AMC Networks Ends Q2 With 10.8 Million Streaming Subscribers

The company’s net revenue decreased by 4%, missing Wall Street expectations

AMC Networks earnings

AMC Networks Inc. reached 10.8 million subscribers, the company reported Friday in its second-quarter earnings report.

The company increased its subscriber base by 1.3 million from Q1, a 46% year-over-year increase driven partly by the AMC+ premium streaming bundle launch in Spain. Reported global subscription revenues grew by 20% thanks to the subscriber growth and contractual affiliate rate increases, though it was partially offset by a decline in linear customers. AMC Networks touted additional growth due to the launch of AMC+ on Amazon Prime Video Channels in India this past quarter. AMC Networks counts AMC+, Acorn TV, Shudder, Sundance Now and ALLBLK among its direct-to-consumer portfolio.

Overall, the company report Q2 net revenues of $738 million and a diluted earnings per share (EPS) of $1.91 (adjusted EPS was $2.06). This was below analyst expectations via Yahoo Finance, with average projections of $774.35 million in revenue and an EPS of $2.31.

“AMC Networks delivered a solid second quarter, benefiting from strong subscriber growth for our differentiated streaming services as we execute on our strategy to super-serve passionate audiences with a curated, targeted content experience,” interim CEO Matt Blank said in a statement. “We added nearly 1.3 million new subscribers in aggregate across our streaming portfolio, ahead of our forecast, to end the quarter with 10.8 million total paying subscribers.”

He continued: “As we leverage our strong linear business, we are seeing increasing demand for our digital and advanced advertising opportunities. And our content creation strengths were on full display in the quarter, with viewership records, widespread critical acclaim for new and returning series including for ‘Better Call Saul’ and ‘Dark Winds,’ and Emmy Award nominations across major categories. We are building our business in a steady, disciplined and sustainable fashion, positioning ourselves for future growth and delivering shareholder value.”

Operating income increased 125% to $153 million, though adjusted operating income decreased 22% to $196 million with a margin of 26%, as compared to the prior-year quarter due to content and marketing investments aimed at driving subscriber and streaming revenue growth. Net cash provided by operating activities was $41 million and AMC Networks produced a free cash flow of $7 million.

Programming highlights of Q2 include 12 Emmy nominations, including seven for “Better Call Saul.” Both “Moonhaven” and “Dark Winds” were renewed for second seasons and a third series in “The Walking Dead” universe, welcoming back stars Andrew Lincoln and Danai Gurira, has been ordered. AMC Networks’ linear operation is comprised of AMC, BBC America, IFC, IFC Films, and more.

The company is now eyeing a full year 2022 financial outlook of low-single-digit total company revenue growth, with adjusted operating income projected to come in 10% lower than the 2021 fiscal year due to increased strategic content, marketing and technology investments and free cash flow of approximately $100 million.

Despite the overall financial miss in Q2 on the back of decent subscriber growth, the company reaffirmed that it’s still on track to achieve its long-term subscriber goal of 20 million to 25 million streaming subscribers by 2025.