AMC's streaming revenues grew while advertising profits decreased in the US

AMC Networks reported financial results for the second quarter ended June 30, 2024. The Chief Executive Officer Kristin Dolan said: “AMC Networks continues to find strength and opportunity in a strategic plan built around programming, partnerships and profitability. Key to our plan is the creation and curation of celebrated series and films, and making them available to audiences everywhere, including through an exciting new branded content licensing agreement with Netflix. In the first half of 2024, we’ve made significant progress against our strategic priority of generating strong free cash flow, and we’re well on our way to achieving our free cash flow guidance for the full year.”

STRATEGIC PARTNERS
The company has expanded its longstanding relationship with Netflix by striking an innovative deal to strategically curate and window prior seasons of 15 AMC branded shows on their platform, launching on August 19th. In addition, AMC Networks entered into a new licensing partnership with Sky, making Sky the new home of The Walking Dead Universe in the UK.

AMC Network maintains a continued participation in new and innovative internet-delivered skinny bundles including the inclusion of its AMC, We TV, BBCA, BBC News, Sundance and IFC networks in Optimum’s new Entertainment TV package available on Optimum Stream.

The company successfully implemented price increases for two of its targeted streaming services: Acorn TV and HIDIVE with an insignificant impact to churn due to highly-engaged, brand loyal subscriber bases. AMC Reality, a branded offering on ITVX, the UK’s largest AVOD platform, launched May 30th joining AMC Stories which launched on ITVX on April 8th.

The company greenlighted the third series in the expanding Anne Rice Immortal Universe, a drama for AMC and AMC+ focused on a secretive society called The Talamasca, slated for a 2025 premiere. Besides, it has announced a new series from AMC Studios for AMC and AMC+, set inside the bubble of Silicon Valley, from writer and showrunner Jonathan Glatzer of "Succession".

THE US MARKET
The company informed that the domestic operations revenues in the US have decreased 7% from the prior year to $538 million. The subscription revenues decreased 3% to $323 million, primarily due to declines in the linear subscriber universe, partially offset by an increase in streaming revenues. Streaming revenues increased 9% to $150 million driven by year-over-year subscriber growth and price increases. Streaming subscribers increased 5% to 11.6 million as compared to 11.0 million subscribers as of June 30, 2023.

Affiliate revenues decreased 12% to $172 million, primarily due to basic subscriber declines. Content licensing revenues decreased 18% to $67 million due to the availability of deliveries in the period. Advertising revenues decreased 11% to $149 million due to linear ratings declines and a challenging ad market, partly offset by digital and advanced advertising revenue growth. Operating income of $103 million included a long-lived asset impairment charge related to our BBCA joint venture of $29 million.

GLOBAL MARKET
AMC Networks' international revenues decreased 9% from the prior year to $90 million. The prior period included $19 million of content licensing and other revenues related to 25/7 Media, which we divested on December 29, 2023. Additionally, current period advertising revenue included $13 million of revenue related to a one-time adjustment payment. Excluding revenues related to 25/7 Media and the one-time adjustment payment, International revenues decreased 4%. Subscription revenues decreased 13% to $50 million, primarily due to the non-renewal of an AMCNI distribution agreement in the UK that occurred in the fourth quarter of 2023.

Content licensing and other revenues decreased 86% to $3 million due to the sale of its interest in 25/7 Media in December 2023. Advertising revenues increased 84% to $38 million due to a $13 million one-time adjustment payment and new streaming offerings in the UK. Excluding the one-time adjustment payment, advertising revenues increased 18%.

Operating loss of $44 million included a goodwill impairment change of $68 million related to AMCNI. Adjusted Operating Income increased 53% to $29 million. The increase in Adjusted Operating Income was primarily driven by the one-time adjustment payment. 25/7 Media generated $1 million of AOI in the second quarter of 2023. Excluding AOI related to the one-time adjustment payment, International AOI was $16 million, with a margin of 21%.