AMC Networks Inc (NASDAQ: AMCX) navigated a challenging third quarter of fiscal 2024, reporting a 5.9% year-over-year revenue decline to $599.6 million. Despite this, the company surpassed analyst expectations, exceeding the consensus estimate of $587.6 million. While revenue dipped, AMC Networks delivered an adjusted EPS of 91 cents, beating the analyst consensus estimate of 62 cents. This represents a 50.8% year-over-year decrease in earnings.
The decline in revenue can be attributed to several factors. Domestic Operations saw a 13% decrease in affiliate revenue, driven by a reduction in basic subscribers. Advertising revenues also experienced a 10% year-over-year drop, reflecting anticipated linear ratings declines and a challenging advertising market. However, there was a bright spot in content licensing revenues, which increased by 31% to $81 million due to the availability of deliveries.
Despite the challenges, AMC Networks highlighted the continued growth of its streaming business. The company reported a 5% increase in streaming subscribers, reaching 11.8 million compared to 11.1 million as of September 30, 2023. This growth translated into a 7% increase in streaming revenues to $152 million, driven by subscriber growth and price increases.
In terms of profitability, the consolidated adjusted operating income decreased 19% to $150 million, with free cash flow reaching $53.94 million. CEO Kristin Dolan emphasized the company’s commitment to its critical strategic pillars: programming, partnerships, and profitability. Dolan highlighted significant progress made across all three areas during the quarter.
Looking ahead, AMC Networks has generated $293 million in free cash flow year-to-date, making steady progress towards its goal of $500 million in cumulative free cash flow over two years. Dolan also emphasized the importance of new and expanded partnerships with major players like Charter Communications, Inc (CHTR), Netflix Inc (NFLX), and Amazon.Com Inc (AMZN). These partnerships are playing a crucial role in driving the company forward and delivering unique, high-quality programming across a growing range of platforms.
AMC Networks stock surged 4.79% to $8.75 in premarket trading on Friday. Despite the positive earnings report, the stock has plunged close to 57% year-to-date due to previous earnings misses in the last three quarters.
The company’s focus on streaming growth, coupled with strategic partnerships and a commitment to profitability, suggests a path towards future success. While the current macroeconomic environment presents challenges, AMC Networks’ ability to navigate these headwinds while delivering strong streaming performance offers a glimmer of optimism for investors.
