AMC Networks CEO Josh Sapan on 'The Walking Dead,' Franchises and Streaming Strategy (Q&A)

Josh Sapan
Courtesy of AMC Networks

AMC Networks CEO Josh Sapan

The executive also discusses taking the company's niche streaming services global and how he thinks about potential mergers and acquisitions.

AMC Networks, the company behind such cable channel brands as AMC, SundanceTV, We TV and BBC America, wrapped up 2020 with more subscribers for its niche streaming services than expected and is expecting continued growth in the years ahead.

Management on a recent earnings conference call also said that streaming would become the company's largest revenue segment by 2025.

The Hollywood Reporter spoke to AMC Networks CEO Josh Sapan about how the firm's streaming strategy differs from Hollywood conglomerates, the health of key content franchises, such as The Walking Dead, programming strategy, and how his team thinks about possible acquisitions.

Many entertainment giants have focused on providing broad-based streaming services. AMC Networks has instead focused on a handful of niche streamers, such as horror-focused Shudder (whose programming successes include Creepshow), arthouse centric Sundance Now (recent hits include A Discovery of Witches and Riviera), independent movie destination IFC Films Unlimited, Acorn TV, which focuses on British and international mysteries and dramas (Bloodlands, Midsomer Murders) and, Black series and film destination Allblk, formerly known as UMC (Millennials, Double Cross). Why did you and your team decide to bet on this portfolio approach of narrowly focused content plays?

We really embarked on this some time ago, going back to the beginning of Sundance Now and Shudder, which we launched a few years ago. Our point of view was that we anticipated that there would be large SVOD services that would look to offer something for everyone in the household, and that there would be a number of them. We believed we could have a thriving, successful business if we were really truly complementary and distinct from that. So there would be department stores, if you want to call them that, and that's a good thing. But we would have specialty boutiques that, if you were a fan of something, you would find your way to. And it wouldn't be quite as much dependent on the show, but you would go because you were interested in the category and there was a reliable stream of material for the category.

We had seen this in our earlier cable TV linear lives, that one can start targeted, or niche, offerings that can actually become bigger and more vital than one expects, if you can hit a cultural nerve. And so we set out to do that with those first two that we started. And then we purchased a company called RLJ Entertainment, and that brought us terrific executives and the Acorn TV service and Urban Movie Channel, now called Allblk. And it brought us an executive named Miguel Panella, who now is overseeing all of our SVOD services. And all the services grew, so the thesis really worked.

And so, last year we ended at more than 6 million subscribers, and the [annualized] revenue run rate went from $125 million to over $300 million. So it's really economic.

You have said that niche streamers don’t necessarily need expensive original hit shows like your broader-based rivals. Is that a key part of the financial benefits of your approach?

It is, frankly, less expensive. You're not competing in multiple categories to get everyone. Each thing is not a moonshot. Others [say]: "I have to get to 150 million subscribers, I have to go take over the world." Not that there's anything wrong with that. So on the Acorn service, for example, some of the material is new, some of it is not new, but one can go from watching Manhunt and Foyle's War, which are great shows, to new material like Bloodlands, which is another show that's exciting, to Agatha Christie material. So that whole economic model is quite different than if I need to go out and make the biggest show in the world to capture everyone's attention this week, not that there's anything wrong with that. Or take Shudder, for instance. Creepshow is a big hit. And then during the pandemic, there was a movie called Host. It was interesting, and it was a horror movie, and it was it was gripping, but it was made all remotely with in-home devices, so it is inherently much more economic.

Many entertainment companies have said their big broad-based streaming services launched over the past year or two  would turn profitable a few years down the line. How about you?

Some of them are already profitable. We're a company of around $3 billion in revenue, and we have said that our run rate streaming revenue at the end of 2020 was $300 million-plus.

Last year, you also launched, for $8.99 monthly, or $6.99 for people who have AMC as part of a pay TV subscription, AMC+, which includes such ratings hits as The Walking Dead. Is AMC+ your way into offering a more broad-based streamer?

AMC+ is a bit of a "best of." You get Shudder and Sundance Now and select material from AMC, BBC America, IFC and you get new material. So it is focused ultimately on two things: prestige drama and epic worlds. So it is really quite focused. So you won't see kids programming, you won't see sports programming, you won't see news programming, you won't see nonfiction programming. It's a very clear proposition. You know what that AMC material is like, and it gets served up to you. "I like AMC-type shows that are character-driven dramas." It's very focused.

So you can buy Shudder and Sundance Now, and they'll cost you $11 or $12. Or you can buy AMC+ for $8.99. So it is a very great deal if you're predisposed toward that material. So we're doing essentially our own bundling. There are many bundles that are alive, and we have one,  and people are liking it and buying it. And if you're a subscriber to those services on Amazon, Amazon will say "convert to this and you'll save money."

How competitive can your niche streamers be with entertainment giants' offerings in what has often been called the streaming wars?

Our view is: we want to get people's interests and passions with a clear proposition and have them served, because we do believe that there will be multiple streaming services in each household. And there will be competition for the consumer wallet, and we don't want to compete with another big "here's everything" store. We want you to understand what [our niche brand] is, like it, identify with it, be satisfied with it, and continue to buy it when you buy multiple other ones. So everything we do will be focused, defined and highly curated.

Do you think there's upside in terms of the pricing you charge for your streaming services?

I actually do think there's upside and I think that one, of course, needs to be careful about pricing, but we've actually taken price increases and just seen growth. We've already done it. Acorn is six years, seven years old, so it's not brand new and if you like that material, you don't want to give it up.

How do pay TV giants distributing your networks feel about your streaming services?

We did it in partnerships with our multichannel video programming distributor partners. We did it with them, with Comcast and with AT&T etc. They became our partners in the very birth of them, and so it's a really harmonious relationship in terms of distribution. And of course, we launched on Apple and Roku and Amazon as well.

Do pay TV companies and their broadband services get a cut if they sign up subscribers for your services?

Will they take a cut? Yes. So they have a financial incentive for their broadband-only customers or for their customers who are buying video from them to sell something else in the store. So it really does create more harmony. It's really a pretty wonderful.

There has been a lot of talk about the growth of advertising VOD (AVOD) or FAST (free ad-supported streaming television) services. Would such a streaming approach work for AMC Networks?

We are a very active participant in AVOD and FAST with our library content and with channels on AVOD or FAST services. It's working well on Pluto, Vizio and others, so we're pretty pleased with being a selective supplier and partner of AVOD and FAST channels. But we are premium and have always been premium. This is such a nice moment, because we can render what we do and what we have done now for a long time in the streaming environment. We were making bingeable material – everything from Mad Men to Breaking Bad – before it was bingeable. Finally, we have that environment now to put it forward, and it makes it a much more satisfying consumer experience.

When you think of how the coronavirus pandemic has changed streaming and the industry, do you expect consumer behavior changes to be for good?

It has undoubtedly accelerated what was already a behavioral and consumption pattern. And it's not going away. So I think it's frankly just the beginning. And we will lead in targeted and serve up brand new experiences. In the pandemic, Host, a movie made remotely during the pandemic, goes on Shudder, and it's way cool. And the more we do that, the more we will delight consumers and the more they're going to love our services. So I think we are at the beginning.

How much opportunity do your streamers have outside the U.S.?

So we've launched several services abroad, including in Canada, in the U.K., in other English- speaking territories, and in some non-English-speaking territories, and we will make a territory-by-territory decision. Already, international is a piece of what we're doing. It's not the biggest piece, and it will differ by territory, but there'll be, I think, very significant appetite for what we're doing internationally, because it is singular, because it is the defining authority in horror or prestige material or Allblk. There's a big globe of a billion-plus broadband homes across the planet and growing. And so yes, we have a huge international opportunity that's already started. I think there are self-defined fans of horror wherever you go in the planet. And Allblk is a very bold definition of what a service stands for, and so I think there will be territories that have immediate affinity.

How do you decide what platform – your linear networks, streamers or both – to put content on in the streaming age?

There will be all flavors, and it will be determined by the content and the audience. There are a few principles that drive us. The first will is: it has to be great content, it has to be great material. The second is that we have to maintain the integrity of each of our platforms. So it has to be true to whether it's on AMC, AMC+, Shudder, Sundance Now, Allblk, it needs to be true to Acorn. And we need to serve our network brands and [distribution] partners. So it could mean that a show has a linear premiere, that gives it wide exposure briefly, and then it goes to streaming. It could mean that it goes to streaming, and then it's monetized on linear afterwards. Or it could mean that it plays on one or two different services. Those are all calculations that, I hope, are driven by the principles, not slap it everywhere and get all the money you can.

How are you feeling about the health and the future of The Walking Dead franchise?

So The Walking Dead, as you know, has World Beyond, which is about kids who have come of age in the zombie apocalypse, it has Fear the Walking Dead, and we have new shows, in development. So it's really all about franchise and people.

We look at everything, as much as we can, as a franchise opportunity. Another example is Breaking Bad and Better Call Saul, done as a prequel. Who would have thought that when Breaking Bad ended and Vince Gilligan wrote the most magnificent ending to a series I've ever seen? And then Better Call Saul comes along, and it's just stunningly good.

We also own [a controlling stake in] Agatha Christie Limited within Acorn. So we think  about everything as "the world of" and how does one piece influence the other piece in the world. When it's done well, it's really fun. When it's done poorly, it's poor.

How do you feel about the Walking Dead ratings so far for the second part of season 10?

It came back exactly at our expectation on linear. It was produced during COVID and is extremely well done. Personally, I think the return of Lauren Cohan was very exciting. As a fan, it was a thrill. And I think the universe and the people have a lot of interesting relationships. I think it's a world of interest.

Can new iterations and spin-offs feed the flagship show and/or each other?

When someone is reintroduced or introduced in a new story, I think it ignites consideration of their evolution of what happened. Where did the child come from? When was the child born? What were the circumstances of this character? I want to understand what happened. I think that's an awful awful lot of fun. If you watch Better Call Saul, as it gets closer to Breaking Bad times, the characters start to populate the show, they come back.

Speaking of Better Call Saul: your team recently signaled its final season of 13 episodes would likely air only in 2022. Could the final season be split up or have some other special release strategy?

I don't know what the exact play pattern is. We haven't talked about that yet.

How do you approach programming these days: is it a brand-by-brand approach or an AMC Networks-wide approach?

The latter, so it's all centralized. We reorganized the company, and [president, original programming and co-president, AMC Studios] Dan McDermott in L.A. and his team do all the development. They have a clear mind's eye and work with [chief operating officer] Ed Carroll and [streaming president] Miguel Penella. So everything is centralized and well considered, because it needs to be. And every greenlight decision or continuation decision takes into account all the questions you asked about, where will it play, is it appropriate for this, is it appropriate for one service or two, what's its international opportunity?

Do you want to do more Breaking Bad/Better Call Saul or Walking Dead spin-offs?

It's really dependent upon where the author sees the world, and whether they think that it's over or not, and whether they think it needs a left turn or a right turn or a back look or a forward look. The best work comes from people who have something in their heads. Robert Kirkman, Vince Gilligan and Peter Gould are brilliant. We may have, as a television company, predispositions and desires, but we work with creative people.

Could AMC Networks potentially buy more niche streaming services? 

Not immediately. We have a pretty full plate at the moment. But but at the same time, it's working extremely well, and our company is doing well. We have AMC+, and that's all of six months old, so there's an awful lot of action going on. So I wouldn't say no, but there's no immediate plans.

The entertainment industry has gone through a lot of consolidation in recent years. Do you think AMC Networks has to sell or buy something to become bigger? 

No, we actually feel better than ever. We have always been about curation and about doing things selectively. We have never said "we're going to go out and be the big monster of this." It's not what we have set out to do in linear or in streaming, actually the opposite. In a certain sense, our size is an advantage, because we can have high impact on our business. With the number of streaming subscribers we talked about, that's not a rounding error, that's central for us. At a different company, they might legitimately say "we can't bother with that," "we can't take executive time fooling around with that, stop that." It needs to have impact. So in a certain sense, our size and economic impact is actually an advantage.