AMC Networks posted disappointing earnings results during the company’s third quarter of 2024, as both revenues and profits slipped. Net income slid 35% to $41.4 million from $63.4 million in 2023. Though the network saw gains in streaming and content licensing, the company said a “challenging” advertising market and falling affiliate revenues led to the results.
AMC’s operating income and adjusted operating income — values the company uses to measure its success — both slipped year over year. But the company saw an uptick in content licensing revenues aided in large party by a licensing pact with Netflix.
The company also announced that it closed a deal to fully acquire BBC America last Friday. Previously, AMC Networks owned 49.9% of the channel. It purchased the remaining 50.1% for $42 million in cash.
Despite the results, shares of AMC Networks ticked up more than 4% in trading on Friday.
Here are the top-line results:
Revenue: $599.6 million, down 5.9% year over but higher than $597.9 million expected by analysts surveyed by Zacks Investment Research.
Net Income Attributable to Stockholders: $41.38 million, down 35% from $63.42 million. Operating income slid 22% to $93.7 million, with adjusted operating income falling 25% to $131.5 million.
Earnings per share: 76 cents per share, down from $1.44 in Q3 of 2023. Adjusted for certain items, EPS came in at a 91 cents, compared to $0.88 per share expected by Zacks.
Subscribers: Increased 5% year over year to 11.8 million.
“As we manage this business within a complex and changing environment, we remain focused on our key strategic pillars — programming, partnerships and profitability,” AMC Networks CEO Kristin Dolan said in a statement.
Compared to the third quarter of 2023, affiliate revenues decreased by 13%, dropping to $164 million. The company attributed that to a drop in basic subscribers, which continues to be a trend in the declining cable landscape.
Though AMC made revenue gains in streaming that helped offset those results, the drop in affiliate sales led to subscription revenues ultimately dipping by 5% to $316 million. Advertising revenues fell 10% to $133 million. This was due to linear ratings declines as well as a challenging ad market but was partly offset by revenue growth in digital and advanced advertising.
There were some positives. Content licensing revenues increased 31% year over year and hit $81 million. This was connected to AMC-branded shows being made available to stream on Netflix thanks to a licensing agreement. Additionally, streaming revenues increased 7% to $152 million during the period due to year-over-year subscriber growth and price increases. And AMC+ increased its subscriber base by 5% to 11.8 million total.
The streaming increases were correlated to AMC’s deal with Netflix. In August, the network made 15 seasons of its originals on the streaming giant. Dolan said the company was “very pleased” with the results of this partnership during the third quarter earnings call.
Acquisition activity around Season 2 of “The Walking Dead: Daryl Dixon,” which is only available on AMC+, more than doubled compared to the period before AMC was licensing to Netflix. Similarly, AMC+ acquisitions driven by Season 2 of “Interview with the Vampire” was up nearly four times compared to the baseline.
Dolan said that AMC had generated $293 million of free cash flow to date and was on pace to deliver $500 million in cumulative free cash flow over two years. The company also entered into new and enhanced partnerships with Charter, Netflix Amazon and other major companies.
