AMC Networks Wants More From MSOs

Sapan says relationships with show creators are good

By Jon Lafayette -- Broadcasting & Cable, 9/15/2011 5:59:48 PM

AMC Networks is trying to keep a lid on the costs of the high-profile hits on AMC, but it thinks cable operators ought to be paying much more for the channel.

CEO Josh Sapan, speaking at an investor conference for the first time since AMC Networks was spun off as a public company from Cablevision systems, says AMC is worth 75 cents a month per subscriber, about double what the networks gets now.

"The AMC that a distributor purchased and contracted for 4½ years ago is actually nothing like AMC today. It's literally almost a different channel. A channel without Mad Men, Breaking Bad, Walking Dead, The Killing and Hell on Wheels is not a channel that has five of the best and most important and most widely acknowledged shows on the television dial," Sapan said at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference Thursday. "We think it is a channel that is deserving of a rate, if you look at it independent of history and incumbency of 75 cents."

Less than a third of AMC distribution agreements will expire before the end of 2012 and Sapan acknowledged that value on the screen can be very different than the result of negotiations in the real world.

Over the past few months AMC, a network that could do no wrong, has gotten some harsh publicity because of contentious talks with the creators and the producers of its acclaimed shows. First it had a contract dispute with Mad Men creator Matthew Weiner, then Sony shopped Breaking Bad to other networks because it was unhappy with the terms AMC was offering. Finally Frank Darabont stepped down as show runner of The Walking Dead, AMC's highest-rated show.

Asked about the situation, Sapan told the conference, "We really admire and revere our partners who make these shows. And we are also business minded so we look at the economics of the shows. If a show succeeds and runs for four or five years, and there are renewal negotiations there tends to be generally some tension about money. And so we're business people and we negotiate to do the right thing and to keep our costs in line and keep our rights as broad as possible."

Sapan acknowledged that can create tension, "but overall we have, I'd like to think, a harmonious relationship with the people who make our shows."

Like other media executives, Sapan said that the worries about a downturn in the economy have not affected its advertisers. He said the scatter market was up and that the upfront had been strong.

The upfront was the first for IFC, which is making the transition from network that was commercial free to one with traditional spots. Sapan said the switch was going smoothly.

"It is going exactly according to our expectations and we are finding that IFC is appealing to categories of advertisers that want young adults, and particularly young men," he said.

Sapan has overseen similar transformations with AMC and WE tv. But he said there were "no immediate plans" to put commercials on its Sundance Channel.