AMC Networks U.S. Ad Revenue Drops 20 Percent, Streaming Subs Fall to 11.5M

Georg Szalai
·4 min read
2

AMC Networks, the company behind such cable channel brands as AMC, IFC and Sundance TV, as well as such streaming services as AMC+, Acorn TV and Shudder, said its streaming subscribers dropped by around 300,000 to 11.5 million as of the end of the first quarter.

The figure for the end of March was down from 11.8 million as of the end of 2022 and 11.1 million as of the end of September. Management had previously forecast that subscribers for the firm’s collection of niche-oriented streamers would hit 12 million at the end of 2022, with a target to reach 20 million-25 million by 2025.

More from The Hollywood Reporter

Meanwhile, AMC Networks’ U.S. advertising revenue fell 20 percent in the first three months of 2023 after a fourth-quarter drop of 12 percent.

The company said its latest quarterly earnings also included further “restructuring and other related charges” worth $5.93 million following layoffs, believed to have affected around 20 percent of staff, and other cost cuts. AMC’s fourth-quarter results had already included $449 million in restructuring and related charges, mostly related to domestic operations and non-cash programming write-offs.

AMC original series in the first quarter included Mayfair Witches, based on Anne Rice’s trio of novels about a doctor (Alexandra Daddario) who discovers she is the heir to a family of witches. The network has already picked up a second season of the show.

AMC reported a first-quarter revenue gain of 1 percent to $717 million, “largely driven by increased distribution and other revenues, partly offset by lower advertising revenues.” U.S. ad revenue fell to $161 million “due to anticipated linear ratings declines, softness in the advertising market and fewer original programming episodes within the quarter, partly offset by digital and advanced advertising revenue growth.”

Earnings per share declined by 2 cents, or less than 1 percent, to $2.36, while adjusted earnings per share rose 3 percent to $2.62 in the first quarter.

AMC’s quarterly operating income dropped 1 percent to $173 million, while adjusted operating income increased 2 percent to $216 million, benefitting from “significant cost reduction measures, including lower levels of marketing and subscriber acquisition investment,” the company noted.

Overall, revenue and profit came in ahead of Wall Street expectations. AMC Networks’ stock jumped more than 14 percent in Tuesday pre-market trading.

“AMC Networks has always been known for great content that breaks through in popular culture, receives critical acclaim and engages fans,” new CEO Kristin Dolan, who will speak on her first AMC Networks earnings conference call later on Tuesday morning, said in the earnings update. “In an environment of shifting consumption, we are committed to making our content available across the entire distribution ecosystem. While we reevaluate the pathways to content monetization, we are strategically reducing costs and streamlining our organization. These efforts contributed to a first quarter with strong margins and increased streaming revenue as we prioritized higher-value subscribers for our streaming portfolio. We remain focused on the overall profitability of the company as we continue to maintain a strong balance sheet, drive free cash flow and maximize shareholder value.”

Kristin Dolan, the wife of chairman James Dolan, took over in the CEO role at the end of February. Christina Spade had briefly held the top post at the company starting on Sept. 9. On Nov. 29, however, AMC made the surprise announcement that Spade “has stepped down from her role” without giving a reason. Later that day, James Dolan, who took over day-to-day oversight at the firm on an interim basis, sent a staff memo unveiling “a large-scale layoff as well as cuts to every operating area.” He explained: “It was our belief that cord-cutting losses would be offset by gains in streaming. This has not been the case.”

Guggenheim analyst Michael Morris in his earnings preview noted that Tuesday’s management call with Wall Street analysts would likely provide an outline of Kristin Dolan’s plans. “Recent reports suggest the company plans to launch an ad-supported tier of its subscription service AMC+ later this year,” he wrote. “We expect investor focus will be on updates to the company’s niche streaming strategy, advertising trends, linear cord-cutting trajectory and content timing around both upcoming slate and licensing.”

Best of The Hollywood Reporter

Click here to read the full article.