In this segment from the MarketFoolery podcast, host Chris Hill and Motley Fool Asset Management's Bill Barker dig into the first-quarter report of cable channel operator AMC Networks (NASDAQ:AMCX), which pleased the market by exceeding expectations.

Worth noting, though, is that those expectations had been somewhat muted, given that ratings for its flagship show, The Walking Dead -- and its many ancillary properties -- were known to be dropping a bit. Because of those concerns, revenue and earnings that were essentially flat were good enough for Wall Street. The Fools consider AMC's ad rates, the broader outlook for its many networks, its strategy to respond to the threat of Netflix, and other drivers of the business.

A full transcript follows the video.

This video was recorded on May 10, 2018.

Chris Hill: Let's move on to AMC Networks. Shares of AMC up nearly 10% this morning. First quarter profits came in higher than expected. I'm assuming at least part of the story here is the tax cut, because coming into this quarter, there was a little bit of concern, in part because the flagship show for AMC right now, Walking Dead, or, I guess, Fear The Walking Dead -- clearly, I'm not an actual viewer of said show -- ratings down just a little bit. So, I think there was a little bit of concern. But, you tell me.

Bill Barker: Yeah, it's Walking Dead and Fear The Walking Dead, and numerous other shoot offs of it. If you go to the AMC website and scroll down, they have The Walking Dead, Fear The Walking Dead, Talking Dead, which, I guess, is talking about the show --

Hill: That's a show that Chris Hardwick, a podcast host that I enjoy a great deal, yes, it airs right after the show. We talk about doubling down. Clearly, AMC Network, tripling down on zombies.

Barker: The Walking Dead Extended Episodes, The Walking Dead Red Machete --

Hill: Please tell me there's a musical. Tell me if there's a Walking Dead! The Musical.

Barker: -- The Walking Dead Conversations, not to be confused with Talking Dead. It just goes on. So, if there's softness in that brand, then they're going to be in trouble. I think they showed that they got the ad rates a little bit higher than last quarter, where they'd had some softness in the ad rates. Bottom line and top line, very flat year over year, which seems to be enough for investors today.

Hill: Here's what could help: if they could actually produce the next season of Better Call Saul. Which, in the past, has come in the spring, and here we are in the spring. Fans of the show like myself are just sort of looking around, saying, "Where's the next season?" They don't even have a firm date on when it's going to start. They're saying, "Fall of 2018." People like me would like a little bit more specificity.

Barker: I guess you would. You're going to have to wait. You're going to have to suffer. Your interest will be increased. They have a lot of different networks over there.

Hill: IFC.

Barker: IFC. WE tv.

Hill: OK. If you tell me there's a television network called WE tv, sure. I'll believe that.

Barker: There is. I don't think it's aimed toward us.

Hill: Which ironic, because it's named WE.

Barker: [laughs] I think the WE, the W probably has something to do with women, because I think that's more of the target audience. MeTV, I think, would be the one for us.

Hill: Yes. [laughs]

Barker: Instead of WE tv. But, that, I think, is their second-biggest network. I'm not sure.

Hill: It's interesting, I saw a couple of comments from the executives, I believe this was from the call. One of the things that AMC, and networks in its category, is trying to do to stem the tide of Netflix is to talk up not only the quality of their programming, but also their ability to promote those shows. And I think there's a little something to that. I don't know, from an investor's standpoint ... I think that matters more on the content creator side of thing as opposed to investors. If you're an investor and you're looking at Netflix and AMC and just look at the past few years, it's kind of easy to figure out which one has been the better investment.

But, I do think there's something to, when showrunners and producers are looking at their options, in terms of who they're going to go with, one of the things that AMC can legitimately say with regards to Netflix is, "We're going to give you more promotion of your show on our network than Netflix will," simply because Netflix is cranking out a new thing -- whether it's a movie, a television show, a limited-run series, a comedy special -- they're cranking out a new thing pretty much every day this year.

Barker: Yeah. That may be the case, certainly, for the producers. There's a little bit more visibility to some of these things. But, certainly, if Netflix is able to pay more, that speaks, too.

Hill: [laughs] That does.

Barker: Netflix has been spending wildly, and it's working out for them. I think everybody who's partnering with them is pretty happy about the money that they're paying. I think.

Hill: I would think so.

Barker: For all these things. Like anything else, you get more money getting past seasons one and two. So, having a smaller playground to compete in, AMC doesn't have the opportunity to start a new show every day. But, it's all kind of flat there, which is maybe not too bad, in an era of cord-cutting, to maintain your revenues. But, I think today's news was more relief than really demonstrating that things are rapidly improving.

Bill Barker has no position in any of the stocks mentioned. Chris Hill has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends AMC Networks. The Motley Fool has a disclosure policy.