AMC Networks reported higher profits in the fourth quarter, but a larger-than-expected write-off for cancelled programming left earnings below Wall Street expectations
Net income rose 132% to $35.38 million, or 49 cents a share, from $15.19 million, or 22 cents a share. The results include a $52 million write-off for cancelled programs including AMC Network’s Low Winter Sun.
Fourth-quarter revenues rose 18.7% to $435 million.
"In 2013, we delivered strong financial results, with double digit increases in both net revenues and adjusted operating cash flow driven by the success of our original programming at AMC, IFC, SundanceTV and WE tv,” Josh Sapan, president and CEO, said in a statement.
At AMC’s national networks segment, adjusted operating cash flow decreased 1% to $106 million in the fourth quarter. The company said programming expenses increased, including the $2 million charge. Revenue rose 19.3% to $404 million.
Advertising revenue rose 30.9% to $205 million due to strong demand for original programming, including top-rated series The Walking Dead, the company said.
“Heading into the quarter, we expected to see a write-down on programming costs and strong ad growth,” said Michael Nathanson, analyst at MoffettNathanson Research. “The ad growth was largely in-line but the write-down was materially worse.”
Analyst David Joyce of ISI Group said AMC’s ad revenue growth was very strong, but the programming write-offs put adjusted operating cash flow and earnings per share below expectations. But the numbers were “above our estimates if the charges are removed,” he added.
“We would be buyers of any AMC pullback due to its industry-leading advertising growth, and as the core operations were closer to our estimates than the reported results. Additionally, another very strong advertising growth quarter is underway,” Joyce said.
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