(Reuters) - Cable TV broadcaster AMC Networks Inc (AMCX.O) said it expects slower advertising growth this quarter as its latest series, “Turn”, draws fewer viewers than its older hits, sending its shares down nearly 18 percent.
AMC also reported a first-quarter profit that missed analysts’ estimates as it spent more on new programs to replace hit shows such as “Breaking Bad” and “Mad Men”.
The company's newest show "Turn" debuted in April with 2.1 million viewers, less than half of what its hit zombie show "The Walking Dead" started with. (r.reuters.com/sap29v)
“It sounds like the costs will continue to be higher-than-expected in the second and third quarters, as they are replacing licensed shows with wholly owned shows,” Evercore Partners analyst Alan Gould said.
“Turn”, which tells the story of four childhood friends who became spies during the American Revolutionary War in 1778, is facing stiff competition from HBO’s hit series “Game of Thrones”.
“The series is not doing that well. I think they’ll have to write off that show,” Albert Fried & Co LLC analyst Rich Tullo said.
AMC has also lined up “Halt & Catch Fire,” a series set during the personal computer boom of the 1980s, for a June launch.
The company’s operating expenses soared 48 percent to $376.9 million in the quarter ended March 31, partly due to its purchase of Chellomedia — the former international content arm of Liberty Global Inc (LBTYA.O).
Revenue jumped 37 percent to $524.6 million, beating the average analyst estimate of $507.5 million.
Advertising revenue increased 27 percent as more people watched the fourth-season finale of “The Walking Dead”.
National networks revenue rose 20.7 percent to $448.7 million. Revenue from AMC’s international networks category, which includes Chellomedia, rose seven-fold to $76.6 million.
Net income rose to $71.4 million, or 98 cents per share, from $61.5 million, or 85 cents per share, a year earlier.
Excluding items, the company earned $1.04 per share.
Analysts on average had expected earnings of $1.16 per share, according to Thomson Reuters I/B/E/S.
AMC shares were down 9 percent at $59.61 on the Nasdaq on Thursday afternoon after falling to $53.99 earlier in the day.
Almost 4 million shares changed hands by 1320 ET, about five times the stock’s 10-day moving average.
Reporting By Lehar Maan in Bangalore; Editing by Sriraj Kalluvila and Simon Jennings