AMC Networks Inc.'s stock (ticker symbol AMCX) has risen by 2% premarket on Friday following the release of their second quarter earnings report. Despite a revenue miss, the network, which is known for its popular "The Walking Dead" franchise, surpassed profit estimates by a wide margin.
Strong Financial Performance
For the quarter, AMC Networks Inc. reported a net income of $70.2 million, or $1.60 per share, compared to $83.2 million, or $1.91 per share, in the same period last year. Adjusted per-share earnings stood at $2.02, significantly higher than the FactSet consensus estimate of $1.53.
However, there was a decline in revenue, which amounted to $678.6 million, down from $738.0 million in the previous year. This figure fell short of the $712.0 million FactSet consensus. The decrease in revenue was primarily due to lower advertising revenue, domestic affiliate revenue, and 24/7 Media production services revenue. Nevertheless, there was a silver lining as streaming revenue experienced a growth of 13%.
Declining Ad Revenues
Ad revenues took a hit in the quarter, declining to $167 million from $175 million. This decrease can be attributed to anticipated linear ratings declines, a soft ad market, and fewer original programming episodes during the period. However, this decline was partially offset by growth in digital and advanced advertising revenue.
Impairment Charge and Market Challenges
AMC Networks Inc. faced market challenges within its production services business, 24/7 Media. This led to an impairment charge of $24.9 million, covering reduced demand for new content and series cancellations from third parties. These challenges resulted in lower expected future cash flows for the company.
In the year-to-date, AMC Networks Inc.'s stock has fallen by 22%, while the S&P 500 has gained 17%.