Ad revs slide, national networks struggle, but AMC posts strong overall fiscal year
Joseph O'Halloran
| 02 March 2018

The devil was certainly in the detail as US cable TV provider AMC Networks reported the financial results for its last full year and fourth quarter.

For the 12 months ended 31 December 2017, the company’s net revenues increased 1.8% on a year-on-year basis to a record $2.8 billion. Full year operating income increased 9.9% compared with fiscal 2016, to a record $722 million, while full year adjusted operating income increased 3% to a record $905 million.

The company’s National Networks — principally consisting of the company's five nationally distributed programming networks, AMC, WE tv, BBC AMERICA, IFC and SundanceTV as well as AMC Studios, the company's television production business — also delivered a record in the form of distribution revenue of $1.4 billion, an increase of 6.6% annually led by a 3%, or 11 million, increase in total subscribers and continued expansion of AMC Studios production capabilities.

Yet drilling down into the results report, some signs of challenges and headwinds appeared. Fourth quarter net revenues slipped 0.4% on an annual basis to $727 million, reflecting, said the company, a decrease of 1.3% at National Networks and an increase of 6.9% at International and Other business lines.

Quarterly operating income was $162 million, an increase of 55.7%, or $58 million, versus the prior year period. The operating income increase reflected a decrease of 6.5% at National Networks offset by a decrease of 77.6% in operating loss at International and Other. The improvement in operating income was, said AMC, primarily related to the absence of $68 million in charges incurred in fourth quarter 2016 in connection to AMC Networks International — Digital Media Centre, which was subsequently sold in July 2017. Adjusted operating income totalled $206 million, a decrease of 3.4% compared with the prior yearly period. National Networks adjusted operating income decreased 5.2% and international and other adjusted operating income increased 32.2% versus the prior year period.

Fourth quarter net income was $146 million compared with $14 million in the fourth quarter of 2016. The increase was due in no small part to the decrease in income tax expense as decreed by recent US tax reforms. There was 2.4% revenue growth at National Networks over the course of the year, totalling $2.368 billion, while the division posted operating income of 894 million up 4.6% annually.

Commenting on the 2017 results, president and chief executive officer Josh Sapan said: "AMC Networks delivered record financial results in 2017, increasing net revenues and adjusted operating income for the seventh consecutive year since becoming a public company, and generating significant free cash flow that we are using to invest in key strategic initiatives and our networks. Our recent distribution deals with the streaming services fuboTV and Philo make AMC Networks available on more virtual MVPDS than any other independent programmer, proving the value of our discrete brands and our desirable, high-quality content.”