AMC Networks reported its second-quarter 2023 earnings Friday, revealing it lost hundreds of thousands more subscribers across its portfolio of niche streamers and was down 17% in U.S. ad sales for the April 1-June 30 period.
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. In Q2, that decline continued with streaming subs down to 11 million at the end of June, per AMC Networks’ Friday earnings results.
It should be noted that in AMC Networks’ press release, it states streaming subscribers totaled 11.2 million at the end of Q1, which contradicts its previously given Q1 results, writing: “In the second quarter, we updated our subscriber definition to no longer include estimated subscriber conversions. This definitional change resulted in the removal of approximately 300 thousand subscribers from our quarter end subscriber count. Subscribers and growth rates mentioned in this release reflect our updated definition.”
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.
The company previously forecast that by the end of this year, it would make it halfway to its larger goal of having 20-25 million streaming subs in 2025.
When detailing the earnings report on a call with analysts later Friday, AMC Networks CEO Kristin Dolan noted that the ongoing SAG-AFTRA and WGA strikes would not impact the company’s content pipeline until “well into 2024.” Execs said that its new trio of “Walking Dead” franchise series, “The Walking Dead: Dead City” (starring Lauren Cohan and Jeffrey Dean Morgan), “The Walking Dead: Daryl Dixon” (starring Norman Reedus) and “The Walking Dead: The Ones Who Live” (starring Andrew Lincoln and Danai Gurira), had all completed production prior to the actors’ work stoppage.
Domestic operations revenue fell 6.3% from Q2 2022. Content licensing increased 12% and subscription revenue was down 4%. Streaming revenue rose 13% and affiliate sales dropped 12.7%. Ad sales were down the above-mentioned 17%.
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 fell 21%. Distribution and “other” revenues were down 24% and ad sales dropped 6%. Per AMC Networks, the company took a $25 million impairment charge related to 25/7 Media for the quarter.
Wall Street forecast earnings per share (EPS) of $1.60 on $706.5 million in revenue, according to analyst consensus data provided by Refinitiv. AMC Networks reported adjusted EPS of $2.02 ($1.60 diluted EPS) on $679 million in revenue.
Operating income was $105.7 million for the quarter, with free cash flow at $148 million. Restructuring and related charges totaled $6 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,” CEO Kristin Dolan said in a letter to shareholders. “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’s appointment as CEO came in February, following 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 Thursday at $12.28 per share. The regular U.S. stock markets will reopen Friday at 9:30 a.m. ET.