Earnings jumped at AMC Networks as shows like Breaking Bad and The Walking Dead generated big increases in ad revenue. But AMC's stock fell as the earnings gains fell short of Wall Street expectations.
Net income rose 59% to $58.1 million, or 80 cents per share, in the third quarter, from $36.6 million, or 51 cents. Revenues rose 19.1% to $395 million.
AMC stock dropped 5.83% to $68.13 after the results were announced.
"Third quarter results were softer than we expected, with costs at the networks the only bright side," said analyst Vasily Karasyov of Sterne Agee. "We think shareholders would like to hear from management encouraging comments on operating trends in 4Q and beyond as well as use of cash in the second half of 2014 and beyond."
Analyst David Joyce of ISI, says that revenue and cash flow were below expectations. He'd also been estimating earnings per share of 95 cents. "We would be buyers of any AMCX pullback, due to the industry-leading growth, and as the core operations were closer to our estimates than the overall results. Additionally, another very strong advertising growth quarter is underway," he said in a research note.
In a statement accompanying the earnings results, AMC Networks CEO Josh Sapan said: "Our solid financial results in the third quarter were driven by a return on our investment in original programming. Our shows are performing well on IFC, Sundance Channel and WE tv. At AMC, our acclaimed series Breaking Bad came to a close with record viewership and the Emmy Award for Outstanding Drama Series, and The Walking Dead kicked off its fourth season with record ratings that extended its reign as the #1 show on television among adults 18-49. With our Chellomedia acquisition, we believe we will over time further capitalize on demand for our content by growing internationally, a key strategy to ensuring our long-term success."
Cash flow at AMC's National Networks was up 24.5% to $144.9 million as revenues rose 20.2% to $367.9 million. Ad revenues were up 36.3% to $146 million because of strong demand for the company's original programming, including Breaking Bad and The Walking Dead. Distribution revenues rose 11.4% to $221 million as affiliate fees increased.