AMC Networks Earnings: Strong Free Cash Flow Overshadows Ongoing Linear TV Struggles

AMC posted a mixed second quarter as revenue was below and adjusted EBITDA came in ahead of FactSet consensus. Cost management drove the EBITDA beat, particularly at the corporate level, but struggles in domestic pay TV persisted because of the soft advertising market and the ongoing secular decline in subscribers. We think AMC lacks the financial resources required to operate as a streaming-first business and that the Dolan family should consider a sale or merger in the near to medium future. We maintain our $27 fair value estimate.