AMC Networks Second Quarter Profit Falls 16%, Misses Wall Street Forecasts

The IFC and Sundance parent saw year-over-year subscriber growth but numbers dropped from first quarter

AMC Networks earnings

Solid growth in streaming revenue wasn’t enough to lift AMC Networks second-quarter results, as the parent of IFC and the Sundance Channel missed Wall Street expectations for the period.

Citing lower advertising sales and domestic affiliate fees, AMC Networks reported an 8% decrease in revenue to $679 million for April through June, down from $738 million in the 2022 second quarter and well off the $717.5 million projected by analysts surveyed by Zachs Investment Research.

The New York-based company reported a 16% drop in net income to $70.2 million, or $1.60 per share, down from $83.4 million, or $1.91 per share, last year.

Analysts were expecting profit of $1.77 per share.

Streaming results provided some relief, with revenue rising 13% to $137 million, driven by year-over-year subscriber growth and 2022 price increases.

But while streaming subscribers increased 6% to 11 million during the period, that was down 2% from 11.2 million in the first quarter, which the company said reflected the end to some promotions.

“Even during a period of industry-wide uncertainty and change, we are seeing the benefits of our strategy play out in our financial results, which for the second quarter include year-over-year increases in free cash, streaming subscribers, and streaming revenue, as well as healthy margins,” said CEO Kristin Dolan in a statement. “It’s clear we have the programming, the platforms and the partners necessary to continue to operate a very profitable business that delivers long-term shareholder value.”

Distribution and other revenues also fell for the company, owing in part to the decrease in production at 25/7, the company’s production services business. Specifically, distribution fell 24% to $79 million overall.

In fact, most of this loss is credible to 25/7. While subscription revenues increased 1% to $57 million owing to the favorable impact of foreign currency translation, content licensing and other revenues decreased 54% to $22 million due to a volume reduction from 25/7 Media. This reflected a reduced demand for new content as well as series cancellations from third parties. Operating losses for the division were $12 million, a drop that is largely attributable to $25 million impairment charge related to 25/7 Media.

AMC’s second quarter also saw a Free Cash Flow of $148 million, which was due to the acceleration of certain cash payments that were related to a legacy content licensing agreement. Net cash provided by operating activities was $158 million.

Operating income decreased 31% from 2022 to $106 million. The same held true of Adjusted Operating Income, which saw a decrease of 10% to $177 million and benefited from cost management measures, specifically those around marketing. That figure represents a margin of 26% that is consistent with results from last year.

In its second quarter, AMC brands such as AMC, BBC America, IFC, Sundance TV and WE tv launched on Comcast’s streaming offering NOW TV. Additionally, AMC+ launched on Charter, making the streaming service available to Spectrum TV customers.

As for its content, AMC’s second quarter saw the premiere of “The Walking Dead: Dead City,” which emerged as the No. 1 season premiere in AMC+ history and attracted a linear audience premiere of 2 million viewers.

Looking ahead, “The Walking Dead: Daryl Dixon” is set to premiere on September 10, and “The Walking Dead: The Ones Who Live” is set to premiere sometime in 2024. During this quarter, AMC also negotiated the returns of library titles “Fear the Walking Dead,” “Killing Eve,” “Brockmire,” “The Terror,” “The Son” and “Preacher.”