AMC Networks, Inc. Earnings: Zombies Breathe New Life Into Ad Sales

By Markets Fool.com

Image source: AMC Networks.

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AMC Networks (NASDAQ: AMCX) reported second-quarter results on Thursday morning. Here's what you need to know about the studio's report.

AMC's Q2 results: The raw numbers

Metric

Q2 2016 Actuals

Q2 2015 Actuals

Growth (YOY)

Revenue

$684.8 million

$601.1 million

13.9%

Net income attributable to AMC Networks shareholders

$77.2 million

$83.0 million

(7%)

GAAP earnings per share (diluted)

$1.05

$1.14

(7.9%)

Source: AMC Networks.

What happened with AMC Networks this quarter?

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AMC delivered on its vision of high advertising sales and did better than expected in international markets.

  • As expected, domestic ad revenue came through with flying colors. Sales in this category increased 29% year over year, to $239 million, driven by the airing of several new shows and high advertiser interest in AMC's biggest hit shows.
  • International sales grew 4.8% larger, stopping at $118.3 million. AMC's television content drove these sales higher, overcoming a slow quarter for theatrical films overseas.
  • AMC's new share-buyback program saw some action in this report. The company bought back stock certificates worth $48 million during the second quarter, at an average price of $59.19 per share. After closing the books on the reported quarter, AMC repurchased another $27 million worth of shares, priced near $57.32 each. The original $500 million buyback program now has $425 million available for use.

Management did not provide any guidance targets in the press release. That's the typical approach for AMC.

What management had to say

In the earnings release, CEO Josh Sapan avoided discussing new titles like The Night Watchman and The Preacher. Instead, he focused his comments on the impact of established blockbusters:

Our acclaimed and popular shows, including The Walking Dead, Better Call Saul and Orphan Black, are being watched across multiple platforms and create network and programming brands that are highly sought after by advertisers, distributors and consumers. We remain confident that our approach is the right one to succeed in a highly competitive and consolidating entertainment marketplace.

Looking ahead

AMC shares opened Thursday's trading slightly higher, roughly in line with overall market trends. The stock's price has fallen 33% over the last 52 weeks, and it is trading at 10.3 times trailing adjusted earnings -- an all-time low.

Maximizing value from proven hits like The Walking Dead may be AMC's preferred mode of operation for the moment, but the company is hard-pressed to come up with the next generation of advertiser-friendly eyeball magnets. Investors should keep a close eye on AMC's new shows over the next several quarters, because these titles will eventually be asked to pick up where the current hit library leaves off.

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Anders Bylund has no position in any stocks mentioned. The Motley Fool owns shares of and recommends AMC Networks. Try any of our Foolish newsletter services free for 30 days.

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