British Invasion Gives AMC Networks Inc a Boost

By Tim

The Walking Dead returned for a sixth season last month and has already been greenlit for a seventh. Photo Credit: Frank Ockenfels 3/Gene Page/AMC

Zombies and time lords helped AMC Networks turn in another quarter of strong growth as domestic advertising revenue soared, overshadowing weakness in the international sector.

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Global viewing ofFear The Walking Dead couldn't make up for the lack of a theatrical hit the size of IFC'sBoyhood, which went on to win an Oscar for actress Patricia Arquette.Here's a closer look at the company's third quarter performance:

Metric Q3 2015 Q3 2014 YoY Growth
Revenue $632.17 million $519.55 million 21.7%
Operating income $159.27 million $110.23 million 44.5%
Adjusted EPS $1.09 $0.83 31.3%
Adjusted cash from operations $190.58 million $141.87 million 34.3%

Sources: S&P Capital IQand AMC Networks press release

Commenting on the results, CEO Josh Sapan said in a press release:

What went right:Advertising revenue at the company's core national networks segment soared 52.3% year-over-year thanks to the inclusion of BBC America ads in results.Doctor Whoand other signature British properties helped bring in $210 million, or roughly 40% of national networks revenue. The results also included revenue from the summer spinoff,Fear the Walking Dead, which debuted to 10.1 million live plus same-day viewers of the Aug. 23 pilot premiere.

What went wrong:International revenue fell 7% to $114.1 million, but that's not the real story. National networks distribution revenue from affiliate fees and syndication are more interesting in that they climbed just 20.1% despite a much-touted deal with Hulu for exclusive streaming rights to Fear the Walking Dead, among other programming. It's possible that AMC won't begin recognizing revenue for that deal until licensed shows begin airing. Fear won't make its way to Hulu before 2016.

What's next:Investors want to keep a close watch on international revenue, especially now that new original series are entering the lineup. Martial-arts dramaInto the Badlands premieres on Nov. 15.

Financially, AMC didn't offer much of a forecast during the earnings call held Thursday morning. Instead, CFO Sean Sullivan told analysts that foreign currency "headwinds" could keep a lid on growth in the international business unit. Other comments were high-level, aimed at reassuring investors that AMC management is "optimistic" about performance heading into the fourth quarter.

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Tim Beyers feels like the walking dead when there's no coffee to be had. He's also a member of theMotley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission but didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim'sweb homeandportfolio holdingsor connect with him onGoogle+,Tumblr, or Twitter, where he goes by@milehighfool.The Motley Fool owns shares of and recommends AMC Networks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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