AMC, WE tv Lead Rainbow’s 18% Ad Surge

Cablevision’s Rainbow Media unit enjoyed a robust second quarter, growing its advertising revenue by 18 percent versus the year-ago period.

The ad-supported cable nets AMC, WE tv and IFC in Q2 generated $222.7 million in overall net revenue, improving on last year’s $199.1 million by 12 percent. When Sundance Channel, the local News 12 operations and other Rainbow business are thrown into the mix, the unit took in a grand total of $280.5 million on the quarter, up 11 percent versus $252.3 million.

Operating Income at the three core networks grew 12 percent to $86.4 million compared to the prior-year period.

Cablevision credited higher pricing at AMC and WE tv for the marked increase in ad sales revenue. AMC finished the quarter with 88.5 million subscribers, up 2 percent from Q2 2009, while WE tv closed out the period with 63.7 million subs, a gain of 2 percent. IFC reaches 51.2 million subs (up 3 percent), while Sundance Channel is now in some 39 million homes, boosting its reach by 18 percent.

AMC ranked 19th among ad-supported cable networks in Q2, averaging 968,000 prime time viewers, a dip of 6 percent versus the year-ago period. Adults 25-54 accounted for 44 percent of the network’s nightly deliveries (428,000). We tv averaged 274,000 viewers in prime (down 9 percent), of whom 104,000 were women 18-49, an improvement of 7 percent from 97,000.

Thus far in this current earnings season, national ad sales results have been uniformly strong. Comcast Networks saw its Q2 ad sales dollars grow 21 percent, while the Turner nets were up 14 percent versus the year-ago period. Discovery Communications lifted its sales 13 percent, while News Corp. improved 11 percent across its broadcast and cable properties. Viacom notched a 4 percent uptake.

Cablevision’s core MSO business took in $1.37 billion in net revenue, up 6 percent from the year-ago $1.3 billion. Local ad sales rose 27 percent to $33 million. That segment accounts for less than 3 percent of the company’s overall revenue haul.

Despite facing intense competition from Verizon’s FiOS TV service, Cablevision added 284,500 new RGUs in the last year. For video subs, the average revenue generated per customer climbed 7 percent to $149.12.

“We’re holding up quite well and continue to win back customers from our competition,” said Cablevision chief operating officer Tom Rutledge, adding that approximately 40 percent of subs who leave to kick the tires on FiOS TV wind up returning to the MSO.

Rutledge said the operator is ready to embark on the second phase of its deployment of a network-DVR service, with an eye toward fully launching the product before the end of the year. Two years after a lawsuit grounded Cablevision’s early trials of nDVR, a federal appeals court in August 2009 gave the operator the green light to begin offering the service, saying it did not constitute a violation of copyright law.

While Cablevision’s scheme to stream all “saved” content from servers in its head-end will save the company millions on traditional set-top recorders and associated truck rolls, some network ad sales chiefs have worried that the remote DVR service could cause an explosion of time-shifted viewing, thereby increasing commercial-avoidance behavior.

DVRs are used in 37 percent of all US TV households.