AMC Networks CEO Josh Sapan understands his company may seem over-reliant on “The Walking Dead,” but he sees the series as a cash cow for years to come.
“While we have a solid focused group of entertainment assets, we are aware that much of the attention the financial community places on our company is around the series ‘The Walking Dead,’” said Sapan during AMC’s fourth-quarter earnings call, according to a Seeking Alpha transcript.
But he said that “Walking Dead” is illustrative of the benefits owned franchise content and that the series will yield significant opportunities past ad revenue and those opportunities won’t be subject to fluxuating ratings.
“‘The Walking Dead’ is a franchise that will deliver ancillary revenues over different distribution platforms for many years to come, as it does today. And we believe it will have a long life that accrues to our strategic position and financial benefit,” Sapan said.
In terms of ancillary revenue, Sapan said that refers to revenue generated by a series like ‘Walking Dead’ after it has been on AMC’s platform for a year and its rights are then sought out by SVOD services and international distributors.
Of course, analysts still have concerns about AMC leaning too heavily on ‘The Walking Dead’ and what that could mean for future ad revenue growth.
“We continue to believe that adv. growth will be driven by an expanded original content slate, while ancillary / non-affiliate fee revenue streams drive dist. Growth,” wrote Jefferies analyst John Janedis in a research note. “While concentration around TWD series remains a risk, the ability to grow revenue and AOI in F16, despite a decline in ratings, removes some of the ‘bear’ thesis.”
Meanwhile, MoffettNathanson analyst Michael Nathanson said ‘The Walking Dead’ and AMC’s other acclaimed original series are masking issues like the network’s dependence on repeat film and TV content, which “will remain casualties as live viewing continues to decline,” and the usually ill-fated tactic of adding commercial inventory to offset declining GRP.
He added that declining viewership for ‘The Walking Dead’—which he said is down 17% in the first two episodes of the fiscal first quarter—will shrink ad revenue.
“As viewership for AMC’s top show fades, we believe that advertising results will be increasingly impacted as the company continues to use ‘The Walking Dead’ as the linchpin to package and selling advertising,” Nathanson wrote.