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AMC Defends Programming Migration to Netflix

8 Nov, 2012 By: Erik Gruenwedel

AMC Networks Nov. 8 defended the premium television platform’s decision to license programming to Netflix, calling the subscription video-on-demand service integral to luring and retaining viewers to its affiliate partners.

AMC — like Starz, HBO and Showtime — is carried by third-party cable and satellite TV operators delivering licensed and proprietary movies and episodic programming. AMC hits include “The Walking Dead,” “Mad Men,” “Breaking Bad” and “Hell on Wheels,” among others.

Indeed, digital and licensing revenue accounted for a 17% year-over-year third-quarter (ended Sept. 30) revenue growth to $332.1 million.

“Some, but not all of our shows will appear on Netflix during the term of the agreement, and we’re not at liberty to discuss the details of the agreement,” CEO Josh Saban told analysts during a fiscal call. “In general you can assume that most, but not all, of our shows will go to Netflix. And depending on their nature and editorial type, we will be rewarded.”

When asked how offering programming to SVOD impacts transactional VOD agreements with iTunes and Amazon Instant Video, COO Ed Carroll said third-party production partners on some of the shows control distribution rights to electronic sellthrough and rental resulting in different revenue splits.

“Generally, our philosophy on EST is that for the consumer it is a very non-economic way to watch TV shows by paying a relatively high a-la-carte fee,” Carroll said. “If people choose to download an individual episode, our data seems to support the idea that those folks are more likely to [also] see the shows on the [MCVD] channels of our networks and affiliates.”

AMC would not disclose EST revenue in the quarter.

AMC subscribers declined 12 million in the quarter largely due to the absence of satellite TV operator carrier Dish Network regarding a litigation matter.

In fact, the dispute — which involved issues over the failed Voom HD channels in addition to retransmission fees, was resolved in the current quarter — resulted in net income declining to $36.6 million compared with net income of $40 million last year.

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