AMC Networks shares were punished after a shaky fourth-quarter earnings report

AMC Networks shares were punished after a shaky fourth-quarter earnings report

Updated with closing price. Shares in AMC Networks fell sharply on Friday following a weak fourth-quarter earnings report and a conference call with Wall Street analysts.

The stock initially fell by mid-numbers in pre-market trading following the earnings release, revealing a 23% decline in native advertising revenue and a 16% decline in affiliate revenue. Although it was difficult to draw a direct line between management’s comments on the call and the stock’s movement later in the morning, the selling intensified after the call. Shares fell 19% in the first hour of trading, to their lowest level since last October. It improved slightly in the afternoon but is still down 15% at $14.41.

Executives were asked during the call to provide their guidance on when the company’s top line revenues might stabilize or even return to growth. “We’ve been very clear over the past year moving forward about how we run the business and make it as efficient as possible,” said CEO Christine Dolan. “Primarily, we’re really waiting to see what happens in the industry. What I’m excited about is that we’re continuing to produce, through (entertainment and studios president Dan McDermott) and the team, really high-quality content.”

Dolan cited presentations by McDermott & Co. This week on the TCA Winter Press Tour. “This is part of our ongoing strategy to own and manage franchises that we can monetize over time,” she said. “As the market sorts itself out, the growth opportunity of recent years remains. I think it will stabilize. We’re kind of holding on to our knitting. … We’ll stick to the plan and we’re optimistic that over the next year or two the ship will right itself in our industry and things will open up again.”

While AMC Networks is often mentioned as a potential target for mergers and acquisitions given its size and stake in the increasingly difficult general entertainment software sector, it has been kept out of the deal scene due to the Dolan family’s control of its shares. Christine Dolan addressed this speculation at the top of the call in her written comments. “It’s hard to miss the fascination with the scale,” she said. “From our perspective, we see the power in being nimble and independent and appreciate the flexibility that this gives us in the marketplace. We have opportunities that frankly aren’t possible for non-vertically integrated programmers who are tied to large broadcast networks or distribution companies. We can really dance with anyone and we’re excited to use that structural advantage.” That comes with this independence to better serve our viewers and business partners.

Like its peers in the linear TV space that reckons with the advent of streaming, AMC Networks faces a host of challenges to its traditional business model. Dolan put a positive spin on the week’s news of the sports streaming venture involving Disney, Fox and Warner Bros. Television. Discovery, saying it demonstrated new possibilities for legacy companies in the streaming era. Despite the pressure on affiliate revenues, she said AMC Networks “feels positive about our relationships with our distributors,” noting that carriage deals have been completed in 2023 for about half of the company’s total footprint.

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