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AMC Networks (AMCX)
Q4 2012 Earnings Call
February 26, 2013 10:00 am ET
Seth Zaslow - Senior Vice President of Investor Relations
Joshua W. Sapan - Chief Executive Officer and President
Sean S. Sullivan - Chief Financial Officer, Chief Corporate Officer and Executive Vice President
Edward A. Carroll - Chief Operating Officer
Bryan Goldberg - BofA Merrill Lynch, Research Division
Michael C. Morris - Davenport & Company, LLC, Research Division
Richard Greenfield - BTIG, LLC, Research Division
Christopher Merwin - Barclays Capital, Research Division
Ryan Fiftal - Morgan Stanley, Research Division
Vasily Karasyov - Susquehanna Financial Group, LLLP, Research Division
Benjamin E. Mogil - Stifel, Nicolaus & Co., Inc., Research Division
Alan S. Gould - Evercore Partners Inc., Research Division
Caroline C. Anastasi - JP Morgan Chase & Co, Research Division
» Boise Management Discusses Q4 2012 Results - Earnings Call Transcript
» Kaman Management Discusses Q4 2012 Results - Earnings Call Transcript
Thank you. Good morning, and welcome to the AMC Networks' full year and fourth quarter 2012 earnings conference call. Joining us this morning are members of our executive team: Josh Sapan, President and Chief Executive Officer; Ed Carroll, Chief Operating Officer; and Sean Sullivan, Chief Financial Officer.
Following a discussion of the company's full year and fourth quarter 2012 results, we will open the call for questions. If you don't have a copy of today's earnings release, it is available on our website at amcnetworks.com. This call can also be accessed via our website.
Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance or results and involve risks and uncertainties that could cause actual results to differ. Please refer to the company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The company disclaims any obligation to update the forward-looking statements that may be discussed during this call.
Further, we will discuss non-GAAP financial information. We believe the presentation of non-GAAP results provides you with useful supplemental information concerning the company's ongoing operations and is appropriate in your evaluation of the company's performance. Please refer to the press release and related footnotes for GAAP information and a reconciliation of GAAP to non-GAAP information, which we'll refer to on this call.
I would now like to turn the call over to AMC Networks' President and CEO, Josh Sapan.
Joshua W. Sapan
Well, good morning, and thank you for joining us. I'll provide a brief summary of our financial performance followed by an update on the business and then turn it over to Sean Sullivan for greater financial detail.
2012 was a successful year for AMC Networks. We made significant strides on both the financial and operational front, and the fundamentals of our business were quite strong. In the fourth quarter, the company reported 8% revenue growth and AOCF declined 4%. As we discussed on our last call, our results for the quarter were negatively impacted by our litigation with DISH Network and the associated temporary drop of our networks from the DISH platform. Sean will discuss the impact in more detail, but as a reminder, our networks were off the DISH platform for essentially the month of October and we incurred marketing and legal expenses related to the dispute during that period. If not for the situation with DISH, we would have reported healthy double-digit growth in AOCF in the quarter.
For the full year 2012, we grew revenue 14% and AOCF 5%. Excluding the impact of the dispute with DISH, we would have also reported healthy double-digit growth in AOCF for the full year.
Our overall strategy remains fairly simple and straightforward. I think it can best be described as being content-driven. As the overall pay TV ecosystem continues to evolve, we believe that we will be increasingly defined by the content that we create. We've been steadily and fairly significantly increasing the investment in our programming across all of our channels. Our 4 networks are each at various stages of evolution against that strategy, but the focus for each of them has principally been on that content. In 2012, original programming remained at the core driver of our success.
AMC, the largest of our channels, has clearly been the most notable for us, as its slate of scripted dramas has met with the greatest retention. The third season of The Walking Dead drove records for basic cable TV. The mid-season premiere that aired earlier this month drew almost 8 million adults 18 to 49, making it the most watched episode in the series' history. Season to date, viewership in key demos adults 18 to 49 has increased roughly 50% over the prior season and has made the show the #1 program on all of television among 18- to 49-year olds, outdelivering hits such as Modern Family and CIS, the Big Bang Theory and Two and a Half Men on broadcast.
As we look into 2013, we're pleased that our other scripted series including the critically acclaimed Mad Men and Breaking Bad will be returning along with the crime drama, The Killing and our Western series, Hell on Wheels.
As you may be aware, we've also green led a new cop story set in Detroit called Low Winter Sun that we expect to air in the second half of the year.