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Charlie Ergen and his Dish Network (s dish) spent their Wednesday earnings call explaining to investors why they don’t need AMC Networks (s amcx) channels.
But a day later, during its own second quarter Come to Wall Street address, AMC Networks struck a contrarian tone: Not being in Dish’s 14 million homes since July 1 didn’t affect Q2 earnings, but Q3 will be a very different matter.
“Although Dish Network’s termination has reduced the company’s total subscribers by approximately 13 percent, the impact on our (cash flow) and operating income, if it continues, will be materially higher,” the company said in its Thursday earnings release.
As for AMC’s second quarter performance, it wasn’t too shabby, with the company reporting a 53 percent spike in profit to $41.5 million on a 12.2 percent increase in revenue to $327.6 million.
Key revenue drivers remain ad sales and purchases of AMC’s critically lauded series, including Mad Men, Breaking Bad and Walking Dead on disc, download and streaming.
Relative to other cable conglomerates, AMC Networks gets a smaller portion of its revenue from pay TV affiliate fees — an amount that totals only around $418 million a year, according to a memo put out last week by Lazar Capital analyst Barton Crockett.
With shows like Walking Dead becoming mainstream audience hits — the zombie series’ second-season premiere scored the biggest audience ever for a basic cable series last October — AMC is trying to significantly increase its carriage fees in renewal talks.
But the conglomerate, spun off from Cablevision last year, claims it never even got to plead its case with Dish before the satellite carrier pulled its AMC flagship channel, along with the smaller IFC and WE TV, off its service on June 30.
AMC still insists that Dish is trying to drum up leverage for a separate legal matter — Cablevision and AMC are suing Dish for $2.5 billion for dropping the now-defunct Voom HD channels in 2008. Dish was ruled to have destroyed evidence in the case, which goes to trial in September.
Also read: AMC – “Dish never even talked rates with us”
If this is indeed factoring into settlement negotiations, Dish is doing little to reveal any progress made.
On Wednesday, Dish co-founder and chairman Ergen ramped up the rhetoric as only he can. Turns out the Englewood, Co.-situated Ergen family isn’t a fan of AMC series, even though they’ll collectively be up for 34 Emmys next month.
“I’ve had satellite television for as long as satellite television has been around, and there’s never been one minute that I know of anybody in my family, or anybody who’s came to my house, has ever watched one second of any of those channels,” Ergen told investors Wednesday.
“They’re critically acclaimed but not viewed as much by our audience,” he added. “And our customers can go to iTunes and get ‘Mad Men’ the same time it’s on.”
Ergen also claimed that Dish could pay the entire bill for his subscribers’ purchases of AMC series on iTunes and still come out ahead of paying AMC’s increased licensing fee.
Of course, it’s still early August. Ergen’s position could change on or before Sept. 18, when the Voom HD trial begins; or on or around Sept. 23, if Mad Men and Breaking Bad clean up at the Emmys; or on Oct. 15, when Nielsen’s Fast National ratings appear for the third-season Walking Dead premiere the night earlier.
Then there’s Dish’s own Q3 earnings. In an SEC filing made several weeks ago, Dish revealed that it only lost 10,000 subscribers in the second quarter, beating analysts forecast. It will no doubt be interesting to see what the company’s subscriber churn is during the current quarter with AMC not around.