AMC Networks 2016 Earnings Beat Wall Street Estimates, CEO Allays ‘Walking Dead’ Fears

AMC Networks beat Wall Street’s earnings estimates Thursday morning when it released its full year and fourth quarter results. As a result, the stock surged roughly 6% as of 10:15 ET, over $60 from a previous close of $57.50.

Yet questions about AMC flagship drama “The Walking Dead” remain. “As efforts to launch new, owned franchises have not succeeded, value has become increasingly concentrated in (a declining) ‘Walking Dead,'” Bernstein analysts wrote in a note to investors after the numbers came out.

AMC Networks CEO Josh Sapan, knowing what the financial sector would be focusing on, pointed out on a conference call with investors that not only is “The Walking Dead” still the biggest draw of young eyeballs on TV, its digital consumption is increasing, and it’ll make the company buckets of money in other non-linear contexts. “It will have a long life that accrues to our strategic benefit,” Sapan said. “This is an approach we’re replicating with many other shows. We think the company is becoming, and has become, more of a studio, as opposed to a channel operator.”

The company posted net revenue of $2.756 billion for 2016 on the whole, slightly above analyst expectations, and an increase of 6.8% from 2015. Operating income was $658 million, down 7% from 2015.

Adjusted EPS for the year came in at $5.73 — again, well above the consensus estimate of $5.62 — and $1.30 for the fourth quarter.

Fourth quarter net revenues in the International and Other increased 7.5%, or $51 million, to $730 million; but operating income was $104 million, a decrease of 35.3%, or $57 million, versus the prior year period. AMC attributed that decline to a $75 million loss in its International and Other segment. The growth in revenues was led by a 15.6% increase in distribution revenues to $316 million, primarily attributable to an increase in licensing revenues as well as an increase in affiliate fees. Advertising revenues increased 3.1% to $298 million due to higher pricing, but was affected by “The Walking Dead” and other decreased ratings deliveries — ratings for “The Walking Dead,” while still enormous, have fallen from previous seasons.

“With a rapidly expanding studio business, we now have a growing portfolio of shows that we own that provide this kind of opportunity for our business,” said Sapan. “In addition, we are embracing changing viewing habits by making strategic investments in streaming services that fit well with our programming and the audiences at our network brands.”

AMC called out two such investments Thursday: Its now $73 million investment in RLJ Entertainment (upped from an initial $65 million infusion), and its minority stake in Funny or Die. “We don’t enter these randomly or casually,” Sapan said Thursday morning, bringing up other investments in BBC Worldwide and ITV’s SVOD service BritBox, horror SVOD service Shudder, and SVOD service Sundance Now. “We feel it’s a progressive, interesting investment that will yield a return over time.”

The International and Other segment (which includes digital) continues to be a bit of a cost center for the company — while revenues were essentially flat for the fourth quarter, at $119 million, operating losses just for the quarter increased $75 million. In addition to some losses at IFC Films and $19 million vanishing due to unfavorable foreign exchange rates, there was a noncash $68 million impairment on AMCNI-DMC, the AMC’s Amsterdam-based media logistics facility.

AMC Networks is seeing increasing revenue from virtual MVPDs like Dish Network’s Sling TV and AT&T’s DirecTV Now. While Sapan wouldn’t comment on ongoing negotiations to join Hulu’s forthcoming live streaming cable package, he gave a mini sales pitch for his networks’ inclusion: “When you’re in the business of selling subscribers a service and you want them to connect at a price and you want them to stay and continue to re-up every month, if it’s not supported by a bundled IP or telephony product, especially, the five AMC Networks channels are a wise choice to include.”

Because AMC Networks only has five channels, Sapan argued, they each have significant value. “You don’t get a free lunch for showing up with 22 channels,” he said. “We knew there would be a reckoning.”

AMC stock has seen some decline from a year ago, when it was trading at $68.51, though it’s been on an upswing from an October low of $48.26.

More Biz

  • The dark Manhatten skyline, seen from

    StubHub Refunds $500,000 to Customers Shut Out by New York Blackout

    Saturday’s blackout in New York had an outsized effect on the city’s nightlife, with Madison Square Garden and the entire Broadway district seeing multiple shows cancelled due to the the power outage. As a result, StubHub has refunded more than $500,000 worth of tickets for cancelled events. According to a statement from the company, the StubHub [...]

  • Weapons Cache

    D.A. Files 64 Charges in Bel-Air Weapons Stockpile Case

    The L.A. County District Attorney’s office has filed 64 counts against Girard Saenz, the man who allegedly kept a stockpile of more than 1,000 weapons at a Bel-Air home linked to the Getty family. Saenz is accused of illegal possession of assault weapons, transferring handguns without a dealer license, possession of short-barreled shotguns, and possession [...]

  • 9-1-1: Angela Bassett in the series

    Fox Sees Primetime, Sports Ad Gains As TV Upfront Wraps

    Fox Corporation is the latest to benefit from stronger-than-expected trends in TV ad spending, as the company notched strong gains in advertising commitments for its next cycle of programming – its first since selling off a large chunk of its media assets to Walt Disney. Ad demand was stronger than many executives anticipated, according to [...]

  • BMI Promotes David Levin to Senior

    BMI Promotes David Levin to Senior VP of Licensing

    BMI today announced that David Levin has been promoted to Senior Vice President of Licensing, effective immediately. In his newly expanded role, Levin is responsible for all of BMI’s domestic licensing and revenue generation, encompassing radio, television, digital media, cable, satellite and general licensing.  Levin, who will oversee teams in New York and Nashville, reports [...]

  • Warner Music Group Logo

    Warner Music Acquires Musical Theater Indie First Night Records

    Warner Music Group has acquired First Night Record, an independent record label for West End and Broadway musical theatre cast recordings. The company will be overseen by WMG’s Arts Music Division, led by President Kevin Gore. First Night co-founder John Craig will join the Arts Music team under a multi-year consulting agreement to identify and record musical theatre productions in [...]

  • Woodstock 50 to Hold Open House

    Woodstock 50 to Hold Open House for Local Residents Before Permit Review Tuesday

    If nothing else, the producers of Woodstock 50 are persistent. After two permit applications to hold the troubled festival at the Vernon Downs racetrack in Upstate New York were rejected by the town of Vernon codes office, the producers and venue owner Jeffrey Gural today invited the local community “to embrace the Festival’s spirit of [...]

  • ILM Star Wars The Force Awakens

    ILM to Open Latest Effects Facility in Sydney, Australia

    Sydney, Australia, is to be home to Industrial Light & Magic’s fifth production hub. The Disney-owned special effects company currently has facilities in San Francisco, Vancouver, London and Singapore. The decision to open the Sydney outpost was announced Monday local time by executive creative director and head of ILM Rob Bredow, ILM executive Luke Hetherington, [...]

More From Our Brands

Access exclusive content