AMC Networks Third-Quarter Profit from Continuing Operations Rises

The Walking Dead - TV Still: Season 2, Episode 2 - Running in Field - H - 2011
Gene Page/AMC

UPDATED: The cable network group behind "The Walking Dead" home AMC, IFC and other channels also posted higher revenue driven by affiliate fee gains, while U.S. ad revenue was essentially flat due to the absence of "Mad Men" in the latest period.

NEW YORK - AMC Networks, led by president and CEO Josh Sapan, on Thursday reported a gain in third-quarter profit and revenue as the company continued to see growth in affiliate fees, while advertising revenue was essentially flat due to a lack of Mad Men in the latest period.

The company's earnings from continuing operations of $40 million compared with $34 million in the year-ago period. When including discontinued operations in the year-ago period, the bottom line rose 58 percent. Operating profit rose 22.8 percent to $94 million. The bottom line figures were better than Wall Street analysts had expected.

Revenue at the company behind such cable networks as AMC, IFC, Sundance Channel and WE tv rose 4.6 percent to $284 million, slightly below Wall Street expectations. The flagship AMC network has had success with such hit shows as Mad Men, Breaking Bad and The Walking Dead.

But the company highlighted that its U.S. networks advertising revenue was virtually unchanged from the year-ago period as Mad Men aired then, but not in the latest period. Affiliate fee and other revenue rose 6.9 percent.

The earnings report from AMC Networks, which is controlled by the Dolan family that also controls Cablevision, is the firm's second since becoming a standalone company.

Wall Street seemed to cheer the bottom line gain, boosting AMC shares by 5.8 percent to $34.42 on Thursday.

“The core of our growth strategy continues to be our investment in original programming," said Sapan, highlighting The Walking Dead season two premiere, which was the highest rated drama ever in basic cable history in key adult demos, and the fourth consecutive primetime Emmy for outstanding drama or Mad Men. "Our programming successes are reflected in solid financial results as we continued to increase net revenues, AOCF and operating income in the third quarter."

During an earnings conference call, management said a recent Netflix streaming content deal will start adding to AMC Networks' financials in the current fourth quarter. Ad cancellations haven't crept up, and ad prices remain strong in the scatter market, Sapan added.

Sapan said new AMC show Talking Dead, a new talk show focused on Walking Dead, is looking like a winner in terms of financials as its viewership is about two times the average for that time period. Could AMC do more scripted shows? Sapan said yes, if they are the right shows and have an economic profile with an incremental return.

Asked about the ad outlook for IFC, Sapan said AMC is ahead in its development, with the goal for IFC being revenue growth that can bring in money that can be redirected to further program development.

Asked about a drop in Nielsen subscriber figures, Sapan said: "It appears to be a one-time reset based upon the way they sample and count." Earlier in the day, Viacom had mentioned that it is investigating a surprising and sudden Nielsen ratings decline for its Nickelodeon kids network.


Twitter: @georgszalai