AMC Networks CEO Talks Streaming Upside, Consolidation

Josh Sapan
Courtesy of AMC Networks

AMC Networks CEO Josh Sapan

Josh Sapan spoke during a session entitled "Content Is Still (Yes, Still) King" that was part of a virtual Paley Center event.

AMC Networks, the cable networks company that operates AMC, IFC, WE tv, BBC America and SundanceTV, has much streaming upside left and feels good about its position in a consolidating industry, CEO Josh Sapan said on Tuesday.

Speaking during the Paley Center's virtual Paley International Council Summit in a session entitled "Content Is Still (Yes, Still) King," he was asked about recent industry mega-deals and what they mean for the mid-sized company.

Consolidation has been going on for 10 or 20 years despite another recent sprint, Sapan said. "We have so far been able to thrive,” he continued, describing the firm's focus this way: “Be nimble, be quick, be agile, count the money, and seize the opportunity.” He concluded that if there was an advantage for the firm amid consolidation, “it is that we have perhaps some opportunity to move a little more quickly than some others.”

Some on Wall Street have long seen AMC Networks as a potential takeover target for other cable networks owners, streaming companies or the Dolan family, which controls the firm. But management recently signaled it could look at possible acquisitions of more streaming services. On Tuesday, Sapan didn't address the firm's interest in a potential sale.

While ViacomCBS has talked about exiting some niche streaming offers, Sapan said AMC Networks' niche streaming services, Acorn TV, Shudder, Sundance Now and UMC, are all profitable and "not anywhere near the ceiling" in terms of subscribers, including international rollout runway. And the recently launched streamer AMC+ has a “much higher ceiling,” he added.

About four weeks after the AMC+ launch, the service has been "blowing past” management's estimates, Sapan said, adding that being a smaller firm helps here as well as numbers that are small for Disney or Netflix are "big for us."

AMC Networks recently raised its streaming subscriber forecast and touted the growth outlook of streaming service AMC+, which offers "the best from AMC, IFC, and SundanceTV, plus IFC Films Unlimited, Shudder, and Sundance Now."

Earlier in the year, AMC Networks forecast it would reach 3.5 million to 4.0 million paid subscribers in aggregate for its four niche streaming services by the end of 2020, "a full two years ahead of the company’s original target of year-end 2022." As part of its latest earnings update, the company said it would end the year with more than 4 million of these subscribers, and around 5-5.5 million subscribers when including AMC+.

"Proving out the ability to achieve enough subscriber scale (and long-term profitability) across its streaming businesses to offset declines in the linear business is critical to driving a higher multiple on AMC Networks shares," Morgan Stanley analyst Thomas Yeh wrote in a recent report.