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AMC Earnings Show Gains

UPDATED: 1:20 p.m. ET

AMC Networks posted higher third-quarter profits despite missing new episodes of Mad Men, which cut into advertising growth.

Net income rose to $40 million, or 55 cents a share, from $25 million, or 37 cents a share, a year ago.

Revenues rose 4.6% to $284 million. 

"The core of our growth strategy continues to be our investment in original programming," CEO Josh Sapan said in a statement. "The Walking Dead's season two premiere, which was the highest rated dramatic show ever in basic cable history against key adult demos, and our performance in the 2011-2012 upfront, underscores the strength of this strategy. In September, AMC also won a record fourth consecutive Primetime Emmy Award for Outstanding Drama Series for Mad Men. Our programming successes are reflected in solid financial results as we continued to increase net revenues, AOCF and operating income in the third quarter."

Adjusted cash flow at AMC's national networks, including AMC, WE tv, IFC and Sundance Channel, rose 16% to $123.2 million. Revenues rose 3.9% to $258.3 million.

On the company's earnings call with analysts, Sapan said that third-quarter ad revenue was essentially flat. "This was caused most significantly by the airing of one original series on AMC in the third quarter of 2011 versus two in the third quarter 2010, and that absent second series in 2011 was Mad Men." A new season of Mad Men was delayed until 2012 by negotiations with series creator Matt Weiner.

Sapan said that in the fourth quarter, "we will again air two original series, the zombie themed series The Walking Dead and our new Western series Hell on Wheels, both of which have been extremely strong in the ratings."

In the scatter advertising market, Sapan said "we are selling somewhat closer to air than we did in the same period last. However our pricing is quite strong and in the recently completed upfront we were very successful in both price and volume and will begin those benefits in fourth quarter."

Affiliate revenue rose 6.9%.

In October, AMC Networks announced a distribution agreement with Netflix. He said the deal will start to show up in AMC's revenues in the fourth quarter. "We believe the manner in which we structured the agreement protects the existing cable ecosystem and the premiere linear window that goes on cable, while at the same time providing us with additional revenue for our increasingly desirable content in a post home video, digital syndication window."