Josh Sapan: Small is Beautiful for AMC Networks

In our conversation, Josh details AMC's efforts to diversify during the past few years, with investments in international channels, in independent streaming platforms, and the build out of the AMC Studios ARM. He offers his thoughts on why AMC doesn't need to quote dominate the planet, as he puts it, to be successful. Jan CEO of AMC Networks, thank you so much for stopping by. Great thanks, wonderful to be here. We're at a moment when people are re examining, rethinking, reevaluating.

The headlines have been full of media m and A. You run the one of the you know, one of the really prestigious collections of great cable channels. AMC, Sundance, TV, WE, t v I, f C, BBC America, a really nice collection of channels small in the scheme of media that that has been making headlines for seventy billion dollar deals to bring companies together. How As you look ahead for the next three to five years, where do you see AMC networks competitive position? Where's your best shot to remain

a vital and competitive brand. Sure, so I think you've actually described, uh, what could either be described as up people or a frenzy in the media landscape, UH, perhaps being the perception of it being made to seem somewhat brighter because of M and A. UH And although fundamentals are shifting, the M and A captures everyone's attention and UH and lends a level of drama to the actual patterns of consumption and economic vitality related to those patterns

of consumption. So I think it can make the circumstance seem slightly exaggerated. So not to say that there aren't fundamentals and that M and A isn't undergone transition and therefore changing who's on first, so to speak. But so the way I would respond to that is that, um, we think that people like very good content, and that they follow very good content, and they follow it in changing patterns of consumption on different interfaces. But it is

fairly constant. Uh, It's fairly constant that people like what they like. If you ask anyone rhetorically, what are your favorite things, they could often answer it, it's a limited number,

and they'll find their way to those favorite things. So our point of view and how we've been operating now since we separated from Cable Vision spun off, which is now about eight years, has been to as a core principle focus on excellent content, and I'd like to think that we haven't been distracted by some of the very very near term rewards that are inherent in the media or television business that defy or contradict very very very

good content. And it's put us in fairly stable instead, which I can describe in more pragmatic circumstances relating to our manner of distribution and our success and distribution and our consumer appeal. While we've been doing that, we have been, however, diversifying in a way that we think is meaningful in response to the fundamental changes. And I'll be specific. So your app description was we're a series of cable channels. But today we are also an international company and we

use investing. Yeah, we spent a billion dollars to buy channels overseas, and that is connected to the fact that we're also a studio. And so we now have getting close to half a billion dollars in revenue or a big chunk of our economics coming from the shows that we own the underlying rights too, and can place on our own channels and ourselves others. So I'd like to say that we were a cable we were a cable channel company, and today we are a content company that

is that is relatively smaller and more boutique. I would say that with as a strength, with more agility and flexibility that has diversified its manner of economic exploitation to include what was the United States and is the globe, What was cable systems and is now in including the Internet, and what was uh an interface that had a channel lineup and now is an interface that is as frequently an app right and in that world, the focus of

somebody finding their favorite show or that hot new property that they that they've heard about through word of mouth, through recommendations through their friends, UM in that in that world, that focus on excellence becomes that much more important because presumably people are going to run, people are going to rise and seek out the premium, the exclusive, the distinctive. That's kind of been your your mantra. It has been our moentre. Who's an anecdote, and I hope it's not.

It's not meant to be self serving, but are not biggest channel called DBC America UM, which is at Comic Con today, parenthetically with Jody Whittaker being the first female doctor, which is fun uh and is also today at Comic Con talking about Killing Eve a little bit, which is a show with Sandra Oh and Jody Comber written by Phoebe waller Bridge. But that show premiered on what we would call today on a relative basis, a smaller platform, BBC America, and it actually either defied odds or even

defied gravity in terms of attention. Now limited number of episodes, but it was excellent television. And so I think it's the status that it has been roughly a decade or so since one TV show grew its linear ratings in every episode of its exhibition, which Killing Eve did. Now, admittedly they're relatively small numbers compared to The Walking Dead, but that was the trend, and you're in the television writing business. Uh. Television critics gave it more recognition than

they did any other TV show this year. So it's just an example of good or excellent finding its way because people are paying a lot of attention and actually the barriers that used to cause them to only go one way, for instance, the channel that they were on and the night and the time and the night on the time or gone. And And I also think that what replaced that paradigm, which is became the almighty algorithm,

is actually showing signs of somewhere in fact. And I think that personal recommendation and curation as it relates to Berthal recommendation is becoming more important in the face of machines indicating what you might like. That sounds labor intensive. I would beg to differ. I actually think that um that. Uh. I'll say it rhetorically. I wouldn't tell my friends to go watch something unless I really thought they would like it. Uh,

I wouldn't. But a machine might tell you to watch something if it's indications are that you might like it. So I think that real people, real humans us are relying increasingly more on personal reference and recommendations, and frankly to a degree a of course less than watching what's on at nine, because you were watching what was on at eight, but also a little less uh by watching what an algorithms suggests you should watch. And let me

ask you the question. I don't mean to put you on the spot, and I'm supposed to being interviewed, but I think you might answer that you pay a little bit more attention to what people who you respect and like and think have good screen criteria are more than what pops up through some and I don't mean to make it sound poor, but through essentially a formula. It's

absolutely true. And I would just like to say that I distinctly remember speaking to you a couple of years ago and you said, I've just seen this great play at the public It's called Hamilton's It's crazy. It's so good.

So so you're your your recommendations right higher. But to your point, yeah, it's so that's you know, it's it's it's interesting because uh, you know, just when you thought it was safe to go back in the water, Uh, just when you thought it was safe to premier a show and deliver an audience because it was preceded by a big show. Came the emergence of something that made everything on demand easily accessible, which put pressure on that

old system. Didn't go away. And now just when you thought you could safely rely onto ubiquitous recommendation algorithm, through a good uh development of that sort of machinery, I think comes the beginning, I would say, of what might be exhaustion with it, and it's enhanced that exhaustion by degrees, if you will. I wouldn't call it a suspicion, but by degrees of evidence in social media that what you're getting is not what you should be getting. And you

see that. Obviously book Head labored and continues to labor under some of the issues related to that, and you see in other platforms then beginning to try to adjudicate what pleasing they need to do. And I actually just think it's the not maybe the beginning of some questioning and greater personal authority in the manner in which you make your choices and curation. Right now in this world

a wash in content curation. Good curation is more valuable than ever, and that's kind of what you offer people through through am C, through Sundance as a brand, I think I think the answer is yes, and I wouldn't limit it to us. I mean, there are other brands that are very trusted for what they do. And you know, everyone has their favorites. I won't name mine, but everyone. If you said what channel or what frankly magazine, UH would you go to just because it's there, everyone would

come up with their answer. And I do think that we've taken pains to establish that if you see something on a MC, it's going to be like this. And it may be as different from Madmen, Breaking Bed, Walking Dead and currently Lodge for You Nine with Wyatt Russell, or diet Land with Julianna Margalie's or The Terror with Jared Harris, but I think you're gonna see a very well constructed drama no much, no matter what the circumstances.

And I think on BBC America, whether you're seeing Blue Planet two or Planet Earth, which you're obviously nonfiction, or you're seeing Killing Eve, you're seeing something that stands up. And I think on i f C, if you're seeing Portlandia or Documentary Now, you're seeing something that is idiosyncratic,

comedic and reliable in what it delivers you. And there's extraordinary benefit a of course in the content standing for itself, but also in the frame of reference meeting expectations right, and and that I'm sure that puts a that puts a bar on your programmers, because that puts a high bar for your programmers in terms of meeting those expectations set very high by you know, little shows like mad

Men and Breaking Bad and Rectify on Sunday's TV. Do you worry about the future of the linear TV business, the future of the you know, getting people to the set at Thursday at nine or Sunday at eight. Uh? Yeah, I think the answers yes. I wouldn't say worried about the future of it. I say that it's undergoing transition. And um I think that. Um it's a curious question and a rich question and to be a fascinating question

and an imperfect analog. UM is terrestrial radio, which competed, of course with satellite radio, which offered diversity and essentially a cable paradigm like alternative first in the automobile, UM, where you could have incredible diversity on a vertical basis. So you could listen to a political channel and that was I would say it wasn't supplanted, but it was

hugely influenced by um streaming services. Uh so take Pandora bad analogy, but Pandora offered you something that was customized for you, and then Spotify offered something different, and Apple Music offered something different than Amazon offered something different related to price and creation. To rest you, radio is hardly dead. To rest you, radio is a different animal. And by the way, podcasts of course offered talk radio, if you want to call it that, in a completely different incarnation.

So so I hope I'm not going on too much length about it, but it's a fascinating subject. So our engagement with linear television in the US is mindful of the fact that it's taking on different proportion and a different nature. But we do think that it has important and important place in the world, just a very different place in the world, and it will have different characteristics. And you really prospered, you know, I know from covering

your earnings. I mean you've really prospered, prospered through content licensing. In the last couple of years, You've seen really meaningful revenue coming through Obviously, that's a that's a calculation as to how much of your content that you exhibit first on linear platforms, how much do you how much do you license out into other buyers that want your high quality content to bring subscribers and eyeballs to their platforms.

How do I know? Over the years you've had you've gone back and forth a little bit, but in general you have made you have embraced the s P o D world and made shows available on a season delay basis. Is that are those calculations becoming more tricky now that you are sort of seemingly kind of tiptoeing into your own streaming platforms. So you know, I think you you characterized it rather perfectly. I think that, um, we set

ourselves up to evaluate it on an ongoing basis. Not surprisingly, we made a calculation and arrived at sort of a protocol if you want to call it that, for how to approach that which was just what you said, which is to take advantage of the economic reward that allowed us to pour more money into production by doing licensing

to third parties, which continues. We now have a few several streaming services which have grown in terms of our own the ones that we do at our own hand and ones we've invested in external to those, and so we now have scale enough for the economic consideration of whether the show as we make should go to those streaming services. And so it's become a more practical consideration economically and so called strategically to place some of that

content perhaps on those streaming services. So I would call it a work in progress. Um I think others who have a different media mix and different proportion and perhaps different ambitions in terms of size are reacting to it somewhere differently. We were earlier to the activity. It's been now five years of subscription video on demand services with owned contents that we were there before some others were, and but that's appropriate for the scale of our business,

for our size. We actually don't need to dominate the planet in order to be extraordinarily successful, and so we've also put that into our calculus. But the answer is yes, we actually give different consideration to where material that we make may go in the future. And you reference your investment you've been you bought, you bought a big chunk of Robert Johnson's company that has the Acorn streaming platform is known as a home for British drama. You own

BBC America. The map there seems to make a lot of sense. Can you talk about what motivated your investment in Robert Johnson's company? Sure, so, so yeah. We we operate a tow services ourselves that are of one could call them niche or decidedly focused editorial area. One is Sundance now, which focuses on sundance like material it barely needs more explanation to this called Shutter, which focuses on what's broadly called genre material, and both have been growing

very well. We then made an investment in the company's Bob Johnson's company. It bears the name r l j E. It's publicly traded. It has two streaming services. One is called Acorn, focused on British mysteries, and it also owns the underlawe assets of Agatha Christie and something called UMC

or Urban Movie Channel targeted for urban audiences. And they have been growing extremely handsomely, and so we had the deal was warrants initially, it's all public and we've purchased more of the company and we now have a offer to to take the company private. So that's actively being

considered because we'd like being in the streaming business. And then we set up AMC Premier, which was the first of its kind, uh so called Inside Baseball World in ecosystem with Comcast Acfinity subscription video on demand service that just launched on YouTube tv last week. So when all we have six and that service, just to clarify, offers viewers the linear basically the linear streams and on demand

streams of your five channels, but without commercials. It's actually of a MC and then and uh so it's a MC and then selectively we have offered because it's sympathetic with our m v PD partners, we have ah put some series on that are binge able at time of premiere. So and that's the calculation that we're making about where we and our MVPT partners can experience experience the greatest value development. So and we'll do things differently as we

go forward. Uh and I think we'll see wider distribution for that service. But it's nice to say that, and I should have perhaps mentioned it earlier. All of those subscription video on demand services are experiencing a good pace of growth, and we're pretty economically minded about the manner in which we invest in them. So it's not only linear channels that were are beginning and international exposure and studio and owned. It's now subscription video on demand that

we have equity in. So we like the composition of our company. Is the plan with the Robert Johnson Company, is the plan to keep Urban Movie Channel and Acorn, to keep those as those distinct brands, or might you might you rebrand them into a more sort of general entertainment service at some point. The plan is to keep

them as distinct brands. We think that that company and the people who operated have done a magnificent job developing those as being a top choice of people who like that material, and it's evidenced in the numbers and in

the pace of growth. By the way, I should mention not parenthetically, that we're also partners with our friends at the BBC in another streaming service called brit Box, if I didn't mention it, and so that's a separate flavor of British content now streaming commercial free on the internet and I t V as a partner in that. So when I mentioned six, I was probably didn't count the sixth, but that's what makes at six and so we like and enjoy the answers. Yes, we think they're doing a

wonderful job. We think Acorn is perfectly articulated and very well developed. And we think Urban Movie Channel is in a wonderful position to be the authoritative brand both for creative people in that community and for consumers in that community. And there has yet to be a declaration and an implementation of real creative ambition by and for that community. So that's a wonderful ambition that we hold with our with Bob is um what what has the uptake been

on the AMC Premier package? You know, it's still relatively early days, but we're very encouraged by what began just several months ago and is on the Comcast Exfinity platform alone and is experiencing a good number of subscribers. Um and was followed raple BYFX doing the same plot, if you will, on the Comcast Expenity platform. Has it mean

Comcast has demonstrated its willingness to experiment? Has it been a tougher conversation with other m v p d s to get them to offer You know, we we actually have been focused fairly, uh somewhat singularly I will say with Comcast, because we've been building it with them, uh, if you will sort of there in our baby and UH and so we have focused our attention fairly specifically on and some of the nuances of where you come into the system, how you find it, how you connect,

how you're identified, how you pay, have degrees of complexity. So we've been focused on making that a very good experience. So we've yet to really commence actively UH seeking wide wide distribution Florida. Is it um it costs about six bucks a month? And is the split that you do with Comcast with your distribution partner, is it commensurate to like a pay TV like with like an HBO or a showtime. You know, we have our own very happy

arrangement with Comcast. As you might imagine. The sensitivities on splits, as with many things in commerce between business partners get UH, are subject to great care of expression. The content business and especially you know, the very distinctive and innovative fair that has made you know that put AMC on the map. Um,

that stuff doesn't It never has come cheap. But boy, the arms race that people are talking about in content right now is so much is fueling a lot of the M and A people are trying to, you know, ensure that they have big, heavy pipelines of creative people writing nine figure checks to lock up to lock up producers.

Can AMC play in those waters? Yeah? You know. Um, the answers are definiti I believe, yes, and if I may, I think that um it is it is true that that arms race so called that you mentioned is occurring, and I think that there's a sort of panic in the streets about that. Um. We have been running, I will say bluntly, a very different playbook, and so we are not seeking to produce a hundred and eighties series in a year, and we look carefully when we do.

The Terror for example, So AMC was a limited series called The Terror. It's an anthology series and will reincarnate it this I don't know if you saw the last one. It was about a ship sailing through the Northwest Passage. It was pretty good at the Great ratings, it was well reviewed. Um, there'll be a terror too, if you will,

thank you, thank you for that word. And so we so we didn't rush out and deliver a nine figure check to someone for that or for diet Land or for killing Eve, or for Lodge forty nine, who Paul Giamatti and Dan Carry did for us, or for Fear the Walking Dead, or for any show that we have on the air. We actually operated within I think, very

reasonable and highly disciplined economic parameters. I'd like to think with true, true, true respect for the creative people involved and the desire for them to bring to life the stories they wanted to tell, uh as well as they possibly could. And I hope Marty Knoxon would say that we helped her realize diet Land, and I hope that Hankers Area would say that we brought rock Meyer to life if c a character he's been doing since he's fifteen, uh,

to life when no one else would. And it's not because, uh, we we paid a big check to someone. It's because we believed in Funny or Diet, which we own a piece of, and we believed in the character, and we believed in Hank and we brought it to life. So we didn't buy our way into creative excellence. We actually sought creative excellence, and we sought stories that were as

yet untold and unmade. And I actually think that, uh, if you go back and run an inventory of everything that should have been wonderfully successful on television because it's pedigree was should have led to great success. I think what you'll find is a pretty modest batting average. Yes there are you'll find Dick Wolf, Yes, you'll find somebody else.

And you'll also find and I don't want to name the name a list of road kill that would cause you to think, not once twice, or but perhaps never to ever do that, right, Right, there's a lot of you know, high priced recruits that that don't always that don't always pay off. Yeah, And there's nothing wrong with it. I don't defame anyone from pursuing that if they want to. I just don't think it's a necessity if you're quite

serious about making wonderful creative material. The business of creativity is so you can't you can't plan for it, you can't, you can't forecast it. You just can't. You know, you just don't know what great idea is going to walk in the door. And I would imagine is some of that would you say Madman is kind of still in North Star for a MC in terms of what's possible.

Oh yeah, I think I think. Look, I think it's you know, they're a bunch of sort of north stars, and you may find my list of both ambitious and not in a certain sense. But so I think Madman was a great experience in that because it was unlikely and it was quiet, and it was left a big mark. And I think, uh no, uh Weiner's a genius. And I think that Vince Skillagan wrote a story that nobody

wanted to do and we did. And Better Call Saul, Yeah, and and and Better Call Saul lives on And I think is not a prequel that takes its invitation to just slop the characters up there. I think it's breath taking, lee different and ever more unlikely almost than Breaking Bad. And so when when um Jim Gavin who goes to a series of short stories about sort of a slacker in southern California and teamed up with the producing team of Paul Giamati who you know as an actor, and

Dan Carey. We thought the stories were wonderful and we thought Jim gavin take on the world was very fresh. And by the way, it is high risk because it's a TV show that doesn't have the standard punches and so but we're in love with doing it. I'm so sorry forgive me. I'm as I'm acting as if you and anyone who's listening knows everything I'm talking about. So thank you for anchoring me to the world lodge for you.

Thank you so much, Cynthia. And but I think that those and I think that those things, I actually think people get it, you know what I mean. I think people who watch television and when they watch a channel are I'd like to think if you give them an enormous amount of respect, they will understand if everything is not a hit, but they will give you great credit and reward and some things will be big and little hits for being true to respect for them and respect

for story and respect for the craft. So I think I think it's not only sort of purposeful and principled. I think it's smart business. It's it's a good will that that you build up with that audience that you can then you know, I think it's true. I think it's it's just what it is. What uh it is the the the people who inter the world, the construction that used to intermediate brands. I believe in a standard marketing sense, meaning what's our talking points, what's our position?

On this. How are we going to bring this to market? That disrespected people and believe that you could control the outlet and the assessment I think is of a different time. I think it's anachronistic, you know what I mean? Yeah, But also the fact that you could sort of quote position something and get people to leave a products not good or good when in fact it's not good at a time when the business is changing so much, What where do you see am C going in the next

three to five years. Would you say continued obviously content international is there? What would you say is your plan? Yeah? So I can tell our plan is to um. The plan is to walk and chew gum and by which I mean that we will need to continue to make great content that people like, uh and that is fundamental, but we will need to be ever mindful of the different manners with which people are engaging in screens and

interacting with the world of content. So, as I mentioned, we moved from a cable channel paradigm to the US international to added studio to international, and added commercial free streaming to Studio to International, And we just launched the game last week related to the world if They're Walking Dead that had instant success and so and we have these niche subscription services and the Shutter service just lost by the way, uh four days ago, a podcast actually,

and a merchandise store. So so we will have to undergo an evolution. But I think, like the best brands that began in a media um that had uh commonly referred to as digital incursion or competition, that can be very challenging. I think the ability one needs to adapt. You have to be adept at it and embrace it, but you also have to have the good stuff that allows you to embrace and adapt it and have people

follow you. That's the plan. If that wasn't too conceptual, but and that's that's Those are lofty goals and hard to achieve. But you know, you've had a pretty good track record so far. My last question for you is UM you do have AMC Networks does have a controlling shareholder in the Dolan family. What do you think and I'm sorry to ask to make talk for you. How do you think that they're feeling about the landscape right now? Do they like what they like the hand they have?

Do you think they would be amenable if somebody would have called up big offer for I can't speak to them. We take very seriously the idea that our job is to provide return to shareholders. We do we we the shareholders own the company. UM So that is a serious, uh consideration of ours and not in any way off handed. I believe that they own the company and we have to reward them. Uh. So I can't speak for I

can't speak for the Dolans. We are um with every fiber of our body and effort, attempting to execute the plan that we formulated and adapt as we go forward and um and we do see a pretty interesting and rich horizon, uh if we can be successful in executing it. So there's an awful lot of work to do to execute that. I can't really give you a good answer to the larger considerations, which is which would be their consideration.

It's all about the shows. It's all about the shows, Jess say, Pan, thank you so much for your time. It's always it's always really intellectually stimulating to talk to you. And I mean that well. I thank you and thank you for providing the proper name references so someone has some chance of understanding what I was talking about. No problem, we'll send them to the Internet. Thank you, okay, good,

thank you, thanks for listening. Be sure to join us next week for another episode of Strictly Business.