Yahoo News AMC Networks U.S. Ad Revenue Drops 23 Percent, Streaming Subs Rise to 11.4M
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 — reported a 23 percent drop in fourth-quarter U.S. advertising revenue Friday, following an 18 percent decline in the third quarter, a second-quarter drop of 17 percent and a first-quarter decrease of 20 percent.
After returning to streaming subscriber growth in the third quarter after two quarters of declines, the company added 300,000 subs in the fourth quarter to end 2023 with a total of 11.4 million.
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The latest quarterly U.S. ad revenue update came for the final quarter of 2023, in which AMC Networks aired such original series as The Walking Dead: Daryl Dixon. Ad revenue dropped to $158 million for the period due to linear ratings declines and a challenging ad market, the company said.
On the advertising front, AMC Networks is leaning into data-led audience targeting for ad buying as marketing dollars increasingly shift from linear TV networks to advertising tiers now being rolled out by streaming platforms.
“It’s a huge opportunity to finally swing the pendulum back from digital-first to shared purchase of traditional television as well as digital to support the advertiser efforts,” CEO Kristin Dolan, the wife of chairman James Dolan, told analysts during a premarket conference call as she pointed to Audience+, an insights and data targeting platform rolled out last year. AMC Networks also has its own ad-supported streaming tier, AMC+.
Domestic affiliate revenue declined 16 percent in the fourth quarter, with AMC Networks citing “basic subscriber declines, including the 4 percent revenue impact of a strategic non-renewal that occurred at the end of 2022.”
Overall, fourth-quarter revenue of $679 million was down nearly 30 percent. The operating loss of $11 million marked an improvement from the year-ago loss of $392 million. But adjusted operating income fell 27 percent to $100 million.
AMC Networks also detailed impairment charges it took in the fourth quarter related to BBC America and the late December sale of its remaining interest in production services business 25/7 Media. “During the fourth quarter of 2023, given continued market challenges and linear declines, we determined that the carrying amount of the BBC America asset group exceeded its fair value, therefore an impairment charge of $42.4 million was recorded,” the firm said in a statement that accompanied its financial results. Related to the 25/7 sale, the company added: “We recognized an additional impairment charge of $19.8 million, reflecting a write-down of substantially all of the goodwill associated with the 25/7 Media reporting unit.” Together, those charges amounted to $62.2 million.
A growing tally of Walking Dead offshoots is one indication of how valuable past properties and players remain to AMC Networks and its brands. Earlier this week, the company unveiled a new vehicle for Breaking Bad and Better Call Saul star Giancarlo Esposito (Parish), a revival of sorts for WE TV reality show Braxton Family Values, as well as new projects based on the works of Anne Rice (Interview With the Vampire) and Dashiell Hammett (Monsieur Spade, a sequel of sorts to The Maltese Falcon).
Dolan pointed to the expanding universe of The Walking Dead, including the return of Rick and Michonne, as underlining the continuing popularity of AMC’s zombie apocalypse. “In a world in which a premiere is when a viewer first decides to watch something, as opposed to when a network first decides to show it, we see a very long tail and incredible value in this beloved and expanding franchise,” she told analysts.
That said, CFO Patrick O’Connell told analysts that licensing revenues from The Walking Dead and Fear the Walking Dead were expected to edge down in 2024, compared to recent years, as AMC Networks continues to face revenue headwinds in its linear TV business.
And as AMC Networks looks to offset linear TV declines with streaming gains, CEO Dolan on the analyst call supported industry-wide content rebundling moves in the streaming age with new agreements. “We remain in discussions with a wide variety of potential partners and believe we will see additional bundling activity in the future across the industry,” Dolan argued.
The AMC Networks head pointed to this week Disney, Fox Corp. and Warner Bros. Discovery teaming up for a sports streaming joint venture as a benefit for consumers. “We really do need to make things easier and more cost-effective for our customers. The current environment is confusing, expensive and essentially forces consumers to recreate the cable bundle on their own at twice the price,” Dolan argued.
She also dismissed industry-wide calls for scale for survival in today’s entertainment space, as AMC Networks instead looks to remain independent. “In discussions around media and content companies these days it’s hard to miss the fascination with scale. From our perspective, we see strength in being nimble and independent and value the flexibility this provides us in the marketplace,” Dolan argued.
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