AMC Networks’ new CEO Kristin Dolan on Tuesday outlined her priorities during her first earnings conference call appearance for the company, which operates such cable channel brands as AMC, IFC and Sundance TV, as well as such streamers as AMC+, Acorn TV and Shudder. Optimizing financials and brand impact by making AMC hit content available as widely as possible — including through licensing to other companies, while also looking for opportunities for further streaming subscriber growth — are among her goals, she said.
In Tuesday’s earnings report, she had emphasized: “In an environment of shifting consumption, we are committed to making our content available across the entire distribution ecosystem. While we reevaluate the pathways to content monetization, we are strategically reducing costs and streamlining our organization.”
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She added: “These efforts contributed to a first quarter with strong margins and increased streaming revenue as we prioritized higher-value subscribers for our streaming portfolio. We remain focused on the overall profitability of the company as we continue to maintain a strong balance sheet, drive free cash flow and maximize shareholder value.”
During the earnings call, Dolan said she was looking to “evolve the business for a new world” of multi-platform viewing and making sure AMC Networks is a “nimble and fast-moving” company that “relies heavily on data.” She is also moving ahead with a previously mentioned refocus on a retail instead of a wholesale operational focus. “Everything we do is in service of viewers and subscribers,” she explained.
To “maximize the value and potential of our content” in several ways, she said AMC Networks would not keep its content only for its own networks and streaming platforms. “Our overarching goal is to distribute the shows we make as broadly as possible to ensure that they are visible and available to viewers wherever and whenever they might want to watch, while ensuring we preserve and drive our strong brand identity across all platforms,” she said. “As the models of content monetization continue to evolve, (one) advantage we have is a broad distribution footprint that spans linear television networks, our own digital and streaming platforms, and third-party CTV (connected TV) or FAST platforms.”
She also predicted a “forthcoming shift to streaming bundles,” for which Dolan sees AMC well positioned. “These bundles are beginning to gain traction as the marketplace evolves and consumers seek a more simplified and integrated experience when it comes to managing their various services. With our high-quality content and distinct brands, AMC Networks occupies a prime position for this inevitable shift.”
Asked whether AMC Networks was changing its strategy from being a content company focused on its own streaming services to becoming a content “arms dealer,” Dolan said: “We are definitely sort of walking the line between … we don’t want to be an arms dealer, we have very strong brands and very strong franchises. So what we are doing is looking at optimizing the distribution of our franchises and our films everywhere that we can in a way that still allows us to preserve the brand equity.”
She added that, “particularly with franchises that we already own that are visibly AMC content, like The Walking Dead, we will continue to distribute and monetize them as much as possible, but the main thing is to preserve the brand equity and to keep doing what we are doing on linear and also on our streaming services.” In that context, the management said that approaches distribution/licensing decision on a show-by-show basis to find the best way to monetize content, while ensuring that it gets to be in front of fans and other viewers who want to see it.
CFO Patrick O’Connell said the company continues to expect to generate free cash flow of $70 million-$90 million for the full year 2023, including a one-time negative impact of approximately $115 million associated with the firm’s restructuring plan. “We are past peak content investment, and we continue to expect cash content investment to be approximately $1.1 billion for 2023,” he said. “Looking out further than that, we anticipate that our cash content investments will be in the $1 billion area consistent with our historic pre-pandemic level. This is more than enough content to drive a strong slate of content to support our businesses, and frankly, represents a rationalization for a prior period of over-investment.”
Dolan said she believes in AMC Networks’ niche streaming strategy. It is about “super-serving fans of a particular genre (which) represents our differentiated approach that sets us apart from the general entertainment services with very reasonable levels of content spending” while achieving “strong viewership and remarkable engagement,” she explained. “We have only begun to scratch the surface with all of our services, particularly in terms of our opportunity to expand the depth and breadth of our content offerings and attract larger audiences.”
Dolan also emphasized her team would continue focusing on efficiency and “operating as one focused company” by breaking down barriers and silos.
AMC Networks’ latest financials came in better than Wall Street had forecast thanks in part to licensing of content, according to observers. Its stock was up more than 14 percent as of 9:35 a.m. ET. “First-quarter results came in ahead on licensing,” with revenue of $103 million exceeding his $58 million forecast, Wells Fargo analyst Steven Cahall wrote in a first note after the earnings report. He said that on the call the focus would be on “whether AMC Networks is looking to dramatically shift the strategy, such as shutting down or de-scoping direct-to-consumer ambitions to focus more on profits.”
Dolan, the wife of AMC Networks chairman James Dolan, took over as CEO in late February. Christina Spade had briefly held the top role at the company starting in September. On Nov. 29, however, AMC made the surprise announcement that Spade “has stepped down from her role” without giving a reason. Later that day, James Dolan, who took over day-to-day management on an interim basis, sent a staff memo unveiling “a large-scale layoff as well as cuts to every operating area.” He explained: “It was our belief that cord-cutting losses would be offset by gains in streaming. This has not been the case.”
Before her AMC appointment, Kristin Dolan founded and ran audience measurement and data analytics company 605. She has served as a member of the AMC Networks board of directors, as well as on the boards of James Dolan-run Madison Square Garden Entertainment. Previously she had spent nearly two decades at cable operator Cablevision Systems when it was owned by the Dolan family, including as chief operating officer.
AMC Networks ended March with 11.5 million streaming subscribers, down from 11.8 million as of the end of 2022. Management had previously forecast that subscribers for the firm’s collection of niche-oriented streamers would hit 12 million at the end of 2022, with a target to reach 20 million-25 million by 2025.
Meanwhile, AMC Networks’ U.S. advertising revenue continued to fall in the first three months of 2023 after a fourth-quarter drop of 12 percent.
AMC original series in the first quarter included Mayfair Witches, based on Anne Rice’s trio of novels about a doctor (Alexandra Daddario) who discovers she is the heir to a family of witches. The show has already been renewed for a second season. The network also has The Walking Dead spin-offs coming out later this year.
Asked about the Writers Guild of America strike on the earnings call, Kristin Dolan said on Tuesday: “We are very well positioned for all of this year and into next year, so we have no real concerns about the writer strike at this point.”
