AMC Networks reported lower second-quarter earnings, as advertising and affiliate revenue fell and the company’s streaming services lost 200,000 subscribers.
Net income fell to $70.2 million, or $1.69 a share, from $83.4 million, or $1.91 a share, a year ago.
Revenue fell 8% to $678.6 million.
On the company’s earnings call, CEO Kristin Dolan said that the company hopes that the strikes by the writers and actors unions can settle soon, but noted that AMC has completed production of its series, including new Walking Dead spinoffs.
“In the sort term, we have a pipeline of finished shows for the remainder of this year and into 2024,” she said.
Also: New CEO Kristin Dolan Prepares AMC For Streaming Bundle Future
Dolan also said that the company was pleased with its upfront negotiations, with the market recognizing AMC quality programming. “Our pricing and volume reflect that,” she said.
“We are one of the last major programmers to be airing scripted programming on Sunday nights every week of the year,” Dolan noted, adding that that drives value for advertising and affiliate partners. "Other networks have shifted their programming dollars and their best shows to streaming, hollowing out their linear offerings. We have not."
The ad-supported version of AMC Plus will launch in October, she said.
AMC also said it made a deal to unwind an agreement with Hulu to stream a number of AMC series. As a result, AMC will be able to stream the series, including all seasons of Fear The Walking Dead, on AMC Plus and license them to other distributors. Other series returned by Hulu as part of Disney’s streaming content purge include Killing Eve and Brockmire.
CFO Patrick O'Connell said the deal pulled forward payments by Disney to AMC, giving AMC a $90-million free cash flow benefit in the second quarter and $50 million over the full year.
At AMC’s domestic business, adjusted operating income decreased 12% to $184 million. The company pointed to a 17% drop in advertising revenues to $167 million and a 12.7% drop in affiliate revenue. Affiliate revenue was affected by Fubo’s decision not to renew AMC’s carriage deal.
Streaming revenue increased 13% to $137 million.
Streaming subscribers rose 6% to 11 million, compared to 10.3 million a year ago. But subscribers were down from 11.2 million at the end of Q1.
The company said that it changed the way it counted subscribers, no longer including estimated subscriber conversions. Before the change, AMC reported having 11.5 million subscribers.
Total domestic revenues fell 6% to $582 million.
"Six months into my tenure as CEO, I am impressed with our team’s ability to do what this company has always done best: produce high-quality content and make it available to viewers across an expanding array of platforms,” said Dolan in the company's earnings announcement.
“We accomplish this through a measured, opportunistic and disciplined strategy that drives free cash flow. Even during a period of industry-wide uncertainty and change, we are seeing the benefits of our strategy play out in our financial results, which for the second quarter include year-over-year increases in free cash, streaming subscribers, and streaming revenue, as well as healthy margins. It’s clear we have the programming, the platforms and the partners necessary to continue to operate a very profitable business that delivers long-term shareholder value,” Dolan said.
