strategy in streaming at AMC Networks and contrasted it with that of media rivals. “The playbook we’re running is pretty different than whole-house services, who frankly — God bless ’em — have ambitions for a quarter of a billion subscribers or maybe more,” Sapan said. “They all operate in different systems, as you know.”

Because of the rigorous focus on niche audiences, AMC Networks’ production costs are more manageable than those of peers, Sapan added. Of 20 recent series premiering across the company’s various platforms, about 18 of them cost less than a million dollars an episode, he estimated.

In the company’s earnings release, AMC reaffirmed its expectation to reach 9 million total streaming subscribers by the end of 2021. The company is also on target to become “the worldwide leader in targeted streaming” with between 20 million and 25 million subscribers by 2025. By that point, and given secular declines in the traditional linear business, streaming would be the biggest revenue contributor of any of the company’s business lines.

PREVIOUSLY, 4:24 AM PT: AMC Networks reported a 6% downturn in revenue during the first quarter due to a slump in advertising and content licensing, but earnings per share beat Wall Street forecasts.

Total revenue of $691.7 million fell from $734.4 million in the year-earlier period, missing analysts’ consensus estimate of $722.3 million.

Earnings per share, though, topped the Street at $2.02, or $2.98 on an adjusted basis. Analysts on average were expecting $1.87

A drop-off in advertising hurt the results, with ad revenues decreasing 7% to $199 million. The company blamed “shifts in the timing of the airing of original programming” and lower delivery. Higher pricing and ad-supported streaming growth helped offset the declines.

Distribution revenue decreased 6% to $375 million, while content licensing revenue plunged 54%. The licensing line was hit by the timing and availability of original programming as well as production delays due to Covid-19.

Subscription revenues proved a bright spot, increasing 14% on growth in streaming revenue. Unlike media rivals laying out billions to challenge Netflix in the general-entertainment arena, AMC Networks has focused on a portfolio of targeted streaming outlets. The portfolio includes Acorn TV, Shudder, Sundance Now, and ALLBLK. In its earnings release, the company said it is on-track to reach subscriber targets of 9 million total streaming subscribers by the end of 2021.

Media companies like AMC Networks, Discovery, ViacomCBS and others are navigating through a complicated operating environment. Viewership of traditional linear TV continues to decline and customers are cutting the cord at a steady pace. Those trends are putting pressure on decades-long margins from pay-TV carriage and advertising. In migrating toward direct-to-consumer streaming, companies can control more of the revenue but they risk alienating distribution partners in the process.

“The transition of the company to be the worldwide leader in targeted streaming on the strength of our focused, strong content continues on track,” CEO Josh Sapan said in the earnings release. “The support of our distribution partners for our streaming efforts and our advanced advertising strides are providing us with both stability and momentum.”

Also in the quarter, the company changed the way it reports financial results. Reflecting its new emphasis on streaming, it put that portfolio as well as IFC Films, which were previously in the International and Other division, in Domestic Operations.

This article was printed from https://deadline.com/2021/05/amc-networks-q1-softer-revenue-licensing-profit-wall-street-1234751722/