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AMC Networks, led by CEO Josh Sapan, on Thursday reported better-than-expected first-quarter earnings amid the company’s continued success with original programming at its flagship channel.
The owner of such cable networks as The Walking Dead and Mad Men, AMC, IFC, Sundance Channel and WE tv posted earnings from continuing operations of $61.5 million, compared with $43.2 million in the year-ago period.
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Quarterly revenue at the company, in which the Dolan family is the biggest shareholder, rose 17 percent to $382 million from $326 million. Wall Street analysts had on average predicted earnings of $59 million and revenue of $367 million.
Revenue growth was led by a 26.9 percent advertising gain to $164 million “due to strong demand for our original programming, primarily at AMC,” the company said. AMC once again drew strong ratings with The Walking Dead in the latest quarter. Distribution revenue increased 11.7 percent to $196 million amid higher digital distribution and affiliate fee revenue.
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During a conference call with analysts, Sapan raved about The Walking Dead, ad rates of which have escalated to near broadcast TV levels. He compared the audience for that hit drama to the audiences attracted to sitcoms like Modern Family and The Big Bang Theory.
“The fundamentals of our business remain quite healthy,” Sapan said, proclaiming that investment in content will continue to be robust at AMC and the other channels. He spoke of a “multiyear strategy” for the lesser channels with the goal of making them as popular as AMC.
Some of the shows he’s enthusiastic about that he mentioned during the conference call include Maron on IFC, Rectify on the Sundance Channel and Braxton Family Values on WE tv.
On IFC, he has high hopes for upcoming shows The Birthday Boys, executive produced by Ben Stiller and Bob Odenkirk, and The Spoils of Babylon, executive produced by Will Ferrell.
Sapan also said that AMC sees a boost in Saturday night audiences depending on what airs on the channel in the morning, suggesting that some folks “are planting themselves” in front of the TV set for a very long time. “It’s enough to almost worry about them,” he joked.
Evercore Partners analyst Alan Gould last week raised his 2013 and 2014 earnings estimates “primarily due to higher advertising assumptions.” He also raised his price target on the stock of AMC by $2 to $67.
In midday trading, AMC stock was up 3 percent to $66.40.
One area of weakness in Thursday’s earnings report was the company’s “international and other” business, which recorded a 0.2 percent revenue decline and widened adjusted operating cash flow loss. The business includes AMC/Sundance Channel Global, indie film distributor IFC Films, the company’s technical services operations, developing online content distribution initiatives and Voom HD.
Higher affiliate fee revenue for international channels here were offset by a decline in revenue at IFC Films. The loss also reflected “an increase in professional fees related to the allocation of the Voom HD settlement proceeds” after AMC Networks split the legal payments with Cablevision Systems following a settlement with Dish Network.
Email: Georg.Szalai@thr.com
Twitter: @georgszalai
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