AMC Networks' Profit Surges Despite Absence of 'Mad Men'

Quality Original Programming Underpins Rising Affiliate Fees

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'The Walking Dead'
'The Walking Dead' Credit: AMC

AMC Networks' third-quarter net income increased 58.4% to $40 million as growing distribution revenue lifted the company despite flat ad revenue, the company said today. Net income from continuing operations rose 19.5% to $40.3 million.

"The core of our growth strategy continues to be our investment in original programming," President-CEO Josh Sapan said in a statement. "'The Walking Dead' season two premiere, which was the highest-rated dramatic show ever in basic cable history against key adult demos, and our performance in the 2011-2012 upfront, underscores the strength of this strategy."

"The Walking Dead" didn't actually return until October, after the end of the third quarter, but its popularity has propelled AMC forward after smaller, critically acclaimed draws such as "Mad Men" and "Breaking Bad" put the network on the map.

Ad revenue in the third quarter was essentially unchanged from a year earlier, which the company attributed to the absence of "Mad Men" this year after it ran during the third quarter of 2010. But overall revenue grew 4.6%, partly because of a 6.9% increase in fees from distributors such as cable and satellite companies.

AMC Networks, which was spun off from Cablevision earlier this year, saw growth in both its national properties -- AMC, WEtv, IFC and the Sundance Channel -- and its international properties, which include AMC/Sundance Channel Global and IFC Films.

"They've been very successful at repositioning themselves in the advertising marketplace," said Brad Adgate, senior VP-research at Horizon Media. For all the cultural cachet "Mad Men" enjoys on Madison Avenue, Mr. Adgate noted, the cash is rolling in from the newer hits.

"'Mad Men' gets less than two-and-a-half millions viewers and has a median age in the mid-50s. These other shows do more than double than 'Mad Men' and their median age is significantly younger," he said. "Content is still king and they have content that viewers like."

Revenue from a recent deal with Netflix will start showing up in fourth-quarter results. "Mad Men" returns next year.

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