Domestic Ad Sales, International Contributions Lift AMC

Programmer Registers Double-Digit AOCF Gains in Q4, 2014
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AMC Networks Inc., benefiting from strong domestic advertising growth and contributions from international holdings, rang up double-digit gains in adjusted operating cash flow and revenues in the fourth quarter and 2014 overall.

The programmer reported a 40% rise in net revenues during the fourth quarter to $609 million, boosted by a 19.7% rise at its national networks – AMC, WE tv, BBC AMERICA, IFC and SundanceTV -- to $499.8 million from $417.5 million the prior year. Ad revenue climbed 24.3% to $255 million behind demand for its original fare, while distribution fees advanced 15.3% to $245 million. The growth in distribution revenues was primarily attributable to increases in affiliate fees, including the inclusion of BBC America, as well as increases in licensing revenues.

There was a fivefold surge from international segment – fueled by the company’s acquisition of Chellomedia   from Liberty Global-- to $110.3 million from $17.9 million.

Fourth-quarter adjusted operating cash flow improved 72.1% to $193.6 million from $98.3 million, largely reflective of the rise in revenues. Expenses were essentially flat as increases related to BBC America were offset by a decline in programming and marketing expense. Programming expense including a charge of $28 million in the current year period related to the write-off of programming assets, as compared to a charge of $52 million in the prior year period.

The 87.1% surge in  operating income to $159 million stemmed from the AOCF amelioration. The operating income increase resulted from 75.8% growth at the national networks partially offset by an increase of $2 million in operating loss internationally and from other considerations.

Over the full year, AMC Networks net revenues grew 36.7%  to almost $2.18 billion, lifted by 13.5% growth at national networks to $1.74 billion and a 677% jump internationally to $434.2 million. AOCF reached $659 million, up 25.8%, from $524.2 million in 2013. National networks' AOCF increased 9.8% to $633.6 million from $576.8 million. The international and other segment recorded $24.4 million in AOCF, compared with a $56.5 million loss a year ago.  

Operating income decreased 6.2% to $546 million from $582 million in 2013, which was buoyed by a litigation settlement gain from Voom HD of $133 million recorded in the second quarter that year. Excluding the impact of that item, operating income would have increased at a 21.6% clip.

“The fourth quarter and full-year 2014 was strong for AMC Networks with double-digit percentage increases in our revenue and cash flow," said president and CEO Josh Sapan, "The strong performance of our original programming with record ratings at our national networks has led to continued increases in affiliate fees and advertising revenues.

Sapan called the company's joint venture with  BBC America "another important and valuable network to our portfolio, delivering high-quality programming that attracts audiences and will drive additional opportunities for growth domestically."

He also noted that "International expansion continues to be a focus and we believe our Chellomedia acquisition provides a strong platform for our content, enabling us to capitalize long term on international pay TV growth and drive long-term value for our shareholders."

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