AMC Earnings Rise In Second Quarter
UPDATED: Ad revenues up 13.7%
UPDATED: Ad revenues up 13.7%
UPDATED: 1:10 p.m. ET
AMC's profits jumped in the second quarter as advertising and distribution revenue rose.
Net income in the second quarter tripled to $135.7 million or $1.87 a share, from $41.5 million, or $.59 cents a share a year ago. Second-quarter revenues rose 15.8% to $379 million.
The results included $133 million from the settlement of litigation with Dish Network. Excluding that gain, operating income at the company's national networks was up 14.6%. The Dish Network dispute kept AMC’s channels off satellite for months, and the company warned that it might face disruptions with two smaller distributors in the near future.
"Our original programming continues to fuel the performance of our networks and underpin the Company's growth, with last month's 39 Emmy Award nominations for AMC, IFC and Sundance Channel, the most nominations of any basic cable programming group, contributing to our momentum," CEO Josh Sapan said in a statement.
At the company's national networks division, including AMC, WE tv, Sundance Channel and IFC, adjusted cash flow rose 7.8% to $146.2 million. Revenues rose 15.9% to $353.6 million.
Distribution revenues were up 17.5%, mainly because of increases in home video and digital distribution revenue. Speaking on the company’s earnings call with analysts, Sapan said that in the past 18 months, "we’ve renewed a significant portion of our revenue base at terms that we’ve been please with and that resulted in an acceleration of our rate of growth from what was low- to mid-single digits to mid- to high-single digits."
He added that the second quarter results benefited from a renewal finalized during the quarter.
But Sapan warned that in the next few months, the company would be negotiating renewals at two smaller distributors.
"As we try to realize what we consider fair value for our networks, we believe it is possible we might encounter some disruption in our service in connection with these renewals as we try to move them in line with our other agreements," he said.
He added that any disruption would not have "a significant impact on our financial result" because those distributors represent a small portion of AMC's affiliate base.
Advertising revenues rose 13.7% to $147 million. The company said the ad revenue increase was because of strong demand for the company's original programming. During the quarter, ad revenues increased even though only one original series — Mad Men — aired, compared to more original hours a year ago.
Sapan said that in the upfront, the company was able to increase price and diversify its ad base by attracting new advertisers. This was the first upfront for the company's Sundance Channel, which is converting from a sponsorship model to being ad supported, resulting in a revenue increase that was large in terms of percentage but not significant in terms of dollars. In connection with that move, some programming was written off, costing the company about $7 million.