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AMC Networks reported a 7 percent U.S. advertising revenue drop for the first quarter on Friday, saying that it was “due to shifts in the timing of the airing of original programming and lower delivery, partially offset by higher pricing and ad-supported streaming growth.”
U.S. subscription revenue increased 14 percent, “driven by robust growth in streaming revenues, attributable to increased paid streaming subscribers, partially offset by a low-single-digit decrease in affiliate revenue, attributable to subscriber universe declines.”
First-quarter total revenue fell 6 percent to $691.7 million, falling below the Wall Street consensus estimate. Operating income fell 2 percent to $169.7 million, while adjusted operating income rose 7 percent to $238.0 million.
Domestic distribution revenue dropped 6 percent to $375 million as content licensing revenue decreased 54 percent, “driven by the timing and availability of original programming as the result of pandemic-related production delays,” partially offset by a 14 percent subscription revenue gain, “driven by robust growth in streaming revenues, attributable to increased paid streaming subscribers, partially offset by a low-single-digit decrease in affiliate revenue, attributable to subscriber universe declines.”
President and CEO Josh Sapan said: “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. The transition of the company to be the worldwide leader in targeted streaming on the strength of our focused, strong content continues on track.”
He added: “The support of our distribution partners for our streaming efforts and our advanced advertising strides are providing us with both stability and momentum. We believe the high viewer engagement, efficient economic model and pricing power of our streaming offerings provide us with important strategic advantages which, when coupled with our valuable linear channel offerings, will fuel our growth and continue to position us very well over the near and long term.”
On the earnings call, COO Ed Carroll addressed streaming trends by saying, “We are seeing strong and steady growth throughout, both on AMC+ and on the targeted SVODs.” In terms of engagement, he said, “We are seeing [the] number of streams at an all-time high” and “very healthy” original series completion rates.
Sapan lauded “strong” scatter advertising market trends, echoing comments from other industry leaders this earnings season.
Carroll also mentioned the return to production and the upcoming final season of Better Call Saul, which management had said on its previous earnings call would likely debut in early 2022. “We are now back in production across a range of original programming,” he said. “The production of new content for our linear networks and streaming services is back in full swing. We have three series of the Walking Dead universe in production simultaneously for the first time ever: The Walking Dead, Fear the Walking Dead and The Walking Dead: World Beyond.” And he said: “Better Call Saul is in production in Albuquerque and will premiere on AMC+ and AMC early next year.”
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