James Dolan takes the mic: On AMC Networks’ earnings call, the owner explains his wife’s choice as CEO and discusses M&A prospects and streaming challenges as stock prices rise

AMC Networks Interim CEO James Dolan made a rare appearance with Wall Street analysts at the company’s quarterly results, where he discussed a major leadership change and strategy for dealing with a complicated operating environment.

When asked about M&A reports and whether he sees AMC Networks continuing on its own or merging with another company, Dolan said the priority now is to make adjustments so that AMC can become a standalone company. He later said: “It could be staying the course, it could be an M&A or a strategic deal. We are very open to all these ideas.”

At the start of the call, Dolan said his wife, Kristin, was chosen as CEO because the company’s board “after an ‘extensive search’ concluded that she was the best candidate.” The new CEO (who is divorced from James Dolan, though they remain close) was the former head of ad analytics firm 605 and a longtime senior executive at Cablevision. She will take over on February 27 in the latest major management shakeup at the parent company of cable networks such as AMC and IFC and a handful of niche streaming services. The company laid off 20% of its workforce and reported weaker affiliate sales and advertising results. Despite these headwinds, the company beat analysts’ expectations in the fourth quarter, with afternoon gains sending the stock price up 26%.

“Based on Kristin’s significant operational and executive experience of more than 30 years in the media and entertainment industry, including her history as an executive of subscription-based companies, the board has determined that she is the best candidate for this position.” He added that they have “a strong record of driving institutional change”.

Speaking of change, James Dolan also highlighted the current shift from wholesale to retail.

“Current mechanisms for monetizing content are not working,” he said. “The content industry needs to reorganize itself. We are seeing this now as most media companies begin to correct course to monetize more content and improve the economics of their business. We believe that major distributors and programmers will take the lead. AMC follows. Streaming is a retail business. That’s what [direct-to-consumer] Resources. For now, as the industry continues to evolve, AMC will focus on streamlining our organization, operating more as a retailer than a wholesaler, increasing cash flow and maintaining our strong balance sheet. At the same time, we will continue to do what we do best, which is to create great content.”

In 2020, when Covid brought streaming to the fore, “there was a lot of optimism about streaming,” Dolan recalls. “The thought process at the time was that a streaming customer was worth four or five hundred dollars … based on the idea that they’re a lot like cable customers, that they’ll stay with you for a long time.” all streaming players have realized that customers can turn subscription services on and off “with the click of a mouse,” a radically simpler process than in the old truck-and-box days when “you really had to work at it.” Streaming pricing “doesn’t reflect that reality that a customer can join, gobble up your product for a month, and then leave you.”

AMC Networks shares, which fell to multi-year lows a few weeks ago, exploded earlier today after the company’s strong fourth-quarter report. By midday, they were up 25% to about $26 a share, nearly triple their normal trading volume.

When asked about the overall consolidation of the industry whether or not AMC Networks is part of mergers, Dolan said he doesn’t expect another M&A wave similar to the one that reshaped the industry in 2018 and 2019. Most of 21st Century Fox and Discovery buy Scripps Networks.

“I don’t think the industry is going to take a strong consolidation move because they don’t know how to monetize the content yet,” Dolan said. “Once they reorganize and get a better handle on it and have a better strategy for it, you can see consolidation because there will be consolidation around building stronger products and a stronger customer offering and building a better company. On “At this stage, and this is just my opinion, I don’t see anyone responding to this. Without that answer, I don’t understand the rationale behind pursuing a consolidation strategy.”