AMC Networks Hits 11.8M Streaming Subscribers in Fourth Quarter
AMC Networks, the cable TV company behind such brands as AMC, IFC and Sundance TV, as well as such online video services as AMC+, Acorn TV and Shudder, hit 11.8 million streaming subscribers in the fourth quarter.
That’s up sequentially from 11.1 million paid subscribers at the end of the third quarter of fiscal 2022 as streaming revenues rose 35 percent to $502 million. Overall revenue jumped 20 percent to $965 million, compared to a year-earlier $803.71 million. That beat an overall revenues expectation of $947.78 million, according to a Refinitiv consensus.
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The adjusted per-share earnings came to $2.52 against a year-earlier 54 cents a share, which blew past a Refinitiv estimate of $1.20 per share. But an operating loss of $391.6 million, compared to a year-earlier profit of $63.6 million, included $449 million in restructuring costs and related charges, mostly related to domestic operations and non-cash programming write-offs.
That followed layoffs across the company. Severance and other personnel costs came to $45.2 million. Amid an advertising slump, AMC reported ad sales fell 12 percent to $206 million on lower linear TV ratings, softer ad sales and fewer original TV episodes. That was offset by higher digital and advanced ad sales.
“Broadly speaking, our ad supported networks and digital platforms are experiencing the same environment as others in our space,” AMC Networks CFO Patrick O’Connell told analysts during a late morning call.
Also during the latest quarter, subscription revenues rose 7 percent as higher streaming customer growth offset continuing declines in linear TV subscribers. And affiliate revenues fell 7.5 percent on basic subscriber declines.
As it faces the twin threats of cable cord-cutting and a soft advertising market while making the pivot to streaming, Wall Street was caught off-guard when former CEO Christina Spade abruptly stepped down after less than three months in the role in November 2022. More recently, Spade was replaced by interim executive chairman James Dolan’s wife, Kristin Dolan, as CEO.
Kristin Dolan was not on the analyst call, where James Dolan in prepared remarks described a TV industry upended by cord-cutting and streaming competition. “The current mechanisms for monetizing content are not working. The content industry needs to reorganize itself. We’re seeing this now with most media companies beginning to course correct to better monetize content, and improve the economics of their business. We believe large distributors and programmers will lead the way,” he argued.
James Dolan responded to a question on whether AMC Networks might consider a merger for scale to succeed in the transition to streaming, or would remain as a standalone company. “Our first concern is always going to be creating value for our shareholders. So what form that comes in could be stay the course, it could be M&A, you know, a strategic transaction. Very honestly, we’re very much open to all of those ideas,” he told analysts, while adding AMC Networks was likely to remain on its own in the short term.
AMC Networks has seen job cuts across all of its divisions after AMC’s most-watched show, The Walking Dead, wrapped its run. AMC is looking to tap lucrative streaming and global market sales for at least three The Walking Dead spinoffs in the works featuring the franchise’s most beloved stars, but those future revenue sales aren’t expected to fully offset reduced ad interest in AMC’s myriad cable and streaming services as The Walking Dead franchise continues to shrink.
AMC Networks has often been seen as a takeover target for entertainment or technology giants because it lacks the scale of its industry peers, has a major library for online platforms and its niche streaming services have failed to make up for cord-cutting losses.
Asked about another wave of industry consolidation the streaming space, James Dolan said major players had to first figure out how to better monetize content and achieve profitability. “I don’t see anybody who has the answer to this. And without that answer, I don’t get the rationale for pursuing a consolidation strategy,” he argued.
Stock in AMC Networks, up 2.4 percent to $20.99 in pre-market trading, has tumbled by 45 percent in the last year, while making up two thirds of that fall in share price value since the beginning of the year.
