Notably AMC makes a lot of money by bundling 48 hours of unwanted programming alongside its flagship station.
to get AMC on your network, you also have to accept some of AMC Networks other products, such as WeTV and IFC. They can lose a little money on AMC itself as long as advertising on their other channels makes it.
> Notably AMC makes a lot of money by bundling 48 hours of unwanted programming alongside its flagship station.
How does "unwanted programming" make money?
> to get AMC on your network, you also have to accept some of AMC Networks other products, such as WeTV and IFC. They can lose a little money on AMC itself as long as advertising on their other channels makes it.
If WeTV and IFC are "unwanted channels" by viewers, how would they make money on advertising?
In the 80s/90s before Steam there was an arms race to ship smaller and smaller floppy disks/cdroms/manuals into ever larger cardboard boxes to "software stores" (The original "app store" I guess). In the old days you'd get something like Turbo Pascal or whatever in a fancy box with binders and manuals and stacks of floppy disks in cases shoehorned in like sardines, and by the end of the battle before retail software died, you'd have a giant empty box four times as big with a CD in a paper slipcover and a single sheet of paper. The idea was your competitor can't sell if there's no space for your competitor...
Because of drunks, sleeping people, crazy people, senile people, high people, you make a certain small fixed amount off every channel. You could broadcast a blank black screen or an infomercial and about 1% of the population would "watch", or at least you can bill the advertiser for that.
Old story in retail. Food stores are the worst. Quarter century or so ago I just about saw reps in near fist fights at shelf resets because another rep was encroaching on "their" space.
It's called bundling. AMC knows that their AMC network is very popular. People love Breaking Bad & Mad Men & The Walking Dead. So AMC says to DirecTV: We will give you AMC and charge you $0.75 per subscriber. But wait there's more! If you want AMC (and you do because your customers demand it) then you also are required to carry WeTV and Sundance and IFC and pay us $0.25 per subscriber for each of those networks!
So now, with the $0.25 per subscriber subsidy, those networks have lower viewership numbers they need to hit to be profitable.
I chose DirecTV for my example because they got into a very public fight with AMC last summer and AMC was pulled from DirecTV. Basically DirecTV didn't want to pay as much as AMC was asking. In the end AMC won a pretty decisive victory and got almost everything they were asking for.
Okay, now you've got a circular reference of subsidy: you can't argue that WeTV and IFC are both subsidized by AMC proper, and allow AMC to lose money on AMC proper and make it up on WeTV and IFC advertising.
Either, (1) WeTV and IFC have sufficient viewership-to-cost to be profitable advertising venues and can help offset losses from AMC proper (in which case, they aren't "unwanted channels" by any meaningful definition), or (2) WeTV and IFC are net money-losing channels without sufficient interested viewership for advertising to pay the bills that are subsidized by AMC, in which case they can't possibly offset losses from AMC proper.
Either of these can be true, or neither of them, but not both.
You're thinking that the money to be made in cable is in advertising, which couldn't be further from the truth. Advertising dollars are a supplement to subscription dollars. AMC Networks requires that cable providers (Comcast, RCN, Time Warner, DirecTV etc) carry WeTV and IFC at $0.25/subscriber, even though they are unpopular, and carry AMC at $0.75/subscriber.
Cable providers pretty much have to comply, so they can get AMC. As a result, AMC Networks makes up losses on AMC proper with subscription revenues from the unwanted channels.
> You're thinking that the money to be made in cable is in advertising
No, I'm thinking that the specific claim I was responding to upthread was that AMC lost money on AMC proper, but could afford to make it up because it required cable carriers to carry WeTV and IFC, which were "unwanted programming", but nevertheless made up for AMC proper's losses by advertising sales.
I am arguing that that claim is not sound. I am not arguing one way or the other on where the money comes from.
> AMC Networks requires that cable providers (Comcast, RCN, Time Warner, DirecTV etc) carry WeTV and IFC at $0.25/subscriber, even though they are unpopular, and carry AMC at $0.75/subscriber.
> Cable providers pretty much have to comply, so they can get AMC. As a result, AMC Networks makes up losses on AMC proper with subscription revenues from the unwanted channels.
Assuming that that is basically true, then if WeTV and IFC are losing money (before considering subscription fees), then AMC is really just charging $1.25/subscriber for AMC proper (the thing cable cos want) making a profit, and subsidizing WeTV and IFC with it.
If the subsidy works the other way, then the bundling works around the fact that what to consumers is actually desirable enough to be profitable isn't what cable cos want for some reason, which is possible if what viewers actually watch and what viewers look for in selecting cable providers are not aligned, but a counterintuitive enough claim that some evidence should be provided for it.
to get AMC on your network, you also have to accept some of AMC Networks other products, such as WeTV and IFC. They can lose a little money on AMC itself as long as advertising on their other channels makes it.