Dish says it is dropping AMC Networks

Dish subscribers who love AMC's "Breaking Bad" may be out of luck if a feud between the satellite broadcaster and the cable channel's parent AMC Networks isn't resolved soon. 

Besides AMC, home to "The Walking Dead," "Breaking Bad" and "Mad Men," other channels that could be dropped include WE, which caters to females, and IFC and Sundance, which focus primarily on independent cinema. Dish's contract with AMC Networks is up at the end of June. Dish has just over 14 million subscribers around the country.

Dish Network Corp. said it is dropping the channels because the ratings for the networks do not justify a rate increase that it says AMC Networks is seeking. Dish also said it was not happy that shows such as "Mad Men" and "Breaking Bad" are made available on other platforms such as Netflix and iTunes soon after the shows have aired on AMC.

However, AMC is not the only network whose content appears on other platforms soon after a cable run. Some shows may appear on Netflix or iTunes within days of a cable run. In other cases though, shows are held off of other platforms until after the season ends.

In a statement, AMC said Dish's plans to drop the channels has nothing to do with the performance of its networks or their cost, but instead with another legal battle the two companies are in.

In 2008, Voom HD, a now-defunct group of cable channels owned by AMC, sued Dish for $2.5 billion for breach of contract. The case is wending its way through the courts and last week Dish lost an appeal, which AMC said is the cause for the bad blood.

"It is unfortunate that, because of setbacks in an unrelated litigation, Dish even suggests that they might deny their customers access to some of their favorite networks and shows that are offered by every other major satellite and cable TV provider," AMC said.

Dish responded that the Voom litigation is a "separate matter" and that AMC's statement "distorts the facts of the current situation and incorrectly attempts to tie together two separate issues."

Fans of "Mad Men" who are Dish subscribers don't have to worry. The show will have ended its season before June 30.

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Photo: AMC's "Breaking Bad." Credit: Ursula Coyote / AMC.

 

AMC CEO Josh Sapan downplays tensions with programmers

AMC Networks Inc. Chief Executive Josh Sapan on Thursday downplayed all the recent scrutiny floating around the company's flagship cable channel, AMC, regarding tensions with producers of its high-profile shows "Breaking Bad" and "The Walking Dead."

"With profile comes attention," Sapan said when asked about the high-profile negotiations with Sony Television for future episodes of "Breaking Bad" and the departure of a key producer of "The Walking Dead." Sapan made his remarks at the Bank of America Merrill Lynch Media, Communications & Entertainment Conference in Beverly Hills.

Although Sapan did not elaborate on any of the drama going on behind the scenes of some of the network's most valuable dramas, he did say, "If a show succeeds ... generally there tends to be some tension about money."

In the case of "Breaking Bad," at issue was a new deal for a final season of the critically acclaimed series about a math teacher who becomes a meth manufacturer. AMC wanted to make far fewer episodes than Sony, but the two eventually found a middle ground and struck a deal.

With "The Walking Dead," the departure of Frank Darabont as executive producer was attributed to the network's desire to trim the budget of the costly show about zombies. Neither AMC nor Darabont have ever commented on the circumstances regarding his exit from the show. 

That there were issues on both shows so soon after AMC made a lucrative deal to keep its flagship show "Mad Men" going for a few more seasons also led to speculation that the channel's spending on that hit meant the other shows were going to have to endure cuts.

Sapan did say AMC is undervalued, a sentiment shared by many industry analysts. Distributors pay about 25 cents per-subscriber, per-month to carry AMC, according to information from industry consulting firm SNL Kagan. Sapan said the channel deserves to get 75 cents per-subscriber, a fee that would put the channel in the same neighborhood as USA, Disney Channel and TNT. 

-- Joe Flint

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Photo: A scene from "Breaking Bad." Credit: Ursula Coyote / AMC

Potential list of suitors for AMC Networks should go beyond usual suspects

Cablevision Systems Corp. has finally spun off the bulk of its programming assets as AMC Networks and now the guessing game is starting as to who might gobble it up.

Besides the AMC channel, home to the dramas "Mad Men," "Breaking Bad," "The Walking Dead" and "The Killing," the newly public AMC Networks is also parent of WE, a network that caters to women with a heavy load of reality fare, as well as IFC and Sundance, two smaller channels that primarily offer independent movies.

AMC is the crown jewel of the bunch. Once home to old movies, it now rivals HBO in terms of critically acclaimed shows. "Mad Men" is probably second only to "The Sopranos" in the amount of ink spilled by columnists, critics and bloggers obsessing over every moment of the show.

Shares of AMC Networks have performed below the expectations of some analysts since Cablevision distributed them to its shareholders on June 30, when they closed at $43.50 in "when issued" trading. Late in Monday's trading session, the stock was going for $37.60, down 94 cents, or 2.4%, since Friday's close.  At that price, the company's market cap is almost $3 billion.

Among the usual suspects that come to mind when cable networks come on the market, Time Warner, parent of Turner Broadcasting's TBS and TNT; News Corp., home of FX, Comcast, owner of USA, Bravo and Syfy; and Disney, whose holdings include ABC Family and Disney Channel; have all been mentioned as potential suitors. Another name that will surface sooner or later is Viacom, parent of MTV, VH1, Comedy Central and Nickelodeon.

All of those companies, however, already have significant cable programming holdings and it is unclear whether AMC Networks really fits into their respective strategies.

Disney in particular tends to steer clear of niche networks in favor of general entertainment and sports programming. News Corp. has FX and Fox News driving their cable business as well as their own sports channels. Comcast might be wary of gobbling up even more programming after enduring a lengthy and challenging review process of its purchase of NBCUniversal. Time Warner, like Disney, usually focuses on mainstream channels.

Viacom does have more niche-type networks and might see some advantages to adding AMC Networks to its portfolio. The other big cable network operators -- Discovery Communications and Scripps Interactive -- are not experienced in operating networks that do more than program reality.

One company that seldom gets mentioned as a potential buyer of AMC is CBS. A case could be made that for CBS adding a few basic cable networks would be a good move.

CBS currently has only a couple of cable properties -- pay-TV channel Showtime and CBS Sports Networks, a small sports channel that focuses primarily on college athletics. Although Showtime has done a nice job of turning itself around and becoming a player in the original programming game, it still trails HBO in terms of revenue.

Adding an established basic cable network like AMC would also give CBS more leverage with cable and satellite operators it wants to pay top dollar to carry its television stations. In addition, it would give CBS more outlets for its content. Furthermore, most of its holdings are in broadcast TV and radio -- businesses that have only one revenue stream. The dual revenue stream that cable networks have -- subscriber fees and advertising -- would also help CBS weather tough economic times.

A real long shot buyer could be Time Warner Cable. Once part of Time Warner, it was spun off because Time Warner CEO Jeff Bewkes decided being a pure play content company was the way to go. Time Warner Cable has also made moves recently indicating it too believes in the power of content. In Los Angeles, it struck a big deal to land the TV rights to the Los Angeles Lakers, which it will use to start a cable sports network.

Admittedly, it's a big jump from running some regional sports channels to operating entertainment networks, but the brass at Time Warner Cable has said it sees owning content as a way to control its own economic destiny.

Most analysts don't expect a sale of AMC Networks to happen for at least a year if not two. Don't be surprised if the usual suspects take a pass and a surprise buyer emerges.

-- Joe Flint

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Photos: Top: Don Draper (Jon Hamm) and Megan (Jessica Pare) with youngest son Gene Draper in an episode of "Mad Men." Credit: AMC. Right: Rick Grimes (Andrew Lincoln) in AMC's "The Walking Dead." Credit: AMC.

AMC Networks doesn't make killing in first day as public company

Looks like Wall Street had a similar reaction to AMC Networks Inc.'s first day as a public company as critics did to the much-maligned season finale of AMC's murder mystery "The Killing."

AMC Networks -- parent of cable channels AMC, WE, IFC and Sundance -- closed its first day as a public company at $39.85 a share, down 8.3% from the $43.50 price that shares were issued at Friday morning.

Cable programmers are usually viewed as hot commodities by Wall Street. However, AMC Networks, which was spun off by New York-based cable operator Cablevision Systems Corp., has some red flags, according to Wall Street analysts.

For starters, unlike two other publicly traded programming companies -- Discovery Communications and Scripps Networks Interactive Inc. -- AMC Networks doesn't make or own big stakes in much of the programming that it carries on its channels. AMC's biggest shows include "Mad Men" and "Breaking Bad," both of which are from outside studios. That, wrote Barclays Capital analyst Anthony DiClemente, "places the company at a disadvantage" when negotiating carriage deals with distributors.

Furthermore, DiClemente thinks that AMC and WE, the two biggest channels of the company, are already getting too much money from distributors in license fees and that the future revenue growth will be modest.

"Based on our analysis, AMC and WE are 25% above market on their affiliate fee deals, while networks like HGTV, Food Network, Investigation Discovery and Nickelodeon are significantly below market," he said.

There is a school of thought that AMC Networks will be a takeover target. The Dolan family, which holds the majority of stock in Cablevision, also has the majority of voting shares in AMC Networks. While  family members may be looking to sell, their large stake should discount the stock price, some analysts feel. Furthermore, the Dolans are notoriously tough negotiators and can be hard to read by Wall Street.

Not everyone is down on AMC. While DiClemente has a target price of $32 per share, BTIG analyst Rich Greenfield issued a report this week with a target price of $50 for AMC Networks. BTIG anticipates several potential suitors for the programmer, including Comcast's NBCUniversal and Time Warner. Of course, those companies already own substantial cable programming holdings and may not feel a need to add four smaller networks.

As for the Dolans, Greenfield wrote that the family has been "far more investor friendly over the past couple of years than in the prior two decades." 

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Photo: A scene from AMC's "The Killing." Credit: Chris Large / AMC.