AMC Networks Earnings: Continuing Linear Decline Overwhelms Streaming and Licensing Progress

AMC Networks’ revenue continues to shrink, as the success it is having in streaming and the levers it is pulling to expand the reach of its content cannot offset the ongoing decline in linear television. Despite finding areas of cost savings, operating profit declined much more rapidly than sales, though we attribute much of that to revenue mix and lumpiness associated with licensing revenue. We expect challenges to persist, but we like the efforts that management is making to transform its business, and like other companies so reliant on traditional media, we think AMC’s stock price more than reflects the challenges. We’re maintaining our $15 per share fair value estimate.