The analysts at Moffett Nathanson noted that AMC Networks “essentially waived the white flag on a strong pivot to streaming” during AMC’s Q2 earnings last week. The analysts said the company is in an industry in decline, but it is doing a good job of adapting to that decline.
The factors hitting AMC Networks are all the usual suspects, including cord cutting, the continued decline of linear advertising, and belt-tightening across streamers, which has led to a drop in licensing demand.
AMC Networks CEO Kristin Dolan said on the company’s earnings call that “Other networks have shifted their programming dollars and their best shows to streaming, hollowing out their linear offerings. We have not.”
She also touted AMC+ streaming partnerships, saying “I'm pleased to say we just launched AMC+ on Charter, making it available to Spectrum TV customers. We have now launched AMC+ on all major MVPD platforms.”
And she called out AMC’s relationship with Comcast, saying, “We're also very excited to have partnered with Comcast on their NOW TV streaming product, which recently launched with 40 live channels, including all of our linear networks, plus more than 20 integrated fast channels and Peacock Premium for a monthly price of $20."
She said recent customer research demonstrates the power of an integrated streaming/cable offering.
AMC Networks CFO Patrick O’Connell reported that 2Q streaming revenue was $137 million, representing 13% growth year-over-year. The company ended the second quarter with 11 million streaming subscribers, representing growth of 6% compared to 10.3 million subscribers a year ago.
However, O’Connell said, subscribers dropped on a sequential basis from 11.2 million in Q1 2023 to 11 million in Q2, representing a decline of 2% “as we maintain our focus on higher-value subscribers and allow promotional subscribers who do not convert to our typical retail pricing to roll off.”
The Moffett analysts wrote, “While we no longer expect streaming subscriber growth to be significant, the introduction of an ad tier later this year could provide a decent boost.”
They also noted that while demand for licensed content may be down at the moment, that could change if the Writers Guild of America and the SAG-AFTRA strikes continue, which could create more demand for licensed content from the likes of AMC Networks.