Luxor Capital and AMC Networks
Luxor Capital reduced its stake in AMC Networks (AMCX) through the sale of 809,184 shares during the fourth quarter. The position currently accounts for ~3.0% of the fund’s portfolio. In addition to AMCX, Luxor Capital held positions in companies belonging to the media and telecommunications sectors such as Twenty-First Century Fox (FOXA), AT&T (T), and Liberty Global (LBTYA), which together made up 7.96% of the hedge fund’s portfolio.
Overview of AMC Networks
AMC Networks is a pioneer in the cable television programming industry known for delivering high quality programming content to its audience. The firm primarily focuses on film and original productions. Since its inception in 1984, AMCX has created critically acclaimed TV series such as Breaking Bad, The Walking Dead, Mad Men, Hell on Wheels, and Better Call Saul, all of which were created in the second golden age of television that began in the early 2000s.
In June 2011, AMCX became an independent publicly traded company after its spin-off from Cablevision Systems (CVC). The company’s operations are carried out through two segments:
- National Networks includes five programming networks that are distributed within the United States: AMC, BBC AMERICA, WE tv, IFC, and SundanceTV.
- International and Other includes AMC Networks International, IFC Films, AMC Networks International-DMC, and also online content distribution initiatives.
The company derives its revenues from two channels. The affiliation and licensing revenues received from distributors of its programming made up 62% of total revenues in fiscal year 2014. The company’s revenues from advertising accounted for 38% of its overall revenue.
Strong fourth quarter performance
Revenues were up 40% in 4Q14 due to higher advertising revenues, an increase in affiliation fees, and the acquisition of BBC America. The revenue growth coupled with less than proportional growth in expenses, led to net income increasing to $77.6 million from $35.4 million in the corresponding period last year.
Recent acquisitions set to drive growth into the future
AMCX entered into a joint venture with BBC America in October 2014. BBC America is available in over 80 million households and is home to high quality programming content, including Doctor Who, Sherlock, Top Gear, and Planet Earth. The joint venture is set to be a major growth catalyst in the coming years, as it sets up AMCX pretty well in terms of growing its business domestically by attracting more audience and driving TV ratings upward.
On the international front, the $1 billion acquisition of Chellomedia, which operates under the brand name, AMC Networks International, is set to expand its viewership numbers in Europe. AMCX makes up 0.43% of the iShares S&P MidCap 400 Growth ETF (IJK).
The next part of this series will cover AMCX’s decreased position in Madison Square Garden (MSG).