Business Combination

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Business Combination

Acquisitions

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). AMC Networks funded the purchase price with cash on hand and also borrowed an additional $600 million under its Term Loan A Facility (see Note 9).

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, Chello DMC (the broadcast solutions unit), and Atmedia (the advertising sales unit). The acquisition provides the Company with the opportunity to accelerate and enhance its international expansion strategy. The Company views this international opportunity as one that has the potential to provide long-term growth and value.

The Company 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 is 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 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:
Cash, net of cash acquired (1)	$	996,586
Preliminary purchase price allocation:
Accounts receivable, trade	127,808
Program rights	93,505
Prepaid expenses and other current assets	27,634
Deferred tax asset, net	21,021
Property and equipment	42,852
Intangible assets	296,300
Assets held for sale	18,603
Other assets	31,399
Accounts payable	(21,627		)
Accrued liabilities	(45,833		)
Program rights obligations	(31,984		)
Deferred tax liability, net	(24,590		)
Liabilities held for sale	(18,130		)
Other liabilities	(13,996		)
Noncontrolling interests acquired	(30,873		)
Fair value of net assets acquired	472,089
Goodwill	524,497
	$	996,586

(1) The cash consideration transferred includes the acquisition of an equity method investment acquired during the three months ended September 2014.

The following unaudited pro forma financial information is based on the historical condensed 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 the Company's historical condensed consolidated financial statements if they had occurred 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 9), 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.

	2014		2013
	Pro Forma Financial Information for the Nine Months Ended September 30,		Pro Forma Financial Information for the Three Months Ended September 30,		Pro Forma Financial Information for the Nine Months Ended September 30,
Revenues, net	$	1,595,324	$	483,819	$	1,422,047
Income from continuing operations, net of income taxes	$	186,728	$	57,473	$	257,440
Net income per share, basic	$	2.59	$	0.80	$	3.59
Net income per share, diluted	$	2.57	$	0.78	$	3.53

Revenues, net and operating income attributable to Chellomedia of $261,104 and $28,801, 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 September 30, 2014. Acquisition related costs of $14,128 (of which, $1,853 are included in the operating results of Chellomedia from the acquisition date to September 30, 2014) were incurred during the nine months ended September 30, 2014 and are included in selling, general and administrative expense.

Other Acquisitions

During the three months ended September 2014, a subsidiary of AMC Networks acquired the shares of a small international channel for a purchase price of €21 million (approximately $28,600). The acquisition is included in the International and Other segment and builds on the Company's international expansion strategy and the potential to provide international long-term growth and value.

The allocation of the purchase price to the acquired net assets consisted primarily of affiliate relationships intangible assets, accounts receivable and deferred tax liabilities. The estimated goodwill associated with the acquisition of $9,857 is generally not deductible for tax purposes. The allocation of the purchase price to the acquired identifiable net assets is preliminary and subject to revision.

Pro forma financial information related to the acquisition is not provided as its impact was not material to our condensed consolidated financial statements.