AMC Networks (NASDAQ:AMCX) released fourth-quarter earnings on Thursday morning. Investors were quick to embrace the reported numbers, sending AMC's share prices more than 17% higher in the morning's trading session. The stock was up just 3% at 3 p.m. Thursday.

Here's a closer look at AMC's report.

AMC's fourth-quarter results: The raw numbers


Q4 2016

Q4 2015

Year-Over-Year Change

Net revenue

$730 million

$679 million


Net income attributable to AMC shareholders

$14.5 million

$90.1 million


GAAP EPS (diluted)




Data source: AMC Networks.

What happened with AMC this quarter?

The GAAP results don't look fantastic, but the reasons behind that were largely based on a non-cash accounting adjustment.

  • Thanks to strong ad sales and licensing revenue from hit shows like The Walking Dead, domestic sales increased 9.2% year over year. Operating income in this segment saw a 9.1% boost.
  • International sales, on the other hand, came in 0.5% lower. Operating losses in this division increased from $12.5 million to $87.8 million.
  • The GAAP results, as listed above, included a $67.8 million non-cash charge for goodwill impairment plus another $19.2 million of one-time charges. The goodwill hit was related to AMC's Amsterdam-based media logistics operation, part of a division formerly known as Chellomedia. Hence, these non-cash charges also explain the large operating losses in AMC's international segment.
  • Backing out these items from the bottom line, AMC's adjusted earnings landed at $1.30 per diluted share. That would be 6.5% below the year-ago period's bottom-line result, after applying a much smaller collection of similar adjustments.
  • The company struck up a couple of interesting partnerships in the fourth quarter, including a minority ownership position in comedy studio Funny or Die and a $73 million investment in indie film and TV studio RLJ Entertainment.

AMC is not known for detailed financial guidance, and this release contained none at all. The earnings call provided a handful of sweeping guidance statements, but no hard financial targets. Generally speaking, the first quarter of 2017 is up against some difficult year-over-year comparisons, but the year as a whole should deliver significant top-line growth.

What management had to say

"2016 was a successful year for our company both financially and operationally," said AMC CEO Josh Sapan in a prepared statement. "The Walking Dead remains the [No. 1] show on television by a wide margin and is a powerful example of programming that we own and distribute that commands a loyal audience, attracts advertising revenue, and has significant ancillary revenues that will benefit our business for years to come."

Sapan also underscored the long-term promise of AMC's recent investments in cinematic content, as well as the company's open attitude to partnering with streaming media services.

Zombies against a burning city skyline

Image source: Getty Images.

Looking ahead

It's difficult to think about AMC as a long-term investment without leaning heavily on The Walking Dead. The seventh season of the zombie drama may have lost a significant amount of loyal viewers compared to earlier seasons, but still holds the top spot for cable shows overall and AMC-owned content in particular.

If and when the show's star fades out, Saban still expects the franchise to continue driving AMC's business in many ways for years to come. The company is distributing The Walking Dead on a variety of platforms from syndicated international TV viewings and streaming media platforms to branded merchandise and third-party video game titles.

AMC is trying to copy The Walking Dead 's successful business model around other shows. The company produced 10 scripted series under its own ownership last year, and that expanded production slate has diversified and stabilized AMC's financial platform. Not every show can hit the audience jackpot, but a large collection of titles across a broad range of styles can lead to similar results.

That's the road ahead for AMC -- an ambitious production schedule, hoping to unlock several sustainable revenue sources for the long haul. And though it's hard to hit the mainstream jackpot with any given show, nobody would complain about a top-shelf hit or two along the way.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.