AMC Diversifies Advertisers, Looks To Expand Distribution

Banking on the final episodes of “Breaking Bad” bringing boffo ratings, AMC sold the bulk of inventory in the upfront, but held back “a few units” for the scatter market, according to Ed Carroll, COO of AMC Networks. The last eight episodes debut Sunday and ratings over the first few weeks could determine pricing and spur robust demand for spots in the finale.

It’s likely AMC employed a similar strategy for the final “Mad Men” season next year.

The company said this week it was able to command increases in volume and price in general in the recent upfront deal-making, where it went to market with all four of its networks for the first time. Sundance, which has had a sponsorship model, is moving to a traditional ad-supported one.

It was able to diversify its collection of advertisers in the market, according to CEO Josh Sapan. The company had about 1,000 across its national networks at the end of the second quarter.



Both Carroll and Sapan spoke on a call with investors this week. Sapan spent considerable time on distribution revenue. The company has renewed about 50% of its deals with cable, satellite and telco TV operators over the past year and a half and has deals with several small operators coming up.

With regard to the negotiating to come, Sapan said the quest for “fair value” has the company believing “it's possible that we might encounter some disruption in our service in connection with these renewals as we look to move them in line with our other agreements. Under any circumstances, however, we don't expect any potential disruption to have a significant impact on our financial results, as these platforms represent a very small percentage of our total affiliate base.”

As AMC Networks has looked to expand distribution for networks, it has followed industry practice of horse-trading, writing in a government filing: “In negotiating for increased or extended carriage, we have agreed in some instances to make upfront payments in exchange for additional subscribers or extended carriage ... or agreed to waive (payments) for a specified period or accept lower per subscriber fees if certain additional subscribers are provided. We also may help fund the distributors’ efforts to market our channels.”

Opportunities for greater reach in exchange for fee relief for subscribers applies mostly to We tv, IFC and Sundance Channel, as AMC has wide distribution.

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