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AMC Networks on Thursday reported better-than-expected third-quarter financials amid higher revenue thanks to new original show Fear the Walking Dead and the previous acquisition of a stake in BBC America.
The cable networks company, led by CEO Josh Sapan, posted a profit from continuing operations of $73 million for the latest quarter, or earnings per share of 99 cents, compared with $54 million in the year-ago period, or 74 cents. Wall Street analysts had on average expected earnings of 85 cents per share.
Quarterly revenue increased 21.7 percent to $632 million, led by 31.3 percent growth at national networks, partially offset by a decrease of $9 million in the “international and other” segment.
“Third-quarter growth in revenues was led by a 52.3 percent increase in advertising revenues to $210 million,” AMC said about its domestic networks. “The growth in advertising revenues reflected the inclusion of BBC America in the current year period as well as growth at AMC, principally related to the timing of the airing of original programming.” Late last year, AMC paid $200 million for a 49.9 percent stake in and operational control of BBC America.
The latest quarterly results did not have any contribution from The Walking Dead, but from spin-off Fear The Walking Dead, which ended its first run with strong ratings. It had the best first season of any show in cable history. The show helped boost U.S. advertising revenue in the third quarter after a 5.8 percent drop in the year-ago period.
Said Sapan: “AMC Networks had outstanding performance in the quarter, with significant increases in net revenues and operating cash flow driven by the continued popularity of our networks’ original programming, notably BBC America’s Doctor Who and AMC’s newest original series, Fear the Walking Dead, which premiered to record numbers, becoming the biggest series debut in cable television history.”
He added: “We continue to invest in our international business, growing our portfolio of strong local brands and launching the AMC brand into new markets. We are confident our approach to creating great content and building networks with distinct brands that resonate with viewers will continue to drive our performance over the near- and long-term and deliver value for our shareholders.”
Stifel Nicolaus analyst Benjamin Mogil had said before the earnings report: “We expect investor focus to be less about the quarterly results themselves but rather on ratings commentary surrounding The Walking Dead, as both live/same-day and L+3 have flattened out. With L+7 ratings yet to be released, we are interested in an update. We also note that the ad rate card for the show has materially increased year-over-year and to date, we understand that ratings are within expectation levels not leading to any outsized make-good obligations.”
Domestic networks saw adjusted operating cash flow grow 40.4 percent in the third quarter to $622 million, while operating income rose 42.0 percent to $581 million, AMC Networks said.
International and other adjusted operating cash flow declined $6 million to $7 million, and the operating loss increased to $11 million. The company cited foreign-currency fluctuations as a key driver and lower results at IFC Films compared to the year-ago theatrical release of Boyhood.
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