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Sapan: OTT Will Grow, But Guided By Market

AMC chief says nets are priced right for OTT, traditional TV 6/02/2016 2:15 PM Eastern Last updated at 6/02/2016 2:26 PM
AMC Networks CEO Josh Sapan

As the number of over-the-top players is expected to proliferate, AMC Networks CEO Josh Sapan said his channels are positioned perfectly to weather the distribution onslaught with a mixture of high quality content and attractive pricing.

 

AMC Networks channels – AMC, IFC, WeTV, Sundance and BBC America – are already part of the top OTT services available, including Sling TV, Sony Playstation Vue and Hulu. Sapan said the company’s strategy of producing and owning high quality content and wholesaling it to distributors at a relatively low price has been a key component of its deals with OTT providers.

 

Sapan said AMC channels have become “happy inhabitants” of OTT services like Sling TV and Sony PlayStation Vue, as well as SVOD services like Netflix, and that the inclusion has added to the ubiquity of its channels.  

 

“We look at the possibility of other ones with a pretty welcome eye,” Sapan said at the Sanford Bernstein Strategic Decisions conference in New York. “I think video retailers will be guided by the market.”

 

Sapan said that no matter the distributor, the reason for being in the TV business is to make money. And with high quality shows like The Walking Dead and Portlandia offered at a relatively low price, AMC should be able to survive even the skinniest of OTT bundles.

 

“They have to succeed,” Sapan said of OTT service providers. “They’ll do what they need to do to succeed and that may vary from what they do day one. They’ll be an evolution to each of these services. They’ll find out what price they can sustain; they’ll find out what is essential to have in; they’ll find out questions like the importance of [having] sports or no sports; they’ll find out what price means.

 

“We take some comfort in that we have shows that are very important to some people,” he added. “If I was a video retailer I would pay a lot of attention to that.”

 

Sapan didn’t say how much AMC charges distributors for its networks, but according to SNL Kagan, the channels average affiliate fees range from 13 cents per subscriber per month for WeTV to 40 cents per subscriber per month for AMC. That stacks up against monthly charges of more than $6 per month per subscriber for ESPN and $1.60 for TNT, according to SNL Kagan.       

 

While Sapan believes his channels are undervalued, the networks have received some pushback from distributors when the networks try to close that gap in carriage renewals. The networks avoided a blackout in January after reaching a deal with the National Cable Television Cooperative, which represents more than 700 small market cable operators. The NCTC had objected to what it believed was an exorbitant price increase, but the two sides managed a compromise.

 

Back in 2012, Dish Network dropped AMC, IFC, WeTV and Sundance for four months , with chairman and CEO Charlie Ergen claiming his customers didn’t watch zombies in New York City, referring to The Walking Dead. That dispute, which some claimed had other reasons besides high carriage fees, was eventually settled in a deal that many believe was heavily in AMC’s favor. 

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