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‘The Walking Dead’ Powers AMC Networks’ Q4 and Full-Year Earnings

The Walking Dead” drove a nearly 25% gain in advertising revenue at AMC Networks in the fourth quarter, powering the cable group’s earnings and revenue well past Wall Street’s expectations.

AMC Networks said Thursday that fourth quarter ad revenue at its five U.S. cablers grew 24.3% to $255 million, led by AMC, which saw more record ratings from the first half of the zombie drama’s fifth season in October-November.

Total revenue for the quarter was up 40% to $609 million, reflecting the impact of AMC’s acquisition of BBC America and the Chellomedia international channels group now known as AMC Networks International.

Net income for the quarter came in at $78 million, or earnings per share of $1.06, which bested the 99 cents-$1 consensus estimate of analysts.

For the full year, AMC saw a 15.4% increase in advertising revenues to $765 million. Distribution coin from its national networks — AMC, SundanceTV, WeTV, IFC and BBC America — increased 12.1% to $979 million. AMC is one of the few cable groups to see advertising revenue growing at a faster clip than distribution fees, thanks again to the drawing power of “Walking Dead.”

During a conference call, AMC disclosed that it had taken a $28 million writedown on programming during the fourth quarter. That was due to the cancellation after one season of We TV’s first scripted drama, “The Divide,” and AMC’s decision to pass on two drama pilots, “Knifeman” and “Galyntine.”

AMC Networks execs were pressed during the call on the impact of the widening SVOD market for high-end programming on AMC’s bottom line. CEO Josh Sapan cited the SVOD/cable VOD availability of prior seasons of shows like “The Walking Dead” and “Breaking Bad” as a windfall for linear viewing. He emphasized AMC’s focus on developing shows that are must-sees during the live telecast but also have stickiness in reruns — a tough combo to hit, to be sure.

Having the SVOD window open about a year after episodes air on linear platforms “has turned out to be a very good arrangement for consumers and for the health of our shows,” Sapan said. The channels try to ensure that “our linear viewership is urgent and event-like as possible,” he said, “supported by the availability of previous seasons on SVOD.”

AMC’s International and Other unit, which encompasses its growing international channels portfolio and IFC Films, recorded a $19 million loss, which was $2 million more than the year-ago quarter. The international channels group is still in investment mode, following the Chellomedia deal and restructuring of existing AMC overseas assets.

AMC said full-year revenue in the unit grew to $434 million, boosted in part by the box office for “Boyhood,” the IFC Films release that rode the award season circuit all the way to a best picture Oscar nom. Operating income at the unit plunged to a loss of $42 million due to the one-time gain in Q4 2013 of $133 million from the settlement of the Dish-Cablevision legal battle over the now-defunct Voom channels.


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