AMC Networks' Q3 Streaming Business Provides Bright Spot On Otherwise Muted Q3 Growth, Stock Soars

AMC Networks Inc AMCX reported a third-quarter FY23 revenue decline of 6.6% Y/Y to $636.95 million, missing the consensus of $657.80 million.

Meanwhile, U.S. ad sales were down 18% at $147 million, blaming "anticipated linear ratings declines, a challenging ad market and fewer original programming episodes within the quarter."

Affiliate revenue decreased 13% due to basic subscriber declines, including the 3% revenue impact of a strategic non-renewal that occurred at the end of 2022.

Despite these setbacks, AMC Networks reported that streaming subscribers increased 4% to 11.1 million as compared to 10.7 million subscribers in the prior year period. As compared to 2Q'23 subscribers of 11.0 million, Q3 subscribers sequentially increased 1%.

Streaming revenues of $142 million increased 9%, primarily driven by year-over-year streaming subscriber growth.

Adjusted EPS of $1.85 fell 11.9% YY, beating the consensus of $1.28. Operating income decreased 20% from the previous Q3 to $120.85 million, with free cash flow at $99.2 million.

Citing the company's earning conference call, the Hollywood Reporter noted that the management lowered its full-year 2023 revenue target from $2.8 billion to $2.7 billion. CFO Patrick O'Connell said this "reflects softness we are seeing in content licensing revenues, as well as the continuation of a difficult advertising environment." But he highlighted that AMC Networks was sticking to its full-year bottom-line forecast. 

"Despite these headwinds, we are reiterating our 2023 adjusted operating income outlook and expect to be in the range of $650 million-$675 million, reflecting continued and better than previously anticipated cost discipline," the report added, citing O-Connell.

Price Action: AMC shares are up 17.60% at $15.50 on the last check Friday.