AMC Networks handily beat Wall Street’s expectations with third quarter earnings growth powered by the launch of “Fear the Walking Dead” and the addition of BBC America to the company’s collection of cablers.
AMC Networks’ earnings for the quarter ended Sept. 30 came in at 99 cents per share, topping analysts’ estimates in the 87 cents-89 cents range. Revenue for the quarter grew 21.7% to $632 million while net income spiked to $73 million, from $54 million in the year-ago quarter.
On the downside, AMC’s international and other unit, which houses IFC Films, saw its operating loss grow by $6 million from the year-ago quarter to $11 million. AMC cited the impact of currency fluctuations — which has been a handicap for all media companies this quarter — and the tough comparisons for IFC Films which was boosted by the release of Oscar contender “Boyhood” in the year-ago quarter.
AMC’s results also included a $12 million write-down on unspecified programming expenses at SundanceTV and We TV during the quarter.
The dawn of “Walking Dead” prequel “Fear the Walking Dead” helped drive advertising revenue at the national networks unit — home of AMC, SundanceTV, IFC, We TV and BBC America — up 52.3% from the year-ago quarter to $210 million.
Affiliate revenue jumped 20.1% to $311 million — thanks in large part to the inclusion of BBC America in the Q3 results for the first time. AMC paid $200 million for a 49% stake and operating control of the channel in a pact with BBC Worldwide that closed in October 2014. The Sept. 19 premiere of the latest season of BBC America’s “Doctor Who” came late in the quarter but probably gave a boost to advertising revenue at the cabler.
Strong as AMC’s Q3 numbers were, the company’s domestic cablers are not immune to the subscriber losses that have affected other major media players, notably Time Warner which acknowledged a 1% drop in subscribers for its Turner networks unit in its earnings announcement on Wednesday.
The flagship AMC cabler has lost nearly 2 million subscribers during the past year, dropping to 93.8 million cable homes in the quarter from 95.6 million in the year-ago frame. BBC America (77.1 million) and IFC (71.7 million) have both declined by more than 1 million. We TV (86.5 million) and SundanceTV (60.1 million) have bucked the downtrend with gains of more than 1 million for We TV and 3.4 million for SundanceTV.
AMC Networks CEO Josh Sapan said that he was encouraged by the third quarter results for the largest MVPD players showing a stabilization in subscriber losses but he also said they would continue to be “conservative” in estimating affiliate fee growth.
Sapan was also pressed on the slight ratings declines for AMC’s “The Walking Dead” since its sixth season premiered Oct. 11, given the show’s importance to the network’s bottom line. Sapan cited the successful launch of “Fear the Walking Dead” as a sign of how AMC treats “Walking Dead” as a franchise to be leveraged in innovative ways.
Sapan also noted AMC’s success with the introduction of “Better Call Saul,” a prequel to “Breaking Bad.” “It’s delicate to do what is commonly called a spinoff — they have a checkered history,” he said. But with “Saul” and “Fear the Walking Dead,” AMC now claims the top three original drama series launches in basic cable history, including the 2010 bow of “Walking Dead.”
The drama “Humans,” a co-production with the U.K.’s Channel 4, was also been a solid performer for AMC, in viewership and critical kudos, in its first season that aired over the summer.
Although “Walking Dead” questions dominated the call, Sapan and others noted that IFC, We TV and SundanceTV all turned in record quarters.