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AMC Networks Wants More From MSOs

Sapan says relationships with show creators are good 9/15/2011 05:59:48 PM Eastern

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.

November