Business Combination

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

Business Combination

Acquisition of Chellomedia

On January 31, 2014, certain subsidiaries of AMC Networks purchased substantially all of Chellomedia (a combination of certain programming and content distribution subsidiaries and assets purchased from Liberty Global plc) for a purchase price of €750 million (approximately $1.0 billion), subject to adjustments for working capital, cash, and indebtedness acquired and for the purchase of certain equity method investments. AMC Networks funded the purchase price with cash on hand and also borrowed an additional of $600 million under its term loan A facility (see Note 7).

The acquisition provides AMC Networks with television channels that are distributed to more than 390 million subscribers in over 130 countries and span a wide range of programming genres, most notably movie and entertainment networks. The acquisition of Chellomedia's operating businesses include: Chello Central Europe, Chello Latin America, Chello Multicanal, Chello Zone, the broadcast solutions unit, Chello DMC and the advertising sales unit, Atmedia. The acquisition provides us with the opportunity to accelerate and enhance our international expansion strategy. The Company views this international opportunity as one that has the potential to provide long-term growth and value.

We have accounted for the acquisition of Chellomedia using the acquisition method of accounting, whereby the total purchase price was allocated to the acquired identifiable net assets of Chellomedia based on assessments of their estimated respective fair values, and the excess of the purchase price over the fair values of these identifiable net assets was allocated to goodwill and represents primarily the potential economic benefits that the Company believes may arise from its international expansion strategy. The goodwill associated with the Chellomedia acquisition is generally not deductible for tax purposes.

The acquisition accounting for Chellomedia as reflected in these condensed consolidated financial statements is preliminary and based on current estimates and currently available information, and are subject to revision based on final determinations of fair value and final allocations of purchase price to the identifiable assets and liabilities acquired. The primary estimated fair values that are not yet finalized relate to the valuation of intangible assets, property and equipment, noncontrolling interests acquired and income taxes.

The following table summarizes the preliminary allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed. The excess of the purchase price over those fair values was allocated to goodwill.

Consideration Transferred (1):
Cash, net of cash acquired	$	993,210
Preliminary purchase price allocation:
Accounts receivable, trade	133,200
Program rights	93,505
Prepaid expenses and other current assets	27,635
Deferred tax asset, net	12,677
Property and equipment	39,041
Intangible assets	306,564
Assets held for sale	18,928
Other assets	35,154
Accounts payable	(21,627		)
Accrued liabilities	(45,833		)
Program rights obligations	(31,984		)
Deferred tax liability, net	(17,220		)
Liabilities held for sale	(18,130		)
Other liabilities	(14,119		)
Noncontrolling interests acquired	(22,009		)
Fair value of net assets acquired	495,782
Goodwill	497,428
	$	993,210

⁽¹⁾ The cash consideration transferred is subject to adjustments in future periods for working capital, net debt acquired and for certain equity method investments that were not acquired at the acquisition date.

The following unaudited pro forma financial information is based on the historical consolidated financial statements of AMC Networks and the historical combined financial statements of Chellomedia and is intended to provide information about how the acquisition of Chellomedia and related financing may have affected AMC Networks' historical consolidated financial statements if they had closed as of January 1, 2013. The unaudited pro forma information has been prepared for comparative purposes only and includes adjustments for additional interest expense associated with the terms of the Company's amended and restated credit agreement (see Note 7), estimated additional depreciation and amortization expense as a result of tangible and identifiable intangible assets acquired, and the reclassification of the operating results of the Atmedia business to discontinued operations (see Note 4). The pro forma information is not necessarily indicative of the results of operations that would have been achieved had the acquisition taken place on the date indicated or that may result in the future.

	Pro Forma Financial Information for the Three Months Ended March 31,
	2014		2013
Revenues, net	$	553,681	$	468,995
Income from continuing operations, net of income taxes	$	74,288	$	63,878
Net income per share, basic	$	1.04	$	0.90
Net income per share, diluted	$	1.02	$	0.88

Revenues and operating income attributable to Chellomedia of $61,289 and $4,742, respectively (excluding the discontinued operations of Chellomedia's advertising sales unit, Atmedia), are included in the condensed consolidated statement of income from the acquisition date, January 31, 2014 to March 31, 2014. Acquisition related costs of $14,031 (of which, $1,853 are included in the operating results of Chellomedia from the acquisition date to March 31, 2014) were incurred during the three months ended March 31, 2014 and are included in selling, general and administrative expense.