[ad_1]
Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images
UPDATED with closing price. AMC Networks shares fell sharply on Friday following a shaky fourth-quarter earnings report and a conference call with Wall Street analysts.
Shares initially fell in the mid-single digits in premarket trading following the earnings release, which revealed a 23% drop in national 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 move later in the morning, the selloff intensified after the call. Shares fell 19% in the first hour of trading, to their lowest level since last October. They improved slightly in the afternoon, but still ended down 15% at $14.41.
The call asked executives to offer guidance on when the company’s top-line revenue might stabilize or even return to growth. “We have been very clear over the past year and going forward about how we are managing the business and making it as efficient as possible,” said CEO Kristin Dolan. “As far as revenue goes, we’re really waiting to find out what’s going on in the industry. What makes me happy is that we continue to produce, through (Entertainment and Studios president Dan McDermott) and the team, very high quality content.”
Dolan cited McDermott & Co.’s performances this week at the TCA Winter Press Tour. “This is part of our ongoing strategy to own and manage franchises that we can monetize over time,” he said. “As the market sorts itself out, the opportunity to increase revenue in the coming years is still there. I think everything will be alright. In a way we become attached to our fabric. …. “We’re going to stick to the plan and we’re optimistic that over the next year or two years the ship will bounce back in our industry and things will open up again.”
While AMC Networks is often mentioned as a potential M&A target given its size and involvement in the increasingly complicated general entertainment programming sector, the Dolan family’s control of its shares has kept it out. of the scope of transactions. Kristin Dolan addressed the speculation early in the call in her written comments. “It’s hard to miss the fascination with scale,” she said. “From our perspective, we see strength in being agile and independent and value the flexibility this gives us in the market. We have opportunities that frankly are not possible for non-vertically integrated programmers who are tied to large broadcast networks or distribution businesses. We really can dance with anyone and we are excited about using this structural advantage that comes with this independence to better serve viewers and our business partners.”
Like its peers in the linear television business facing the dawn of streaming, AMC Networks faces a number of challenges to its traditional business model. Dolan put a positive spin on the week’s news about the sports streaming venture involving Disney, Fox and Warner Bros. Discovery, saying it showed new possibilities for legacy companies in the streaming era. Despite the pressure on affiliate revenue, he said AMC Networks “feels positively about our relationships with our distributors,” noting that carriage agreements were completed in 2023 for about half of the company’s total footprint. company.