AMC expects stabilisation for Q2
Details
Michelle Clancy
| 07 May 2017
| 07 May 2017

After a trend of weakness in ad sales, profits at AMC Networks took a hit in the first quarter. Higher programming and marketing costs for its domestic cable networks as well as international losses didn’t help matters.


But this is a mere hiccup, according to management. AMC, SundanceTV, IFC, We TV and BBC America collectively saw a 6.2% decline in advertising to $248 million, thanks to sinking ratings. Distribution revenue though was up 9.8% to $368 million, driven by content licensing revenue. Revenue from the national networks segment increased 2.8% year-on-year.

Overall revenue was up 1.9% to $720 million, but operating income for the quarter fell 10.5% year-on-year to $232 million. Trouble worsened at AMC’s International and Other unit, which saw a year-on-year loss that widened to $19 million, a significant $11 million increase from Q1 2016. Revenue dropped to $107 million.

AMC Networks president and CEO Josh Sapan said the report “sets the stage for continued progress for the remainder of the year.”

He added: “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. 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.”

However, CFO Sean Sullivan said that both total revenue and operating income are still expected to grow in the "low- to mid-single-digits" range in 2017. In the ongoing second quarter, domestic ad revenue is expected to recover, and sales should show seasonal improvement, but AMC didn't commit to any specific targets.

Sapan also made the case for AMC’s value, given the wild popularity of the Walking Dead, Better Call Saul, Into the Badlands, et al: “What we hear from our distributors actually directly is they say... you have the most valuable stuff I'm carrying. They don't even say it in the context of a rate comparison. And then, our rate is 50% or 20% of what the others are offering. I don't mean to knock anybody. So I end up thinking... I work here and you're saying - and it's half the cost or 25% of the cost. That's really good value. And so we need to climb into a position where our content investment, now $1 billion of performance on the screen, four of the top ten shows on TV, and we sort of break records with this stuff, we should be rewarded for it.”