AMC Stock Soars With Better-Than-Expected Q4 Earnings

02/23/2017 10:40 am EST

When a network's flagship program sees its ratings cut nearly through its first eight episodes, one might expect their stock and earnings to drop a bit. This wasn't the case for AMC despite The Walking Dead's alarming ratings slide in the first half of its seventh season.

AMC Networks shares jumped 13% on Thursday morning after the station reported Q4 earning which bested Wall Street expectations.

The report from AMC documents a 3.1% increase in domestic ad sales for Q4 of 2016. Price hikes offset the lower ratings at the network. The results come with the impairment charge of $68 million tied to reduced profit estimates for AMC's Amsterdam-based media logistics facility. This causes the net income to sit at $14.5 million, tremendously down from the $90.1 million in the final three months of 2015. However, revenues at $729.6 million were up 7.5%.

The top line is impressively ahead of the $709.8 million which Wall Street expected. Impairment charge considered, the earnings clocked in at $1.30 a share, topping the expectations of $1.26.

The Walking Dead, "remains the #1 show on television by a wide margin and is a powerful example of programming that we own and distribute that commands a loyal audience, attracts advertising revenue, and has significant ancillary revenues that will benefit our business for years to come," AMC Networks CEO Josh Sapan said. "With a rapidly expanding studio business, we now have a growing portfolio of shows that we own that provide this kind of opportunity for our business. In addition, we are embracing changing viewing habits by making strategic investments in streaming services that fit well with our programming and the audiences at our network brands."

Ad sales weren't the only thing bolstering AMC to this success. Affiliate revenues, including licensing, jumped 15.6% while operating expense climbed, as well, but were ultimately off-set by reduction in marketing expenses. The network took a $5 million programming write down, $11 million less than it took in Q4 of 2015.

The network will likely be satisfied by the ratings of the biggest show through 2017, so far. The Walking Dead returned with its third highest-rated episode of the season and followed it up with over 11 million viewers in its second week.

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The Walking Dead airs Sundays at 9 pm ET on AMC. For complete coverage and insider info all season long, follow @BrandonDavisBD on Twitter.

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