AMC Networks First-Quarter Adjusted Earnings Exceed Expectations

Better Call Saul premiere - H 2016
Courtesy of AMC

The cable networks company, led by CEO Josh Sapan, saw advertising revenue at its flagship network decline as the season finales of 'The Walking Dead' and 'Better Call Saul' moved into the second quarter this year.

AMC Networks, the company behind such cable networks as AMC, IFC and Sundance Channel, on Thursday reported better-than-expected adjusted first-quarter earnings.

Original series in the first quarter included AMC's The Walking Dead and Better Call Saul.

The company, led by CEO Josh Sapan, posted earnings of $113 million, compared with $121 million in the year-ago period. Earnings per share of $1.55 compared with $1.66 in the year-ago period. But those figures included charges of $48 million, or 44 cents per share, in connection with a recent refinancing of debt. Excluding the charges, adjusted earnings hit $146 million, or $1.99 per share, an increase of $25 million, or 20.2 percent per share from the year-ago period. Wall Street had on average expected earnings of $1.79 per share.

Revenue rose 5.7 percent to $707 million driven by a gain of 6.4 percent at the company's U.S. networks to $599 million and a slight gain for the international side and other businesses.

U.S. networks revenue growth was "primarily led by a 10.7 percent increase in distribution revenues to $335 million" due to increases in digital distribution and licensing revenue, as well as affiliate fees, the company said. Advertising revenue rose 1.3 percent to $264 million thanks to "strong growth at WE tv, SundanceTV, BBC America and IFC, which was partially offset by a decrease at AMC due to the timing of the airing of original programming." U.S. networks unit operating profit jumped 10.9 percent to $267 million, while international and other operating loss narrowed by $2 million to $8 million.

The company had in the year-ago period aired the season finales of Walking Dead and Saul, which drew strong ad dollars in the first quarter, but this year, they moved into the second quarter.

Stifel Nicolaus analyst Benjamin Mogil had written in an earnings preview: "Given the strong programming lineup in the quarter, we expect advertising revenue of $275 million, up 6 percent. We note that the prior-year quarter benefited from the Walking Dead and Better Call Saul season finales, which occurred in the second quarter this year."

"AMC Networks is continuing to build on the momentum and strength of 2015 with a strong start to 2016," said Sapan. "Our performance continues to be driven by the strength of our brands and the popularity of our original programming, particularly The Walking Dead, Better Call Saul and Fear the Walking Dead, with viewers and advertisers."