AMC Networks beat Wall Street’s estimates for third-quarter earnings and revenue, and pointed to its acquisition of RLJ Entertainment as a sign of the content company’s expansion into direct-to-consumer streaming.
Earnings per share for the period ending Sept. 30 increased 43% over the same quarter a year ago, coming in at $1.93 on a diluted basis and $2.15 on an adjusted basis. The consensus among analysts was for $1.80 a share.
Revenue gained 7.5% to $697 million, topping estimates for $694.3 million.
On October 31, the company noted, it closed on its planned deal for full ownership of RLJ, paying $59 million for the remainder of the shares it did not previously control. RLJ, founded by media entrepreneur Robert L. Johnson, operates streaming services Acorn TV and UMC, which reach 1 million subscribers. “This acquisition represents a major step forward for AMC Networks as we further diversify our business through direct-to-consumer offerings that we own and control, and through our AMC Studios operation and our international channels business,” CEO Josh Sapan said in the earnings release.
AMC, like other programming-heavy peers like Discovery and Viacom, is facing pressure on its traditional network businesses given the fraying of the cable bundle. While it has successfully ridden successful franchises like The Walking Dead and Breaking Bad and its spinoffs this decade, it has faced questions about how those properties will be fortified, complemented and ultimately replaced.
Nevertheless, the third quarter ended up in positive territory for the National Networks unit, which houses AMC, IFC, Sundance, WE and BBC America. Revenues for the unit for the third quarter 2018 increased 3.5% to $560 million. The rise reflected a 5% increase in distribution revenues to $361 million due to gains in distribution and subscription revenue as well as content licensing. Advertising revenue — another sensitive area — increased a shade less than 1% to $200 million.