The Walking Dead: AMC Networks Should Sell Its Studio While the Getting Is Good

AMC Networks is a zombie, Wells Fargo wrote in a Monday note to clients (and obtained by IndieWire), so make like Lionsgate and sell the studio while you still can.

With an enterprise value of $1.5-$1.6 billion, AMC Studios is worth a pretty penny — though not as pretty as MGM (sold to Amazon for $8.5 billion) or Lionsgate (Wells Fargo’s enterprise value: $3.9 billion). That’s today’s value, and the way things are trending, the number probably isn’t going up.

So: “break-up the company and monetize the content while there’s still time,” Steven Cahall and his team at the bank urged. As Lionsgate’s management eventually realized, the studio has to go first if you want to maximize value. The remainder of AMC Networks — its many cable channels, streaming services, and international business — will likely end up with private equity, probably. Those assets have a combined value of roughly $1.3 billion.

Spokespeople for AMC Networks did not respond to a request for comment on this story.

These aren’t the “Mad Men” and “Breaking Bad” days. (AMC doesn’t even own those shows.) And despite AMC Network’s multiple niche streaming services, the company is too tied to linear television at the worst time to ever be tied to linear television. That’s not where the money is.

Cord-cutting and declining ratings: They’re crushing cable, where AMC, BBC America, IFC, SundanceTV, and WEtv exist. Their combined low reach in a poor advertising environment is a death sentence — and oh yeah, here comes Netflix. Again.

At its May upfront, Netflix executives said its relatively new ad-supported tier had 5 million monthly active users. Once it hits 10 million subscribers, which will be soon, Netflix’s “Standard with Ads” plan will offer half the commercial impressions as the entirety of the AMC Networks portfolio. (AMC’s streaming services are ad-free.)

Without the scale of Comcast, Disney, Fox, Paramount Global, or Warner Bros. Discovery, you simply cannot compete in this environment. Hell, even some of those players probably can’t compete for long.

AMC Networks will probably be “the first media network/content company to be pushed to strategic maneuvers in an admission that the ecosystem is too challenging,” per Wells Fargo. It won’t be the last; the note called out Paramount, Warner Bros. Discovery, and Fox as a few that may need to follow suit. “The sooner the better in our view,” they wrote.

On Friday, when AMC Networks reports its second-quarter 2023 earnings results, you’ll see a company that is just treading water. To the layperson’s eye, the financials themselves might not look so bad — but those numbers are protected through drastic measures, like cutting content spend.

The modern move, which certainly is not unique to AMC Networks, is smart in the short term, but it “starves the network… of new quality shows and accelerates the long-term loss of engagement,” Cahall wrote.

Cutting off the content pipeline also prevents the creation and curation of new IP, which is what carries value for the studio; Anne Rice only wrote so much. So sell now, because as Wells Fargo titled its Monday note, “The walls are closing in.”

The analysts dropped their AMCX price target from $15 per share to $10.

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