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AMC Networks, the cable networks company that operates AMC, IFC, WE tv, BBC America and SundanceTV, is not focusing on any major deals to boost its scale to compete with streaming video giants, president and CEO Josh Sapan said on Thursday.
During the MoffettNathanson Media & Communications Virtual Summit, he answered a question about whether like AMC Networks and other smaller players beyond the top tier of streaming powerhouses, such as Netflix and Disney, would look at consolidating. “We don’t see any need to be combined,” Sapan said. “We are running our playbook” and have executed above expectations. “It’s not something on our minds.”
The media company takes a different streaming tack than most Hollywood giants by focusing on growing niche services, like Acorn TV and Shudder, as well as AMC+, a “best-of-network” streaming bundle offering “prestige drama and epic worlds.” Sapan, in an interview with The Hollywood Reporter, this year likened AMC’s approach to owning a series of “specialty boutiques” rather than the streaming equivalent of a department store. “We believed we could have a thriving, successful business if we were truly complementary and distinct,” he said.
Sapan also mentioned on Thursday that AMC Networks’ streaming services are already being offered in a mini bundle, giving the company its own “bundling attributes,” something that is also “already emerging” in other parts of the industry. “It’s a healthy and smart thing to do,” he said. In addition to being able to buy AMC Networks’ streamers Shudder and Sundance Now separately, consumers can pay $8.99 a month for AMC+, with those services’ content bundled in.
Discussing the streaming business more broadly, he said it was “a fantastic addition to what we are doing,” at one point also highlighting that it has become a way of “incremental monetization” of content for the company.
Sapan also noted the “advantageous” economics of streaming where AMC Networks’ traditional pay TV subscribers move to the streaming space. And he mentioned that streaming gives content that doesn’t immediately draw big ratings to find its audience, allowing patience and belief in good content to pay off.
Asked about recent subscriber trends at the firm’s niche streamers, Sapan noted that his team has seen user “churn at levels we had projected,” in some cases even below forecasts. He argued that was the strongest sign of the “longevity” of subscribers.
Management has highlighted that the content costs to feed its streamers was below that of competitors. For example, management has said that 18 of 20 recent content additions on its streaming services cost less than $1 million per episode. Sapan on Thursday mentioned the likes of The Bureau on Sundance Now as examples of such attractive content with “preferred economics” compared to more expensive tentpole content “moonshots” that large industry players go for.
AMC Networks in early May reported lower first-quarter revenue as U.S. advertising revenue fell 7 percent. “AMC Networks had solid performance in the first quarter, and we are on course to meet our 2021 financial and streaming targets, including reaching at least 9 million paid subscribers by year-end,” Sapan said back then. “The transition of the company to be the worldwide leader in targeted streaming on the strength of our focused, strong content continues on track.”
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