Count Mad Men creator Matthew Weiner and AMC Networks CEO Josh Sapan among the long list of people who believe that this is a golden age for television. “If Dickens were alive today he’d probably be a showrunner,” the AMC chief said in a panel at The Cable Show. Weiner credits HBO’s The Sopranos, where he was a writer, for helping to establish television as a home for art as well as commerce. “There’s not one thing [in the show] that would pass a focus group, and it’s a billion dollar business.” That helped to interest AMC in Weiner’s Mad Men. “The word ‘Sopranos‘ was bigger on our first poster than anything else,” he says. Weiner wrote the pilot 14 years ago and the experience since then “has been life altering in every way….I got to grow up as [lead character Don Draper] has grown up.” Weiner praised AMC for taking a risk on his show, and others. “Breaking Bad and Mad Men have nothing in common. Why are they doing them? Because they’re both good. That’s an interesting strategy.”
Looks like CEO Josh Sapan‘s comments to analysts addressed whatever concerns investors had about AMC Networks’ mixed Q4 earnings report this morning. The company’s stock price opened slightly down but quickly, and steadily, appreciated throughout the morning: It closed +6% at $73.75 after touching $74.22, passing the previous all-time high, on November 6, of $73.39. AMC Networks‘ Q4 report startled some company watchers with its $52M charge for losses tied to the cancellation of Low Winter Sun and The Killing. The charge “was obviously worse than what we modeled and could include more than just these two shows,” MoffettNathanson Research’s Michael Nathanson says. There was also some concern that it might indicate problems that could affect AMC’s upcoming series Turn and Halt & Catch Fire. Sapan wouldn’t give analysts specific metrics for assessing the performances of these shows and, in November, the Breaking Bad spinoff Better Call Saul. While “they’re all well-done shows,” the CEO said, “they’re all reasonably pretty expensive….There is no big bargain among them.” Investors apparently decided to give AMC the benefit of the doubt. “The optimistic case says they cleaned house, got all the bad news out of the way,” Bernstein Research’s Todd Juenger observed. “There can’t be much risk left on the balance sheet after wiping out ~5% of the inventory.”
One knock against AMC Networks as a business is that it may be too small to hold its own when it negotiates deals with cable and satellite distributors. But CEO Josh Sapan says he isn’t worried: With hit series including Mad Men, Breaking Bad, and The Walking Dead, pay TV distributors looking for opportunities to squeeze costs will find that “AMC Networks may have among the highest, if not the highest, value for penny [based] on what we put on the air,” he told investors this morning at the Goldman Sachs Communacopia Conference. Indeed, it may be worth questioning programming giants such as Disney, Fox, Time Warner, and Viacom “about where scale goes and whether all scale’s good.” Sapan credits on-demand technologies and services for changing TV viewing habits — especially for dramas — in ways that favor AMC. When someone wants to catch up with a series, “instead of having to find it on Channel 11 at 11 PM, you find it on demand and have the energy, time and attention” to enjoy it. Also, since viewers can tune in when they’re ready, they’re watching television “with more concentration and attention,” he says. As a result, programmers can “pay attention to a more nuanced story.” VOD also enables networks including the ones he controls to stick with …
Disney Media Networks co-Chair Anne Sweeney talked up the controversial idea in a panel of program execs at the opening session of the National Cable Show this morning. Comcast and other cable operators hope to land series that might go to subscription streaming services such as Netflix by offering opportunities to broadcast them on VOD with ads, and the fast forward disabled. That would be “a very positive thing for the economics of television and television production,” Sweeney says. Even so, she says that with the burgeoning number of platforms for TV “The consumer has taken control and they’re not giving it back.” Programmers here say that they don’t fear time shifting. Showtime’s Matt Blank noted that with DVRs and other on-demand technologies “80% of the people who watch Nurse Jackie watch it after the premiere on Sunday night.” As much as 70% of the people who watch Homeland and Dexter also see episodes after they first air. “The more ways we can provide an on demand platform the more successful we’ll be.” AMC Networks chief Josh Sapan agreed, observing that VOD platforms have given his channels “a rich, rich, rich opportunity to expand the fan base and audience….The calendar is not quite the calendar anymore.”
This is “a new, developing phenomenon,” AMC Networks CEO Josh Sapan told investors this morning at the Barclays’ Global Technology, Media and Telecommunications Conference. Although advertisers still crave ratings points, they also increasingly want to reach people who say that “there are only two or three shows I watch and I live and die for them.” The trend is gaining momentum as viewers discover opportunities to binge view shows on pay TV, VOD and streaming services including Netflix and Amazon Prime. In addition, young viewers become obsessive about programs when social networks such as Facebook and Twitter help to connect them with others who share their passion. As a result, “that favorite stuff in media is emerging as the most important [driver] of value,” Sapan says. That’s encouraging for networks such as AMC — which has high-engagement hits with dramas including Mad Men, The Walking Dead, and Breaking Bad. But it’s hard to build a business around the trend: “Good dramatic TV shows aren’t known until they’re on,” he says. And nobody has perfect pitch. “There are many shows that have spectacular television pedigree and the show doesn’t work” while others from untested producers or stars “take off like crazy.” Sapan says he’s encouraged by his upcoming shows including Low Winter Sun (a police drama), Turn (about Revolutionary War spies), Halt & Catch Fire (about the computing boom in the 1980s), and Line Of Sight (a sci-fi drama the AMC chief calls “nuanced and exquisite”).
“We’re paying particular attention to Sundance” because of the campaign to begin folding in commercials — due to take effect toward the end of this year — AMC Networks CEO Josh Sapan told analysts this morning. The company touted Sundance Channel‘s appeal to upscale audiences in its sales pitches to advertisers for the upfront market, and is now negotiating to change the channel’s pay TV distribution agreements. Sundance’s current affiliation deals “had not embraced or expected advertising”, Sapan says. But “we’re at the final stage of that [renegotiation] plan”. While the finances for Sundance remain “a little difficult to model,” the AMC chief says that he wants to maximize ad rates by promoting the channel’s “story-telling genetics” and ability to become “a home for some of the best shows on TV.” That should result in “very high engagement and people who care a lot about them.” AMC has used the drama Rectify, its first wholly owned original scripted series, to lead its campaign to change Sundance’s business model. “The critical reception was extremely strong and we think that signals vitality for the direction the channel is going in,” Sapan says. He adds that AMC helped the series by offering new episodes in movie theaters and on cable VOD ahead of their appearance on the channel’s program schedule. “We tried to get people to watch and refer their friends and others to it and we think there’s …
AMC Networks‘ C-suite shouldn’t consist of mad men based on the raises everyone but the CEO received last year. The increase in Josh Sapan‘s non-equity incentives wasn’t big enough to compensate in a drop in stock awards. His $8.9M package includes $1.28M salary, $2.08M stock awards, $5.47M non-equity incentives, and $83,647 in other compensation, according to the proxy filed today with the SEC. The board says that Sapan and other execs “allowed us to continue to successfully navigate difficult economic conditions and product results that strengthened our business.” AMC shares appreciated about 31% in 2012, but Sapan’s take came to 4.9 times the median compensation for the other four execs named in the proxy — three times the level that makes corporate governance watchdogs fear that a CEO is too powerful.
These look like interesting defensive maneuvers at a time when cable and satellite companies are threatening to drop little-watched channels. Sundance — which only reaches about 52M pay TV households — would seem to be vulnerable in some negotiations, although AMC Networks says it has recently completed long-term deals with Comcast, AT&T, and Verizon. But AMC Networks CEO Josh Sapan told analysts today that he recognizes the channel “is undernourished, in need of (investment) and rich in opportunities.” While execs offered few specifics, they noted that on April 22 Sundance will introduce its first fully owned scripted series, Rectify (from the producers of Breaking Bad), and that a second one will be coming as soon as next winter. There’ll be at least two scripted series in 2013 vs one in 2012. In addition, the company just announced that beginning March 4 Sundance will show the first four seasons of AMC’s Breaking Bad. Along with the Sundance investments, AMC is researching online distribution opportunities that “shouldn’t be confused with TV Everywhere” — the industry-wide streaming initiative — Sapan says. The goal is to become “educated and smart” in the possibility of distributing shows directly to consumers. “Think iTunes,” he says.
AMC chief Josh Sapan was under the gun today as Day 3 of the VOOM trial focused on a key question: Did AMC and its former parent, Cablevision, hide from Dish a budget that would have clearly given the satellite company the right to end its 15-year agreement to carry the now-defunct VOOM suite of HD channels? AMC’s $2.5B suit alleges that Dish breached the contract in 2008 when it dropped VOOM. But Dish says AMC and Cablevision already violated the deal by failing to invest at least $100M a year in VOOM — something the budget would have revealed. Challenged to explain why it wasn’t shown to Dish, Sapan said the company “never raised questions about what we were spending on,” according to an account of today’s proceedings by SNL Kagan reporter Deborah Yao. The CEO added that the budget was just hypothetical because it hadn’t been approved by the board. Dish’s lawyer also pressed Sapan to say that the $100M spending requirement applied to domestic programming — not overhead and overseas expenses. But the AMC exec said it was “crystal clear” in negotiations that the dollar figure covered all costs, Barclays Equity Research analyst Anthony DiClemente reports. Dish Network CEO Charlie Ergen is expected to take the stand next week.
UPDATE, 11:00 AM: AMC Networks tells me that CEO Josh Sapan didn’t mean to leave an impression that he might help digital streaming services – and therefore promote pay TV cord-cutting — if Dish Network drops his channels. He really meant that he would only consider helping another traditional pay TV provider when he responded to a question about how he’ll deal with “other distributors who might want to capture subscribers who want access to (AMC’s) programming.” His answer: “We think that the potential absence of our service and services on any platform by definition creates a sort of competitive opportunity for another platform. It is a very competitive world for multichannel video. So we’ll watch it as it goes. Of course, we’re contemplating it and making all sorts of contingency plans.”
PREVIOUS, 8:40 AM: Talk about Mad Men, or even Walking Dead: AMC Networks CEO Josh Sapan vaguely hints this morning that he might promote pay TV cord-cutting if Dish Network follows through with its plan to drop AMC, IFC, WeTV, and Sundance Channel in June. Sapan’s making contingency plans, and they apparently include offering more programming to a streaming service — in effect, encouraging consumers to cancel their pay TV subscriptions. Dish’s decision “creates a competitive opportunity for another platform,” Sapan says. “AMC is among the most critical services one can have to succeed” in pay TV and in the streaming world. “We’re in a fairly strong position.”
It was a pointed rebuttal to Dish Chairman Charlie Ergen’s damaging comment early this week that he plans to drop AMC’s channels because set top box data shows they have low viewership — suggesting that other pay TV providers also might consider them expendable. Sapan says that’s bogus. “We think today AMC in particular is one of the most popular services on the television dial.” The real issue, he says, is that Ergen wants to force AMC to scrap its 4-year-old $2.5B breach of contract suit which involves Dish’s decision
Paris, 19 January 2012 – Josh Sapan, President and CEO, AMC Networks Inc., will deliver a Media Mastermind keynote address on 2 April at MIPTV 2012 (1-4 April). In his address, Josh Sapan will discuss the value of original programming and how to create entertainment brands of distinction in an increasingly competitive world.
AMC Networks CEO Josh Sapan told analysts at the UBS Annual Global Media and Communications Conference that he’s “exploring changing the mix of content on AMC” based on the recent success of its zombiefest The Walking Dead – and four non-fiction series he plans to introduce beginning next year. He wasn’t specific about how a revamped channel would look, though. “We’ll see how it goes,” he says. It’s easy to appreciate why he wants to shake up people’s perception of AMC. Pay TV companies currently pay about 25 cents a month for each home that receives the channel. But Sapan says that, with its many original shows, in a perfect world it’s “at minimum a 75 cent channel. …. We’re way underpaid.” He’s a realist, though, acknowledging that “we’re not necessarily going to get that tomorrow.” As a result, Sapan talked up his company’s efficient management of costs. For example, he says that his development costs are “modest.” Although it owns most of its non-fiction shows — “they’re not that expensive,” he says — for most of the shows on AMC “we have chosen not to 100% own.” Sapan says that ”it’s about risk appetite. … If a studio partner is going to come in and fund 30-odd percent of the cost, it’s sensible to de-risk that transaction.” Of course he has second thoughts about not seizing the chance to own AMC’s hit Mad Men. He wasn’t convinced that AMC would do so well with a talky series about ad execs in the 1950s and ’60s. ”It took everybody by surprise,” he says. But he was more confident about Walking Dead. ”That ownership decision was the wisest and best one,” Sapan says.
We’ll see whether the Street is more impressed by AMC’s better-than-expected profits, or disappointed in the worse-than-expected revenues. The cable network company reports 3Q net earnings of $40M, up 58.4%, on revenues of $283.9M, up 4.6%. Analysts thought they’d see revenues of $292.1M. But the earnings, at 55 cents a share, were far ahead of the predicted 44 cents. The company says that domestic ad sales “were essentially flat primarily due to the absence of Mad Men” which ran in last year’s 3Q.
The 3.9% revenue gain for the unit, to $258.3M, was driven by a 6.9% increase in affiliate fees mostly from rate increases. The flip side is that AMC had lower marketing and corporate expenses, boosting the unit’s operating income 24.1% to $99M. AMC had just the opposite situation in its interational operation. Revenues were up 13.8% to $30.7M, helped by higher theatrical revenues from IFC FIlms. Yet the operating loss increased 41.6% to $4M due to higher programming and marketing costs. “The core of our growth strategy continues to be our investment in original programming,” CEO Josh Sapan says. “The Walking Dead season two premiere, which was the highest rated dramatic show ever in basic cable history against key adult demos, and our performance in the 2011-2012 upfront, underscores the strength of this strategy.”
The company behind the cable hit Breaking Bad seemed to be breaking good for investors in its first quarterly earnings report since it was spun off from Cablevision in June. AMC reported 2Q net earnings of $27.2M, up 22.9% vs the same period last year, on revenues of $292M, up 12.3%. Earnings at 39 cents a share were short of the 41 cents that analysts expected; AMC says income from its continuing operations was down because it had $20M in one-time expenses related to a debt redemption from the spinoff. But the revenue figure handily beat the $282.6M that company watchers had forecast. Much of the growth comes from a 21.3% increase in ad revenue at the national networks group which includes AMC, WE tv, IFC, and the Sundance Channel. The group also saw a 3.8% increase in payments from cable and satellite operators. “With a record 31 Primetime Emmy nominations this year, we continue to focus on investing in quality original programming to drive ratings, differentiate our brands and provide value to our distributors and advertisers,” CEO Josh Sapan says.
Although analysts have high hopes for AMC Networks, the company is having a bumpy start on its first day as a public company. Shares in the owner of AMC, IFC, and We TV are selling for about $40 apiece, 8% lower than the market expected based on “when issued” trades for the company that Cablevision Systems spun off. That followed a report this morning from Barclays recommending that investors “underweight” the stock, which it targets at $32 a share. Also Maxim Group’s John Tinker downgraded AMC to “hold” from “buy.” The current trading price is too high for him although he says that AMC “is a terrific company.” He adds that he differs with other analysts who see AMC as ripe for a takeover. The fact that Cablevision’s Dolan family controls 71% of the voting shares means “this is unlikely,” Tinker says.
In conjunction with the spin-off, AMC said this morning that it completed its financing for $2.43 billion in debt. On its own, AMC “has the opportunity to further showcase each of its programming services and provide value to investors, distributors and advertisers,” CEO Josh Sapan said.
Wall Street has high expectations for AMC Networks as it prepares to begin its new life Friday as an independent, publicly traded company. Most, and possibly all, of the analysts following the owner of AMC, IFC, WeTV and Sundance have a “buy” rating on the stock, which Cablevision Systems is spinning off and will trade on NASDAQ under the symbol “AMCX.”
The company’s going public as its biggest channel, AMC, enjoys a hot streak. Mad Men is bidding to become the first series since NBC’s The West Wing to win the Emmy for Best Drama Series for four straight years. If The Walking Dead and The Killing also are nominated, then AMC could become the first cable network to have three candidates in that category. Another AMC hit, Breaking Bad, isn’t eligible this year.
Maxim Group’s John Tinker says that AMC has “done an exceptional” job of commissioning original series as he projects that AMCX will hit $34 in 12 months. He’s concerned, though, that AMC won’t enjoy most of the financial rewards from its hits. For example, Mad Men producer Lionsgate owns the show’s syndication rights. Tinker also fears that AMC’s collection of older movies compete too directly with Netflix. Cable cord cutting “is here to stay,” he says.
It’s no surprise, but significant nonetheless: Cablevision’s board voted to approve the spin off of its programming arm, AMC Networks — which includes cable channels AMC, IFC, Sundance Channel, and We tv. It will go public at the end of the month. The big question: Will CEO Josh Sapan be able to focus on AMC business? Or will he be distracted by squabbles between AMC’s Executive Chairman Charles Dolan and his son, Jimmy, who’ll be on the board?
Here’s the release:
BETHPAGE, N.Y., June 6, 2011 – Cablevision Systems Corporation (NYSE: CVC) today announced that its board of directors has approved the leveraged spin-off of AMC Networks Inc., formerly known as Rainbow Media, to Cablevision shareholders. Following the spin-off, Cablevision Founder Charles F. Dolan will become executive chairman of the new, publicly-traded AMC Networks. Mr. Dolan will continue in his present role as chairman of Cablevision. The company announced earlier this year that current Rainbow chief executive officer Josh Sapan will become president and chief executive officer of AMC Networks.
The share distribution will occur on June 30, 2011 to Cablevision shareholders of record as of the close of business on June 16, 2011. In the distribution, each Cablevision Class A stockholder will receive one share of AMC Networks Class A common stock for every four shares of Cablevision Class A common stock they hold as of the record date. Each Cablevision Class B stockholder will receive one share of AMC
Bethpage, N.Y., March 10, 2011 – Cablevision Systems Corporation (NYSE: CVC) continues to move forward with the spin-off of its Rainbow Media business. The company announced today that longtime Rainbow Media executive Josh Sapan will become president and chief executive officer of the new public company, and that it will be named AMC Networks Inc., following the spin-off.
The new AMC Networks Inc. will include national programming networks AMC, WE tv, IFC, and Sundance Channel; AMC/Sundance Global, the company’s international programming business; IFC Entertainment, an independent film business that consists of multiple brands; and AMC Network Communications (formerly Rainbow Network Communications), a full service network programming origination and distribution company.