AMC Networks Targets Higher 'Walking Dead' Ad Prices

'The Walking Dead'

The hit show's value "as an ad vehicle has not been fully realized" despite ad rate increases, says CEO Josh Sapan, who also discusses the U.S. ratings for 'The Night Manager' and "skinny" pay TV bundles from the likes of Hulu.

Advertising rates for AMC hit show The Walking Dead have increased, but there is "more pricing upside," AMC Networks CEO Josh Sapan said Thursday.

"We continue to see advertising pricing power for shows like The Walking Dead, which attract large, engaged and desirable audiences," he said on the firm's first-quarter earnings call. "While [costs per thousand viewers] in that show particularly have increased, its [value] as an ad vehicle has not been fully realized, and we think there is more pricing upside."

COO Ed Carroll said the company expects "significant pricing increases" for the show in the upcoming upfront advertising market compared with last year, adding it has also seen increases in the scatter market, where ad spots sell closer to air time.

After all, an ad spot on the ratings giant "sells stuff," even if its ratings have been somewhat weaker this season, he said.

"Our horizon for the show is very long," Sapan said on the call when asked how long it can be a financial driver, highlighting the importance of franchise management as the brand now also includes spin-off Fear the Walking Dead and aftershow Talking Dead. He said the company thinks of the franchise in five-year periods nowadays.

He noted that the performance last season was good, saying it is "a great advertising vehicle" and added that "it will be a good vehicle for the upfront" and next year.

He also highlighted that the company continues to use the show's popularity as a "distinctly powerful" promotional platform for other programming.

Sapan on Thursday touted such upcoming AMC shows as Preacher, based on the comic book series, and Feed the Beast.

Discussing The Night Manager and its weak ratings so far on AMC after strong U.K. ratings on the BBC, Sapan said the show is "superb" and highlighted that AMC premiered in on Tuesday night, a new night of originals for the channel. That affected ratings but also provides an audience lift to typical viewing levels, he said, signaling that it could still turn out to draw strong interest in delayed viewing like some other shows in recent years. He added that AMC Networks was "pleased" with the company's co-production deal for the show with the BBC. "We are pleased with its performance," he said in conclusion.

Asked if there is any limit to the amount of original programming for AMC Networks, Sapan said: "Our bias is to own [shows], and our bias is to do more as long as it is economically reasonable."

Overall, Sapan said the company continues its fundamental focus on "shows that really matter to people that view them." He said he feels "it has served us quite well" and is particularly wise as time-shifted viewing grows.

Sapan also emphasized "continued strong demand" by marketers for the company networks' shows, saying ad gains remain a key benefit for AMC Networks despite weaker growth in the first quarter due to the season finales of The Walking Dead and Better Call Saul moving into the second quarter this year.

Carroll said the current second quarter will see a "significant" increase in ad revenue growth, and the quarter will experience the strongest year-over-year ad gain of the year from favorable scheduling of original series.

Discussing "skinny" pay TV bundkes, Sapan said Sling TV and other new TV services are additive rather than cannibalistic. "When there are new OTT entrants … we look at it with fondness," he said when asked if the company plans to make its networks available via Hulu's new virtual pay TV service.

 

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