AMC Networks Loses 300,000 Streaming Subscribes in Q1 as U.S. Ad Sales Fall 20%

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AMC Networks lost 300,000 subscribers across its streaming services in Q1, falling from 11.8 million at the end of 2022 to 11.5 million by March 31, the company reported in its earnings results Tuesday.

This drop in subs follows a slight increase of 700,000 paid streaming customers between Q3 and Q4 of last year.

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AMC Networks’ streaming platforms includes AMC+ (which AMC Networks plans to launch an ad-supported option for in October), Acorn TV, Shudder, Sundance Now, ALLBLK and HIDIVE. Those digital offerings are in addition to the company’s linear channels AMC, BBC America (a joint venture with BBC Studios), IFC, SundanceTV, WE tv and IFC Films.

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According to AMC Networks’ previously given guidance, the company anticipated getting halfway to its larger goal of having 20-25 million streaming subs in 2025 by the end of this year.

Elsewhere, AMC Networks’ U.S. ad sales fell 20% in the first quarter, but the media company still beat estimates for the quarter, in terms of both revenue and earnings expectations.

On a Q1 earnings call with analysts later Tuesday, AMC Networks execs confirmed they are “past peak content investment” and reaffirmed guidance of $1.1 billion in content spend for 2023, and “in the $1 billion area” in 2024.

Currently, AMC Networks CEO Kristin Dolan says the company is “well-positioned” with content amid the writers strike.

Domestic operations revenue ticked up 1% from the previous Q1. Content licensing increased 69% and subscription revenue was up 1%. Streaming revenue rose 29% and affiliate sales dropped 11.7%.

Turning to AMC Networks’ “International and Other” segment — which includes AMC Networks International (its international programming business) and 25/7 Media (its production services business) —  revenue decreased 2%. Distribution and “other” revenues grew 2% and ad sales dropped 17%.

Wall Street forecast earnings per share (EPS) of $1.87 on $696.7 million in revenue, according to analyst consensus data provided by Refinitiv. AMC Networks reported adjusted EPS of $2.62 on $717 million in revenue. Revenue was up 0.7% year over year.

Operating income for Q1 was $173 million, down 0.8%, and net income stood at $103.6 million vs. $104.2 million in the first quarter of 2022. AMC Networks had negative free cash flow of $144 million for the quarter.

“AMC Networks has always been known for great content that breaks through in popular culture, receives critical acclaim and engages fans,” CEO Kristin Dolan, who was appointed to her position in February, said in a letter to shareholders. “In an environment of shifting consumption, we are committed to making our content available across the entire distribution ecosystem. While we reevaluate the pathways to content monetization, we are strategically reducing costs and streamlining our organization. These efforts contributed to a first quarter with strong margins and increased streaming revenue as we prioritized higher-value subscribers for our streaming portfolio. We remain focused on the overall profitability of the company as we continue to maintain a strong balance sheet, drive free cash flow and maximize shareholder value.”

Dolan’s appointment as CEO mid-quarter followed the November exit of Christina Spade, formerly AMC Networks CFO, who stepped down after a brief stint at the top upon the exit of interim CEO Matt Blank.

Once Spade left, owner James Dolan was named interim executive chairman amid a search began for another AMC Networks CEO, and announced that “large-scale layoffs” would be hitting the company amid a stall in growth at streaming AMC+ and its smaller platforms Acorn TV, Shudder, Sundance Now, ALLBLK and HIDIVE. Those restructuring measures were largely carried out in Q4.

AMC Networks stock closed Monday at $15.28 per share. The regular U.S. stock markets will reopen at 9:30 a.m. ET.

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