AMC Networks Posts Lower Second-Quarter Earnings, Meets Expectations

Issue 3 BIZ Exec Suite Josh Sapan - H 2013
Adam Kraus

Issue 3 BIZ Exec Suite Josh Sapan - H 2013

The cable networks group, led by CEO Josh Sapan, saw profits fall due in part to currency exchange losses, despite higher advertising revenues.

AMC Networks on Thursday posted lower second-quarter earnings that met analyst expectations, despite higher overall revenues from a strong programming lineup that includes The Walking Dead and Better Call Saul.

The company behind such cable networks as AMC, IFC and Sundance Channel saw net income fall to $77.1 million, against a year-earlier $83 million, even as overall revenue rose 14 percent, to $684.8 million, driven in part by advertising growth at AMC.

AMC Network's per-share earnings were $1.28, which excludes foreign currency transaction losses. That met a consensus EPS forecast for the quarter at $1.28.

The cable networks group, which is led by CEO Josh Sapan, recorded advertising and distribution revenues growth at its networks. National networks revenue during the second quarter rose 17 percent, to $573 million, while advertising revenue climbed due to the timing on program deliveries.

The company drew strong ad dollars for The Walking Dead and Better Call Saul, which saw season finales move this year from the first to the second quarter. AMC Networks also managed to grow distribution revenues with higher affiliate fees and licensing and digital distribution revenues.

The advertising growth at AMC underlines the health of the U.S. advertising market and fuels analyst expectations that higher viewership adds to the shelf-life value of popular shows for future licensing and AMC being included in skinny bundles. 

AMC Networks CEO Sapan during an analyst call said his company is in discussions to become part of Hulu's TV offering. Sapan also told Wall Street watchers that AMC Networks will continue to have a "bias" toward shows, like The Walking Dead and Fear the Walking Dead, that it owned and controlled.

Besides being advertising drivers, owned content offered "a series of opportunities both domestically and internationally" to be exploited, Sapan said. At the same time, he added that his group will continue to license shows through varied arrangements in which AMC shared some rights.

That includes The Night Manager, a co-production with the BBC. Key to the deal for non-owned shows is ensuring creative material "is very strong, and we can make financial arrangements that we think are sane and appropriate," Sapan said.

He also confirmed during the call that AMC Networks is offering voluntary buyouts to about 200 staffers, or around 6 percent of employees, to reduce operating costs. "It's part of the evolution of a media company in today's world," he said. 

August 4, 10:45 a.m. Updated with comments by CEO Josh Sapan made during an analyst call.