Consolidate, or Strip For Parts? What is AMC’s Best Path Forward to Streaming Success?
As the largest players in the streaming industry slow down content spends and try to consider their next moves, smaller services are also in the midst of company-wide evaluations. AMC operates a family of streaming services that are all of the smaller, niche variety, and it’s currently trying to figure out the best path forward with them.
A report from Puck News indicates that the company would like to lean into its streaming business, especially as its premium linear channels continue to lose viewers. But that’s easier said than done, even though the company added 700,000 streaming users to its collective services last quarter.
Those additions bring AMC’s total streaming subscribers to 11.8 million across AMC+, Acorn TV, ALLBLK, Shudder, and Sundance Now. The company’s streaming segments do not turn a profit currently, though AMC declined to specify how much of its nearly $400 million operating loss was due to its streaming business.
So what is the company’s best path forward to streaming success? It has several options, one of which is to simply wait and do nothing. The company could sit back and let its bigger competitors in the industry iron out their strategies to pursue profits, and glean what it can from those lessons. Indeed, pausing for a breath might not be the worst idea, considering the company just hired its fourth CEO in less than two years (Kristin Dolan — the wife of AMC chairman James Dolan).
Dolan indicated this wait-and-see approach would the company’s strategy in the short-term during AMC’s fourth-quarter earnings call with analysts last week.
“What AMC is doing is essentially maintaining its revenue streams, stabilizing itself…” Dolan said. “Laying back, watching the marketplace, working with retailers like [cable and satellite companies], and waiting for our opportunity to take our great content and put it into a vehicle that truly monetizes it. That may take a little while.”
So what can AMC do to further monetize its streaming efforts? Consolidation could be one solution. AMC+ currently offers full access to the horror-focused Shudder, as well as the international and prestige film services Sundance Now and IFC Films Unlimited. But its other streaming services Acorn TV and ALLBLK are standalone, and by merging them all into one service, AMC could cut down on operating costs while boosting its collective library. Merging more content into one service would also allow the company to charge a higher price for that service, increasing the amount of revenue per subscriber.
The combined service might also be more attractive to a potential buyer if AMC decided to sell. Apple would be a good fit for the content AMC offers, as shows like “Interview with the Vampire” and “Mayfair Witches” would slide right in alongside Apple TV+ offerings like “Servant” and “See.” Apple TV+ offers a similar style of programming, focusing on the prestige TV shows that AMC has become known for over the years.
AMC could also consider selling off its cable channels if it were serious about focusing on streaming. Low linear ratings during Q4 led the company’s advertising revenues to decrease by 12% while streaming revenues jumped by 41%. AMC might look at this data and decide to sell off its linear channels to a company like Starz, which also operates premium cable networks. Doing so would be the clearest possible indication that AMC sees itself as a streaming business first, and will devote all its efforts to that end going forward.
That solution is unlikely, however. Cable networks across the board are facing mounting losses as cord-cutting accelerates, and though AMC has good brand recognition, it would likely be difficult to convince another outlet to pick up its channels. What’s more likely is that AMC decides to become a content “arms dealer,” creating shows and movies for the express purpose of licensing them to other media companies.
AMC already has experience in this regard. The company licenses “The Walking Dead” to several outlets, most notably Netflix. Going the arms dealer route as Sony has done makes the most sense if AMC is looking to get out of the streaming business, as its best content wouldn’t be available on AMC+ in that scenario. But that would give the company enough quick cash to determine what steps it wanted to take with its linear channels going forward.
An outright sale of part of the company, or of the company as a whole, is also definitely in play. Dolan was asked about the possibility of such an option during the earnings call and indicated that all solutions were on the table.
“I think that our first concern is always going to be creating value for our shareholders,” the chairman said. “So what form that comes in, is — it could be stay the course, it could be an [merger or acquisition], a strategic transaction that — very honestly, we’re very much open to all those ideas. But right now, we have the company that we have and we’re trying to guide it through as if it was — it’s going to remain a stand-alone — but that doesn’t mean that we won’t consider M&A and see if we can improve the shareholder value that way.”
That sounds as if AMC is open for business. Mergers and acquisitions could take many forms; the company could try to sell off one of its streaming segments to focus on the others. It could also mean that all of AMC, including linear channels, streaming services, etc. could be folded into another large media conglomerate. FOX executives recently indicated that the company is interested in making larger acquisitions, and AMC would give the company a host of ready-made subscription streaming customers.
Much like the rest of the streaming industry, AMC is at a crossroads. It has myriad options available to it, and some of its next steps will be determined by market forces beyond its control. But changes are definitely coming to AMC, whether it leans further into streaming or company executives decide to dismantle it piece by piece.
AMC+
AMC+ is a premium streaming bundle that includes the best from AMC, BBC America, IFC, SundanceTV, Shudder, Sundance Now, and IFC Films Unlimited containing original, award-winning series, popular movies, festival favorites, plus horror, sci-fi, true crime, and thrillers. You can subscribe to AMC+ for $4.99 / month or save with the annual plan for $59.88 / year.