The share price is down in pre-market trading following the disappointing Q3 earnings release which contrasts with the company’s performance last year – a quarter when it racked up legal expenses for a court fight with Dish Network which also had temporarily stopped airing AMC Networks channels. The programmer just reported net income of $58.1M, +58.6% vs the period last year, on revenues of $395.3M, +19.1%. The Street expected revenues to be a tad higher, at $396.3M. Earnings from continuing operations at 80 cents a share missed forecasts for 86 cents. At the main National Networks unit — which includes AMC, WE tv, IFC, and Sundance Channel — revenues grew 20.2% to $367.9M with cash flow +24.5% to $144.9M. The company says that ad sales were +36.3% to $146M due to strong demand for original shows such as Breaking Bad and The Walking Dead. Meanwhile revenue from cable and satellite distribution fees was +11.4% to $221M. But the unit also shouldered higher programming and marketing expenses. At the International and Other operation — with overseas channels and IFC Films — revenues were +6.9% to $31.1M with cash flow -4.9% to a loss of $8.5M. AMC says IFC Films expenses rose in the quarter. Investors ultimately may consider the Q3 numbers to be a blip: AMC shares are +48% over the last 12 months — and when execs talk to analysts this morning they’ll likely will be peppered with questions about their new plan to buy Liberty Global’s Chellomedia. With that deal “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,” CEO Josh Sapan says.
Today’s agreement to pay $1B for Liberty Global’s international networks company Chellomedia ”dramatically changes the investment thesis” for AMC Networks, BTIG’s Richard Greenfield says. Many believed that the pay TV network company was ripe for a takeover more than two years after Cablevision spun it off. It’s savoring the success of shows including The Walking Dead, Mad Men and the recently wrapped Breaking Bad and a big payoff from the resolution last year of its breach of contract complaint against Dish Network. AMC’s shares are up about 95% since it went public, and +46% over the last 12 months. But Greenfield downgraded AMC to “neutral,” noting that that even though “timing for a sale appeared ideal,” management’s time and attention now “will be shifted to a significant portfolio of global cable network assets.” Bernstein Research’s Todd Juenger says the deal means “slower growth, more financial risk, and [AMC] becomes harder to acquire.” But others say that AMC’s long-term prospects look rosier as it expands its global reach.
AMC Networks significantly expands its footprint with the acquisition of Chellomedia, the international content division of John Malone’s Liberty Global. In May, Liberty put the business up for sale, expecting a deal valued at between $800M and $1B, The Wall Street Journal reported at the time. AMC, which has actively been increasing its global presence via international programming business, AMC/Sundance Channel Global, will pay $1.035B for Chellomedia. (Scripps Networks Interactive, Turner Broadcasting and Discovery Communications had previously been mentioned as suitors.) Chellomedia produces and distributes TV channels across such territories as the UK, Benelux, Central Europe, Spain and Latin America and reaches about 390 million households. Included in the deal are Chello-branded channels airing genres ranging from movies to entertainment, sports, children’s, lifestyle and documentary programming. Chellomedia’s stakes in joint ventures with A+E Networks, CBS International and other partners also fall under the acquisition, although Liberty will hold onto its Dutch premium channel business. This deal will provide AMC, home to Mad Men and The Walking Dead, with further outlets for programming from AMC, IFC, Sundance Channel and WE tv. Here’s the official release:
NEW YORK, NY, October 28, 2013 – AMC Networks Inc. (Nasdaq: AMCX) announced today it has reached a definitive agreement to acquire substantially all of Chellomedia, the international content division of Liberty Global (Nasdaq: LBTYA) for €750 million (approximately $1.035 billion USD). The transaction is expected to close in the first quarter of 2014.
The company had to expand the size of board to 14 to add Jonathan Miller — who was News Corp’s Chief Digital Officer from 2009-2012 and now is a partner at investment firm Advancit Capital. He’ll serve on …
Pay TV distributors who believe that the decks are stacked against them in retransmission negotiations with major content producers should take a look at the 180-page media and entertainment report out today from International Strategy and Investment Group analyst Vijay Jayant. He urges investors to buy shares of AMC Networks, CBS, 21st Century Fox, Time Warner, and Viacom. He’s neutral on Discovery, Disney, and Scripps Networks. The big reason: These eight companies, he says, “control 90% of total TV viewership and 60% of total film production in the U.S., which means that, for the most part, they have the power to determine how content is packaged and priced to distributors and, therefore, consumers.” That muscle will be evident over the next few years as they squeeze cable and satellite companies to pay $60B in carriage fees for their channels in 2016, up from $45B this year. These payments “are drivers for the overall sector.” Factoring in “the consumer’s inherent psychological need for entertainment (even during tough times),” Jayant predicts healthy profits for his eight companies, with annual average returns on invested capital over the next three years ranging from 40.1% for AMC to 9.9% for Time Warner.
The deal with eOne is AMC and Sundance Channel’s first exclusive international output partnership for scripted content. The parties already have a relationship with eOne the studio and international distributor behind AMC’s Hell On Wheels, and along with Fox International Channels, it’s the international distributor on The Walking Dead. The first series eOne will distribute internationally under the new pact are Halt & Catch Fire, a 1980s-set drama about the personal computing boom with Lee Pace, Scoot McNairy and Mackenzie Davis; Turn, a period drama based on Alexander Rose’s book Washington Spies and starring Jamie Bell; and The Red Road, about a local cop (Martin Henderson) struggling to keep his family together while policing two clashing communities. Click over for details:
With 39 Emmy nominations and now a strong Q2 earnings report, I suspect CEO Josh Sapan is in a good mood today. The bottom line was helped by a $133M contribution from Dish Network — part of its payment to resolve the breach of contract dispute involving the VOOM HD …
This is “a new, developing phenomenon,” AMC Networks CEO Josh Sapan told investors this morning at the Barclays’ Global Technology, Media and Telecommunications Conference. Although advertisers still crave ratings points, they also increasingly want to reach people who say that “there are only two or three shows I watch and I live and die for them.” The trend is gaining momentum as viewers discover opportunities to binge view shows on pay TV, VOD and streaming services including Netflix and Amazon Prime. In addition, young viewers become obsessive about programs when social networks such as Facebook and Twitter help to connect them with others who share their passion. As a result, “that favorite stuff in media is emerging as the most important [driver] of value,” Sapan says. That’s encouraging for networks such as AMC — which has high-engagement hits with dramas including Mad Men, The Walking Dead, and Breaking Bad. But it’s hard to build a business around the trend: “Good dramatic TV shows aren’t known until they’re on,” he says. And nobody has perfect pitch. “There are many shows that have spectacular television pedigree and the show doesn’t work” while others from untested producers or stars “take off like crazy.” Sapan says he’s encouraged by his upcoming shows including Low Winter Sun (a police drama), Turn (about Revolutionary War spies), Halt & Catch Fire (about the computing boom in the 1980s), and Line Of Sight (a sci-fi drama the AMC chief calls “nuanced and exquisite”).
The stock price is up nearly 6% pre-market after the company released a Q1 report that showed strong results in most key metrics. AMC Networks generated net income of $61.5M, +42.5% vs the period last year, on revenues of …
The cable operator will pocket $525M and AMC Networks will end up with $175M the companies said today in an SEC filing. This was the last big question remaining after Dish Network agreed in October to pay $700M …
NEW YORK, NY, March 13, 2013 – AMC Networks Inc. announced today that it has appointed James Maiella Senior Vice President, Corporate Communications. He will report to Ellen Kroner, Executive Vice President, Communications & Marketing.
In this role, Maiella will oversee business and trade media relations for AMC, IFC, WE tv and IFC Films. He will work closely with AMC Networks’ other Senior Vice President of Corporate Communications, Georgia Juvelis, who now adds additional corporate communications and corporate marketing responsibilities to her role, while continuing to oversee business and trade media relations for Sundance Channel and AMC/Sundance Channel Global, the company’s international programming business.
These look like interesting defensive maneuvers at a time when cable and satellite companies are threatening to drop little-watched channels. Sundance — which only reaches about 52M pay TV households — would seem to be vulnerable in some negotiations, although AMC Networks says it has recently completed long-term deals with Comcast, AT&T, and Verizon. But AMC Networks CEO Josh Sapan told analysts today that he recognizes the channel “is undernourished, in need of (investment) and rich in opportunities.” While execs offered few specifics, they noted that on April 22 Sundance will introduce its first fully owned scripted series, Rectify (from the producers of Breaking Bad), and that a second one will be coming as soon as next winter. There’ll be at least two scripted series in 2013 vs one in 2012. In addition, the company just announced that beginning March 4 Sundance will show the first four seasons of AMC’s Breaking Bad. Along with the Sundance investments, AMC is researching online distribution opportunities that “shouldn’t be confused with TV Everywhere” — the industry-wide streaming initiative — Sapan says. The goal is to become “educated and smart” in the possibility of distributing shows directly to consumers. “Think iTunes,” he says.
The cable programming company’s shares fell 10.4% in initial trading this morning after it released Q4 financials. AMC Networks says it generated $15.2M in net income in the quarter, -48.5% vs the previous year, on revenues of $366.7M, +8.2%. Analysts expected revenues to be closer to $370.1M. And earnings at 21 cents a share fell short of forecasts for 65 cents. AMC says it missed about $31M in affiliate fees in Q4 as a result of the fight with Dish Network, which kept AMC Networks’ channels off the No. 2 satellite service for several months ending November 1. Since the breach of contract dispute involved the defunct VOOM suite of HD channels, the litigation expenses show up in the International and Other unit where revenues fell 16.9% to $32.6M and operations ended up with a $4.3M loss from last year’s $6.9M profit. Over at the main National Networks business, revenues were up 10.8% to $338.6M with an operating cash flow of $106.7M, +5.6%. AMC says that ad sales were up 16% to $157M “due to strong demand for our original programming, primarily at AMC.” Distribution revenues were up 6.8% to $182M. But the company notes that it had to shoulder higher programming and marketing expenses as well as the temporary loss of carriage on Dish.