AMC Networks delivered strong gains in revenue and earnings per share in the first quarter as gains from content licensing pacts offset a 9% slump in ad sales.
AMC reported revenue of $741 million, up 2.9% from the year-ago quarter. Earnings per share came in at $2.65 per share, or $163 million, up from $2.10 a year ago, or $145 million. Operating income was up 1% to $233.7 million.
AMC cited a 10.8% gain in content licensing and distribution revenue, reaching $407 million, which offset an 8.8% drop in advertising sales at its domestic cable networks, to $226 million.
AMC’s international operations remain a drag on earnings although the loss narrowed in the quarter compared to the year-ago frame. Revenue at the unit that also houses IFC Films was up 4.3% to $111 million while the operating loss was $17 million, which was an improvement of $2 million in the year-over-year measure. On an adjusted basis, the division’s operating loss was $2 million.
“AMC Networks delivered strong performance in the first quarter of 2018 with record total company revenues and earnings per share. We have grown total distribution of our networks, reflecting the strength of our well-priced, well-defined brands; the quality of our programming and its popularity with viewers; and the value we create for both traditional and emerging distribution platforms. AMC Networks has the lowest priced offering of any independent programmer and is the most widely available independent programmer among virtual MVPDs, an indicator of our strong position as these emerging platforms continue to grow,” said Josh Sapan, President and CEO of AMC Networks.
Sapan cited AMC’s “The Terror” and BBC America’s buzzy new drama “Killing Eve” as an example of the company’s focus on premium content that can drive lucrative licensing deals around the world.
During a conference call with analysts on Thursday, Sapan emphasized the encouraging signs for the pay-TV market in the growth of subscribers generated by the new breed of virtual MVPD outlets such as Hulu, YouTube, and DirecTV Now. Total subscribers for AMC Networks channels — AMC, IFC, SundanceTV, BBC America, and We TV — are up 2% year-over-year. That growth is enough to offset about half of the losses of traditional cable subscribers experienced by major cable operators, as evidenced in the recent quarterly earnings reports from Comcast, Charter Communications, AT&T, and Altice USA.
“It’s not a meaningless number,” Sapan said.
Sapan noted that AMC Networks is widely distributed on virtual MVPD and skinny bundles assembled by traditional operators because it represents good bang for their buck given the fees it receives for its five networks. AMC has no broadcast network or sports rights to force its way on to platforms — although AMC’s “The Walking Dead” is a big driver — meaning that it is “independently evaluated” by distributors as an attractive consumer offering.
On the advertising front, Sapan noted that advertising revenue accounts for about one-third of the company’s total base. AMC Networks is touting its position to command top dollar for its high-end programming at a time when so much TV viewing is shifting to ad-free platforms.
(Pictured: “Killing Eve”)