Zombies Don't Mix With the Winter Olympics for AMC Networks Inc.
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Cable network and content production studio AMC Networks (NASDAQ: AMCX) reported fourth-quarter results on Wednesday night. Some big tax items muddied the year-over-year comparison waters. Ad sales struggled while content distribution operations soared.
Here's a closer look at AMC Networks' Q4.
AMC Networks' fourth-quarter results: The raw numbers
| Metric | Q4 2017 | Q4 2016 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $727 million | $730 million | (0.4%) |
| Net Income | $145 million | $14.5 million | 900% |
| GAAP Earnings per share (diluted) | $2.33 | $0.20 | 1,065% |
Data source: AMC Networks.
What happened this quarter?
Unadjusted earnings were distorted by a $68 million tax benefit in the fourth quarter. This was a non-cash item, recognizing the newly enhanced valuations of the company's deferred tax assets and liabilities, which outweighed a $11 million tax expense related to AMC's foreign earnings. Adjusted to factor out these tax effects and other non-cash items, earnings rose 29% year over year to $1.68 per diluted share.
AMC's national cable networks recorded $606 million in sales, down from $614 million in the year-ago period. Within that sum, distribution revenues rose 7% while advertising sales fell 10%. The company is battling lower advertiser interest by charging higher ad fees, and this was the result of these efforts.
The international and other division saw sales rise 7% to $127 million, mostly driven by organic subscriber growth in the AMC Networks International segment, and its streaming video services, Sundance Now and Shudder.
Operating profits decreased by 7% in the national networks segment, reflecting lower revenues and increased programming costs. The international operations segment cut its operating losses from $88 million to $20 million. The big difference -- in Q4 2016, it took a big goodwill write-down on its money-losing Netherlands-based media distribution center, which it then sold in July 2017.
Image source: Getty Images.
What management had to say
In a prepared statement, AMC CEO Josh Sapan focused on his company's biggest hits.
"Our core networks continue to perform well, with AMC delivering 4 of the top 10 dramas on cable in 2017, with The Walking Dead, Fear the Walking Dead, Better Call Saul and Into the Badlands, " Sapan said. "As we continue to evolve and adapt in a world of changing viewer consumption habits, we believe AMC Networks occupies a position of unique strength."
Sapan also pointed to strong subscriber growth for Shudder and Sundance Now, though he declined to provide any firm viewer numbers.