AMC Networks Q3 Profit Surges, Company Bucks Trend By Adding 15 Million Subscribers In Past Year

The Walking Dead

UPDATED at 10AM PT with executive comment. Cable programmer AMC Networks reported a revenue gain of just 2% but double-digit upswings in operating and net income, with execs indicating the company had bucked industry trends by adding 15 million new subscribers across all platforms over the past year.

AMC Networks

Total revenue inched up $13 million from the year-ago period, to $648 million. Operating income surged 31% to $153 million and on an adjusted basis climbed 19% to $200 million. Third quarter net income was $87 million, or $1.35 per share, compared with $65 million, or 91 cents per share a year ago.

President and CEO Josh Sapan said the company, whose portfolio includes AMC, IFC, Sundance TV, We TV and BBC America, is on track to hit its full-year targets for revenue and profit. He credited The Walking Dead franchise (which he said could keep rolling for years, if not decades), though the newest, eighth season began after the quarter’s Sept. 30 close, and other top-performing shows like Better Call Saul.

“Our results reflect the consistent execution of our long-term strategy of investing in high-quality, immersive content that is resulting in growing demand among traditional distributors, virtual MVPDs, advertisers and consumers; and, importantly, is giving us the ability to monetize the demand for our content through new revenue streams,” Sapan said in the initial earnings release. “In an evolving media and entertainment marketplace, AMC Networks is well positioned based on our size, our pricing and our content, which includes four of the highest-rated dramas on all of basic cable, giving us the ability to continue to further invest in our content, our brands and new businesses.”

During a conference call with analysts, Sapan said the company is “pleased” with the early performance of AMC Premiere, a commercial-free version of the flagship network AMC, which Comcast launched several weeks ago on its Xfinity X1 platform. The service, along with similar offerings like Sundance Now and the horror-themed Shudder, ad-free platforms “are a very significant part of our future,” Sapan said. The 15 million net subscriber additions, while described by Sapan as a “radical” number by current industry standards, “did not happen by accident” and derives from both new ventures and momentum across the linear and digital portfolio.

Two keys to AMC’s growth, he added, are its increasingly global footprint and the increase in the number of shows it owns, as in the case of Halt and Catch Fire, through in-house production arm AMC Studios.

The company’s portfolio of just five networks–notably fewer than programming peers such as Viacom, Discovery, Time Warner and 21st Century Fox–has prompted some speculation about its prospects for survival in its current form given the consolidation among MVPDs.

“We are the right size in the U.S.,” Sapan maintained. “We’ll keep tweaking the amount of programming we make as consumption methods and distribution continues to evolve.”

Overall pay-TV subscriber losses, a major theme of Discovery’s downbeat earnings call earlier this morning, entered the conversation with AMC, but Sapan was more sanguine about the shift. About half of the industry’s traditional subscriber losses, he said, have been offset by growth of internet-delivered offerings. “It’s hard to predict where all that will go,” Sapan said. “But I’m somewhat encouraged by virtual MVPDs because in aggregate they’re offered at a much lower price to consumers. So we think that advantages our company because we have five strong channels and we have the best price relative to other channels.”

COO Ed Carroll described the scatter market for advertising as “stable” and said demand for blue-chip advertisers for many of the company’s shows remains strong. On The Walking Dead, the launch of six-second ads has been “an idea that has been received very warmly” by brands, he said. “There are others queued up” after debut advertiser Microsoft, he added, but the key will be to manage the creative integration so as to avoid disrupting the viewer experience. “We want to be respectful of the content.”

This article was printed from