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Photo illustration: Rafael Henrique/SOPA Images/LightRocket, Getty Images
Updated with closing price. Shares of AMC Networks fell sharply on Friday following a shaky fourth-quarter earnings report and a conference call with Wall Street analysts.
The stock initially fell by mid-single digits in pre-market trading after the earnings release, after it was revealed that domestic ad revenue fell 23% and affiliate revenue fell 16%. The selling intensified after the conference call, although it was difficult to directly distinguish between management’s comments on the conference call and stock price movements in the second half of the morning. Shares fell 19% in the first hour of the trading day, hitting their lowest since October last year. It improved slightly in the afternoon, but still ended 15% lower at $14.41.
On the conference call, executives were asked to offer advice on when the company’s top-line earnings might stabilize or return to growth. “Over the past year and going forward, we have been very clear about how we manage our business and make it as efficient as possible,” CEO Christine Dolan said. “At the end of the day, we’re really waiting to see what’s going on in the industry. What makes me happy is [Entertainment and Studios President Dan McDermott] And the team, really high quality content. ”
Mr. Dolan cited McDermott & Company’s presentation at this week’s TCA Winter Press Tour. “This is part of our continued strategy to own and manage franchises that can be monetized over time,” she said. “As the market stabilizes, there will continue to be opportunities to increase sales going forward. We intend to do so and are optimistic that over the next year or two, the ship will get right back into our industry and things will open up again.”
AMC Networks is often mentioned as a potential M&A target given its size and stake in the increasingly difficult general entertainment programming space, but the Dolan family’s control of the stock keeps it out of the deal arena. I’ve been pushed away. Christine Dolan addressed the speculation in scripted comments at the beginning of the conference call. “It’s hard to miss the appeal of scale,” she said. “From our perspective, we see our strength in being agile and independent, and we value the flexibility that it provides in the marketplace. We have an opportunity that is not possible for non-vertically integrated programmers who are tied to broadcast networks and distribution businesses. We can truly dance with anyone and better serve our viewers and commercial partners. We are keen to take advantage of the structural advantages that come with this independence.”
Like its peers in the linear TV business considering the launch of streaming, AMC Networks is grappling with many challenges to its traditional business model. Dolan said he was positive about this week’s news about sports streaming ventures 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, AMC Networks “feels positive about our distributor relationships,” she said, with transportation contracts completed for about half of the company’s total footprint in 2023. He pointed out that.
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