This may be the key line in AMC Networks’ report this morning: Dish Network’s decision to drop AMC, IFC, WEtv, and Sundance Channel has cut the programmer’s total subscribers by 13% — but if the dispute isn’t resolved then the impact on cash flow and operating income “will be materially higher.” (Yesterday Dish Chairman Charlie Ergen was still talking tough, saying that his customers aren’t interested in AMC’s channels.) Yet the Q2 numbers, from the period before the fight with Dish broke open, aren’t bad. AMC generated $41.5M in net income, +52.9% vs the same period last year, on revenues of $327.6M, +12.2%. The revenue figure exceeds forecasts of $324.5M. And earnings at 58 cents a share beat the Street’s expectations by a penny. The domestic networks carried the ball with revenues +14.4% to $305.2M and operating income +21.6% to $111.3M. Ad sales grew 13.4% to $130M, while payments from cable and satellite companies were +15.2% to $176M.
But AMC has problems at its “International and Other” operation which includes its overseas channels, IFC Films, a broadcasting and technology unit, and VOOM HD. Revenues here were -13.1% to $26.3M with operating losses increasing 53.8% to $14.1M. The release sheds little light here, simply saying that it reflects declining revenues at IFC Films and the tech unit — as well as higher litigation expenses related to AMC’s $2.5B breach of contract suit against Dish for dropping the VOOM channels. Dish’s decision to drop AMC’s services is “directly related” to the suit, which goes to trial on September 18 in New York State Supreme Court, AMC chief Josh Sapan says. “Last month, the company received 36 Emmy Award nominations, more than any other basic cable television group,” he adds. “This critical reception helps drive the growth of our business and our financial performance.”
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