Profits at AMC Networks took a hit in the first quarter on higher programming and marketing costs for its domestic cable networks as well as red ink in its international division.
Operating income for the quarter fell 10.5% year-over-year to $232 million. Revenue was up 1.9% to $720 million. Earnings per share were in line with analysts’ expectations at $1.98.
AMC’s results reflected the first-quarter trend of weakness in ad sales. AMC’s domestic cablers — AMC, SundanceTV, IFC, We TV and BBC America — saw a 6.2% decline in advertising to $248 million. AMC said the drop was partly because of lower ratings delivery and the timing of original series.
Distribution revenue for the domestic cable group was up 9.8% to $368 million, driven by content licensing revenue.
AMC’s International and Other unit, which encompasses its international networks and IFC Films unit, saw revenue drop to $107 million. The division’s year-over-year loss widened to $19 million, an $11 million increase from Q1 2016. AMC attributed the loss to higher spending on digital initiatives and an increase in depreciation and restructuring expenses.
AMC Networks president-CEO Josh Sapan said the Q1 results “sets the stage for continued progress for the remainder of the year.” He cited the success of new and returning shows including AMC’s “Better Call Saul” and “The Son,” BBC America’s much-praised documentary series “Planet Earth II” and “Doctor Who,” IFC’s “Brockmire,” and WE tv’s Mama June.
“Our disciplined approach to investing in high-quality content is building our brands and positioning us well with advertisers and both traditional and new distribution platforms,” he said. “Looking ahead, we remain focused on costs coupled with smart content investments that will create value for our shareholders over the near and long-term.”
(Pictured: “Planet Earth II”)