AMC Networks Inc. Used Share Buybacks to Power 18% Earnings Growth

Cable-network operator and premium-content producer AMC Networks (NASDAQ: AMCX) reported second-quarter results in the early morning hours of Thursday. AMC posted a buyout-boosted revenue line and stable net profits, which combined with a generous share-buyback program to drive earnings per share 18% higher.

AMC Networks’ second-quarter results: The raw numbers


Q2 2018

Q2 2017

Year-Over-Year Change

Net revenues

$761.4 million

$710.5 million


Net income attributable to shareholders

$106.2 million

$102.6 million


GAAP earnings per share (diluted)




Data source: AMC Networks.

What happened with AMC Networks this quarter?

Sales in the national networks division increased 3.7% year over year, landing at $627 million. The gains were driven by higher distribution revenues related to the company’s portfolio of premium cable channels, including IFC, SundanceTV, and the namesake AMC channel.

At the same time, ad revenues increased by a more muted 0.8% as AMC balanced out lower ad volumes with higher pricing per minute of airtime.

The international and other division saw sales rising 32% higher, to $147 million, powered almost entirely by a $30 million contribution from the recent majority-owner investment in Levity, mostly known as an arranger of live comedy events. Levity’s large top-line impact did not translate into a meaningful difference in this segment’s operating profits.

AMC Networks bought back and retired roughly 3 million shares during the second quarter, for a total of $159 million, reducing the diluted share count by 12.6% over the last four quarters.

Image source: Getty Images.

What management had to say

AMC Networks CEO Josh Sapan said in a prepared statement:

Our financial performance reflects our continued ability to create high-quality content that stands out, including the widely acclaimed and Emmy-nominated BBC America original series Killing Eve, which debuted in the quarter and became the only scripted series in more than a decade on linear television to grow its ratings every week over its first season. In an environment that is rapidly changing, our strong track record, along with our size and our attractive price to distributors, will enable us to continue operating from a strong competitive position, take advantage of growth opportunities, and create value for shareholders.

Looking ahead

Moving ahead from this moment in a rapidly changing entertainment industry will require some nimble feet among AMC’s management, and Saban wants to be up to that task. In a conference call with analysts, Saban explained that he sees internet-based MVPDs, or multi-channel video programming distributors, playing a larger part of his company’s distribution future.

Although these virtual MVPDs still represent a relatively small percentage of the U.S. pay-TV universe, approaching ten percent or so, the trends toward consumers adopting internet-delivered TV is growing.

We think it becomes very interesting when one considers a day when these smaller internet bundles begin to capture a more significant share of the overall pay-TV universe. And we think our offering of fewer channels of very high quality at a compelling price with extraordinarily strong content will serve us very well as the distribution landscape evolves, including the changing role of retransmission fees for broadcasts and what happens with sports.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends AMC Networks. The Motley Fool has a disclosure policy.

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