AMC Networks plans to cut spending on programming by 20% as it waits for the industry to find a better way to monetize content.
In the fourth quarter, AMC Networks executed cost cuts, writing off programming and eliminating 20% of its staff.
The company also said Kristin Dolan will become CEO later this month. Her spouse, AMC interim executive chairman James Dolan, whose family controls the company, spoke on the company’s fourth-quarter earnings call with analysts Friday.
Between cord-cutting and the shift of viewing to streaming, “the current mechanisms for monetizing content are not working,” James Dolan said. “The content industry needs to reorganize itself. We’re seeing this now with most media companies beginning to course-correct to better monetize content and improve the economics of their business.”
In that process, “we believe large distributors and programmers will lead the way,“ he said. “AMC will follow.”
Dolan said that he was open to M&A activity, but he didn’t think the industry could consolidate meaningfully without a better handle on how to profitably monetize content.
Until then, the company is hunkering down. “AMC Networks will focus on streamlining our organization, operating more like retailers than wholesalers, driving cash flow and maintaining our balance sheet,“ James Dolan said. “At the same time, we will continue to do what we do best, which is making great content.”
We believe large distributors and programmers will lead the way. AMC will follow.”
— James Dolan, AMC Networks
AMC will be making less of that great content.
Chief financial officer Patrick O'Connell said that 2022 would represent AMC’s peak year for content investment.
“We expect cash content investment to be approximately $1.1 billion as compared to $1.35 billion dollars in 2022,” O’Connell said. “Looking past 2023, we anticipate our cash content investment will be in the $1 billion area, consistent with our historic pre-pandemic levels.”
O’Connell said that between 2017 and 2019, AMC spent about $1 billion a year on programming. It jumped up to between $1.3 billion and $1.35 billion in 2021 and 2021.
While the programming cost cut represents a “meaningful reduction,” O’Connell maintained that despite having 20% less to spend, “this still leaves us with plenty of firepower to continue our historical programming cadence.”
The smallest cuts in programming will come at the company’s specialized streaming networks. There will also be a bit less programming on AMC Plus, he said.
The company appears to be focusing on its franchises, with more shows set in The Walking Dead zombie and Anne Rice vampire universes.
James Dolan opened the call by explaining the choice of Kristin Dolan to be the company’s CEO.
He said AMC’s board of directors made a thorough search. “Based upon Kristin’s considerable executive and operational experience for 30-plus years working in media and entertainment, including her prior history managing subscription-based businesses, the board concluded she is the best candidate for the role,” he said.
“As founder and CEO of the audience measurement and data analytics company 605, Kristen has been on the front lines of the evolution of advanced advertising and audience targeting,“ Jim Dolan said. “She also has a strong record driving organizational change. These are areas of critical importance as we transform AMC, networks and further monetize our high-quality content during this pivotal period in our industry.” ■
