AMC Networks, the cable networks and streaming company that operates the likes of AMC, AMC+, IFC, BBC America, Acorn TV and Shudder, reported slightly higher U.S. advertising revenue in the first quarter and said it grew its streaming subscribers in the period to end March with 9.5 million after closing out 2021 with more than 9.0 million.
Earlier in the year, it had forecast it would add around 400,000 streaming subscriber additions during the opening quarter of 2022 as it began to offer quarterly guidance on its streaming business.
Quarterly U.S. advertising revenue rose 1 percent to $201 million “due to higher pricing and digital growth, partially offset by lower linear ratings,” the company said. Among the company’s key content launches in the first quarter was the final season of Killing Eve.
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AMC interim CEO Matt Blank told analysts during a morning call his company had no plans to introduce an ad-supported streaming service after Netflix said it planned to roll out less expensive subscription plans supported by advertising.
“It’s funny when you hear one other large player has some problems in their sub growth, all of a sudden an ad tier is going to solve all problems. We don’t necessarily think that’s true, but, you know, we’ll monitor the market,” Blank said.
His comment came as the AMC chief addressed a disrupted streaming space after Netflix recorded a net loss of 200,000 subscribers and saw its share price tumble. “Anyone trying to build a streaming business can’t predict the streaming part,” Blank cautioned.
He argued that, unlike rival streamers with a broad appeal to consumers, AMC will continue to follow a differentiated strategy of offering genre-oriented digital platforms that target distinct fan bases. “Our goal is to offer everything to someone. And the strategy is working,” Blank said.
Like its peers, AMC has accelerated its shift to streaming, but has focused on various niche and genre streamers, such as horror service Shudder, touting them as less capital intensive than broad entertainment streaming services. AMC’s portfolio of streamers also includes premium bundle AMC+, the Black series and film destination ALLBLK, formerly called UMC, art house-focused Sundance Now and movie service IFC Films Unlimited.
“Subscribers come to our services because of a depth of content and a shared community of like-minded fans and our tailored and curated approach to content,” Blank told analysts. He also touted AMC launching its premium streaming bundle AMC+ in the UK, Australia and India via distribution partners like Apple TV channels and Amazon Prime Video Channels, and said new international markets would be added this year.
“There’s a tremendous global potential out there for us,” he said. AMC reported before the market open that its total first-quarter revenue rose 3 percent to more than $712 million. Operating income also increased 3 percent to nearly $175 million, but adjusted operating income fell more than 11 percent to $211 million. The company cited “increased programming and marketing investments to support the continued growth of streaming revenue” domestically and an unfavorable impact of foreign currency translations in its international business as key reasons.
The company’s domestic revenue grew 6 percent in the first quarter to $606 million. Distribution and other revenue increased 8 percent to $405 million, outperforming the gain in advertising. Within the distribution segment, subscription revenue was up 8 percent on “increased streaming revenues driven by subscriber growth on our streaming services, partially offset by a low-single digit decrease in linear affiliate revenues from declines in the linear subscriber universe.” Content licensing revenue in the same segment jumped 9 percent “due to a higher number of original programs distributed as compared to the prior year.”
Meanwhile, in the company’s “international and other” division, first-quarter revenue decreased 9 percent to $110 million compared with the year-year period. Distribution and other revenue fell 12 percent, “primarily due to the timing of productions at 25/7 Media, as well as the unfavorable impact of foreign currency translation.” Advertising revenue though rose 4 percent “due to higher pricing, partially offset by the unfavorable impact of foreign currency translation.”
Wall Street has taken note of the different approach to streaming compared to sector giants, which have as of late faced questions about their rising streaming content spending and longer-term streaming profitability. “The targeted streaming business is a less speculative, less costly, and a more sustainable model for the company relative to larger general entertainment peers,” Guggenheim analyst Michael Morris, who has a “neutral” rating on AMC Networks shares, wrote in a late February report. “Expansion continues to be done with the business generating positive operating profit.”
AMC Networks named former Showtime Networks chief Blank its interim CEO in late August, picking him to take over from company veteran Josh Sapan who moved into the vice chair role.
