AMC Networks Upbeat on SVOD as Costs Escalate

When AMC Networks acquired home entertainment distributor RLJ Entertainment for $65 million in 2018, the primary attractions were the company’s over-the-top video services Acorn TV and Urban Movie Channel, in addition to majority ownership of the Agatha Christie IP library.

A year into ownership of RLJE, AMC remains upbeat on SVOD, which include horror-based Shudder and Sundance Now, despite increasing costs associated with supplying original content to the standalone subscription services.

AMC reported that its “International and Other” business unit, which consists of AMC Networks International; IFC Films, independent film distribution business; Levity Entertainment Group, production services and comedy venues business; and RLJ Entertainment, including SVOD, generated second-quarter (ended June 30) operating loss of $27 million, up $16 million from an operating loss of $11 million during the previous-year period. Revenue increased 22.4% to $180 million.

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The increase in operating expenses were primarily attributable to the acquisition of RLJE. Operating loss also reflected restructuring and other related charges of $17 million recorded in connection with the reorganization of the direct-to-consumer businesses.

Regardless, CEO Josh Sapan said AMC is seeing “very healthy rates of growth” among the SVOD services.

“As these services gain sufficient scale, we have been increasingly populating them with original content, which has been resonating with subscribers and is driving our momentum,” Sapan said in a statement. “As we continue to remain focused on creating sought-after premium content — which propels our entire enterprise — we believe direct-to-consumer, along with owning more of our intellectual property and expanding our studio, represent significant growth areas for us.”

Meanwhile, RLJE, which also distributes packaged and digital media, recorded Q2 net revenue, operating loss and adjusted operating income of $26 million, $2 million and $2 million, respectively. For the six months of the fiscal year, net revenue, operating loss and AOI reached $48 million, $5 million and $2 million, respectively.

Finally, AMC recorded adjusted operating income of $2 million related to Agatha Christie Limited, and AOI of $3 million through the first six months.

A reboot of ACL-licensed “Murder on the Orient Express” generated $9.6 million in combined DVD/Blu-ray Disc sales for 20th Century Fox Home Entertainment in 2018. The movie, featuring an ensemble cast led by Kenneth Branagh (who also directed), generated Fox worldwide box office revenue of $346 million in 2017.

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