Sapan: AMC Underpriced By Traditional Distributors

Low fee helps land spots on new skinny bundles
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AMC Networks CEO Josh Sapan said that when it comes to affiliate payments, AMC is “dramatically” underpriced by traditional video distributors.

Speaking at the Goldman Sachs Commuicopia conference in New York Wednesday, Sapan said traditional MVPDs pay 25% of what they pay for other network groups.

“They think we’re more valuable [than other groups], even at 25% of what they’re paying for others,” Sapan said.

Related: AMC Networks Ad Sales Chief Arlene Manos to Become President Emeritus at Year-End

At a time when analysts and investors are concerned that affiliate revenue growth will slow or go down because of industry consolidation or cord cuttings, Sapan assured the audience that AMC’s revenues were heading in the right direction.

AMC’s networks, including AMC had very low affiliate fees until the company began its strategy of airing and owning more high-quality original content, such as Mad Men and Breaking Bad. With The Walking Dead, the company has a must-see show that means cable operators must carry it, giving AMC more leverage.

Even so, Sapan noted that change doesn’t come fast in the cable world.

Related: ‘Feed The Beast’ Canceled at AMC

“We think we’ve had a pretty good rate of affiliate fee growth over the last several years against the backdrop of a very consolidated world,” he said. “We think we have a strong look at the future and it represents good growth.”

Sapan noted that there is an advantage to having a low-cost, high value network group at a time when old and new distributors are creating new skinnier programming bundles.

He said that all of the AMC networks will be part of AT&T’s new service and is already a big part of Dish’s Sling and Sony’s Vue.

Related: AMC Earnings Lower Despite Operating Gains

“We’re flattered that they’ve chosen us in each case. They haven’t chosen to include everybody,” he said.

“Beyond the flattery I would say it is an indication of what I just mentioned,” he added. “They are doing a dispassionate evaluation of where there’s value for the money and what the consumer really wants. It’s a bit of a new game. It really is a jump ball.”

Those new distributors value AMC because it reaches a younger audience with shows that they are passionate about.

“They can name them [the shows on AMC]. I think people know what’s on our channels, and they’re often among their favorites, be it Preacher, be it The Walking Dead, or Into the Badlands,” he said. “I think that’s not always the case, particularly with other basic cable channels.”

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