‘The Walking Dead’ Is In “Early Stages Of Life,” Per AMC Networks Boss Josh Sapan, But Mixed Q2 Earnings Send Stock Down 5%
The Walking Dead franchise is “in the early stages of life” and “has many opportunities for growth,” AMC Networks CEO Josh Sapan asserted during a conference call with Wall Street analysts Wednesday morning.
The company has made moves to back up Sapan’s assertion, such as revealing this month at Comic-Con the first taste of its feature film extension of the zombie horde, teaming with Universal Pictures. Despite the potential of those new horizons, the company delivered a mixed second-quarter financial report, and investors reacted Wednesday by sending AMC shares down 5% in early trading. They have slipped 8% in 2019 to date and have mostly stayed in a range between $50 and $60 a share over the past three years.
Total revenue came in at $772 million, which was below analysts’ consensus estimate for $783.2 million. Earnings per share hit $2.25 on a diluted basis and $2.60 on an adjusted basis, which was well ahead of estimates for $1.93.
One line on the income statement that proved unsettling was an 11% drop in advertising revenue to $219 million. The company chalked that up to the timing of when original programming aired, as well as lower delivery, partially offset by higher pricing.
Distribution revenue inched up 1% to $385 million, a gain the company credited to increased content licensing revenue.
During the call, Sapan emphasized the importance of owning content, including The Walking Dead, and noted that the Emmy-nominated BBC America series Killing Eve was “commissioned internally.” Pressed for financial details about the Walking Dead film, which is the start of a planned series of films centered on protagonist Rick Grimes, he declined to get specific. With two series on the air and another on the way, the company has long encountered skepticism in media circles and on Wall Street as far as the long-term viability of the franchise and the risks posed by its possible decline.
In the earnings release and throughout the call, AMC Networks emphasized the emergence of the company’s four targeted direct-to-consumer streaming services, Shudder, Acorn TV, UMC and Sundance Now. As Deadline reported on Monday, the four services are expected to reach 2 million subscribers as a portfolio by the end of 2019 and will be profitable as a group by the end of 2020. By 2024, Sapan said, the four should reach 5 million-7 million subscribers and bring in about $500 million in revenue.
“As we continue to remain focused on creating sought-after premium content – which propels our entire enterprise – we believe direct-to-consumer, along with owning more of our intellectual property and expanding our studio, represent significant growth areas for us,” Sapan said in the earnings release.