BBC America Deal Boosts AMC Networks Q2 Earnings

AMC Networks posted double-digit gains in revenue and net income in the second quarter thanks to the addition of BBC America to its portfolio of domestic cable networks.

AMC’s Q2 results, released Thursday, were dented on the international side by currency fluctuations, which took the unit that houses AMC’s growing international portfolio and IFC Films to a $9 million loss, compared to a $3.7 million in operating income in the year-ago quarter.

Total revenue for the company climbed 15.1% to $601 million, powered by nearly 23% gain for its national networks. Net income rose to $83 million, or $1.14 per share, from $58.6 million in the year-ago quarter. AMC’s results were well above analysts’ consensus estimates.

AMC closed a $200 million deal with the BBC last October to take control of BBC America, allowing the cabler to be consolidated with the results for AMC, SundanceTV, IFC and We TV.

Advertising revenue at its core cablers was solid, growing 13.4% to $186 million, thanks largely to the addition of BBC America. Ad revenue at flagship AMC took a year to year hit because of lower ratings for the second seasons of “Turn” and “Halt and Catch Fire” and for some of AMC’s movie programming. Excluding the BBC America contribution, ad revenue for the national networks unit grew in the “low single digits,” according to AMC execs.

“We’re facing a changing advertising market but we think we’re positioned quite well,” AMC Networks president-CEO Josh Sapan said. “We’ve seen healthy price increases for our originals in the upfront and a pickup in the scatter market.”

“Turn” has already been renewed for a third season but AMC is still weighing the future of “Halt,” Sapan said.

The big question of the week is how cable giants are faring with affiliate revenue. Wall Street has been spooked by Disney’s revised earnings guidance pegged to a decline in the growth rate for ESPN, the sports cabler that had long been seen as immune to losing MVPD subscribers.

Sapan was pressed during the earnings conference call on whether the flagship AMC channel is seeing a meaningful decline in subscribers as more consumers opt for Netflix and other over-the-top options. He declined to get too specific other than to say, “We broadly see what you see” and he acknowledged “the pressures on the system have been fairly obvious for some time.”

The growing value of content licensing to programmers was evident as AMC execs noted that they booked an unanticipated $10 million in revenue during the quarter that mostly came from stronger than expected licensing revenue for “Turn” and other AMC-owned programs.

 

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