AMC Networks Sinks 10% In U.S. Ad Revenue, More Declines Expected: Analyst

AMC Networks witnessed plummeting double-digit percentage third-quarter ad-revenue declines both in the U.S. and abroad, with overall revenue sinking and operating income falling dramatically.

Friday trading of AMC stock closed sharply down -- 12% to $18.39.

Net revenues for the company were down an eye-opening 16% to $681.3 million, with operating income sinking by 20% to $150.7 million.

U.S. domestic ad revenues sank to a worse-than-expected 10% to $180 million -- “due to lower linear ratings, softer scatter and direct-response markets and fewer original hours in the third quarter.” This decline was partially offset by digital and advanced advertising-revenue growth.

Downturns were not just seen in the company's ad business. Domestic TV operations also witnessed distribution fees suffering, sinking 16% to $407 million. In addition, content-licensing revenues went south -- down 63% to $58 million due to the timing and availability of deliveries in the quarter.



UBS, which has AMC Networks under a “sell” valuation, says investors need to brace for lower advertising and content-licensing revenue to come.

International business was harder hit, down 24% to $99.3 million.

Advertising revenues fell 31% to $17 million, primarily due to a planned wind-down of two U.K. channels as well as unfavorable foreign currency issues.

On the streaming front -- something all legacy, linear TV-based companies are actively pursuing -- AMC witnessed 44% growth to 11.1 million paid subscribers versus the year-ago period, with streaming revenue growth of 41%.

Subscription revenues -- a major part of streaming -- posted a modest 8% hike due to increased streaming revenues, primarily driven by streaming subscriber growth.

During the period AMC Networks added 11 free ad-supported TV (FAST) channels to Roku.

There was some improvement, with adjusting operating income down 13.5% to $194 million -- a slightly better picture than the 15.7% decline for the most recent nine-month period ($601.0 million) versus the same period a year ago.

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