Why Netflix should buy AMC

http://jasonevanish.com/2013/09/12/why-netflix-should-buy-amc/

by jevanish • 13 years ago

144 91 13 years ago

DanBlake• 13 years ago

I really dont agree.

Breaking Bad and Mad Men are ending shortly.

Walking dead seems to be tapering off fans, turning from less of a zombie show to more of a drama ( each episode is 95% talk, 5% zombies ).

The fact is, both breaking bad and mad men would make the price of AMC unrealistically high. If Netflix did want to buy them, they should wait until the season after when both shows are no longer on and get it for a song.

A much more astute purchase would be HBO/Cinemax/Shotime

xfour2• 13 years ago

It's so much about what they currently have as that they have shown for a channel, with what is presumably a much smaller budget that the big three premium channels you mention to turn out hits.

I personally think the author is onto something here, as AMC obviously knows how to do production at a high level, and the point is they need volume of shows as well.

jaynos• 13 years ago

It'd be cheaper for Netflix to poach AMC's top talent and invest in new original shows without buying an entire network.

untog3• 13 years ago

But AMC doesn't do production. They buy the rights to the shows from production companies. This post makes zero sense.

dclowd9901• 13 years ago

Walking dead seems to be tapering off fans, turning from less of a zombie show to more of a drama ( each episode is 95% talk, 5% zombies ).

I'm sorry to derail, but I am so sick of this being considered as a "problem" with the show. The show is about human beings facing their inevitable demise. Even the title "The Walking Dead" is a play on words, referring to the survivors, rather than the zombies themselves. The show, the novel are both dramas first, and zombie stories second, where the zombie story is simply a backdrop to the very human drama of coping with one's own death and the death of loved ones.

The show has gotten worse, but that's because the characters have gotten more bland and the scenarios have gotten more tepid. It has nothing to do with drama:zombie ratio. Would you criticize Breaking Bad because you don't see as much crack being made in more recent episodes? How fucking stupid.

If this is a major problem to you, then you don't get the show and probably shouldn't be watching it anyway. I'm sure Fox will cook up some nice, bland, predictable zombie-loaded crapfest for you in due time.

ianstallings3• 13 years ago

Don't hold back, tell him how you really feel.

Zimahl• 13 years ago

Would you criticize Breaking Bad because you don't see as much crack being made in more recent episodes? How fucking stupid.

It's not stupid at all. The meth on Breaking Bad is not the plot, the plot is cancer-stricken man is pulled into the seedy world of illegal drugs and how he participates. The plot of Walking Dead is survival in a zombie world. If you aren't going to focus on conflicts with zombies then they should've just set it in a post-apocalyptic world sans zombies.

dragonwriter• 13 years ago

Would you criticize Breaking Bad because you don't see as much crack being made in more recent episodes?

That would be like criticizing The Walking Dead because you don't see as many vampires in recent episodes.

swanson2• 13 years ago

Most posts about the future of the "Golden Age" of TV indicate that AMC is about to drop off the scene entirely. Breaking Bad and Mad Men are titans but they are on their last legs, Walking Dead has been getting worse and worse. The new goldenboy on the scene is FX but it seems like they have their own plans (they recently segmented into two channels, one for comedy and one for drama).

I am not sure what Netflix gains content wise from buying AMC - they already have rights to Breaking Bad and Mad Men. Orange is the New Black and House of Cards both seem to be better received than any of AMC's new programming (Low Winter Sun is getting skewered by blogs/critics).

I agree that Amazon and Netflix are in the midst of the original content battle. Netflix is taking the analytical approach, whereas Amazon Studios seems to be scaling the typical production process to the web (scripts -> pilot -> pickups).

In the end, I think AMC needs Netflix more than Netflix needs AMC, so I don't see this kind of acquistion happening. But still a fun article to think about. Thanks for posting!

PS If you are interested in this kind of meta-TV stuff, check out Andy Greenwald's stuff on Grantland: http://www.grantland.com/contributor/_/name/andy-greenwald

fraXis• 13 years ago

When you say Walking Dead has been getting "worse and worse" are you referring to the show itself or the ratings? While the show itself is debatable, the ratings are not suffering in the least.

‘Walking Dead’ Season 3 Mid-Season Finale Ratings Top 15 Million http://screenrant.com/the-walking-dead-season-3-ratings/

swanson2• 13 years ago

I was speaking in terms of quality. I think both can fuel subscriptions/customer acquistion. Quality leads to "omg you have to watch this show it is soooo good" and ratings lead to "everyone I know is watching this, I should give it a try"

yid2• 13 years ago

Your points are valid, but the deal might make sense just for the syndication rights to Breaking Bad and Mad Men in the future, possibly as exclusives.

dsl• 13 years ago

AMC, Netflix, etc. are just licensees of the content. It is just like being the first one to buy a copy of Photoshop, you don't have any influence or financial interests over future sales.

For the rights you describe, Netflix would need to figure out how to buy Sony.

kbenson• 13 years ago

Why buy AMC? Netflix can just bid on the shows themselves, and have them directly. Or is AMC itself actually making the shows? My understanding is that there are show companies that make them, but they pitch the show to networks until they get funding (or maybe even create a bidding war for hot properties in the business).

therobot24• 13 years ago

The author forgets to mention that buying AMC might be interpreted as declaring war on other content producers. Sure Netflix has dabbled a bit in funding productions, but starting to slice into another pie will just make their core business model more difficult to maintain if misinterpreted.

sujal• 13 years ago

This is probably not a big concern anymore. Almost all the major studios are in bed with a distributor of some kind. HBO & Time Warner, NBC/Universal and Comcast, and so on. Disney is the only one I can think of without some cable arm attached, maybe Viacom? Fox has/had Sky internationally and used to own a piece of DirecTV, IIRC.

Thus, Netflix wouldn't be an outlier, but part of a broad change/consolidation happening to the industry.

fleitz• 13 years ago

From my limited understanding of the industry AMC doesn't actually make the content, they just buy it.

Having finished Orange is the New Black I think Netflix has the right people to make decent decisions as to what to buy. It would seem to me to make more sense to invest directly in the content rather than buying a purchasing team.

hapless2• 13 years ago

Netflix and AMC have very different business models, and Netflix' business would cannibalize AMC's.

AMC makes a small amount of premium content on a continuous basis, and forces cable companies to carry a mixture of paid channels and advertising. AMC is also vastly more profitable, both in terms of P/E ratio (18 vs 300) and gross earnings (200MM vs 40MM), so it's not as if their "legacy" model is hurting them.

Netflix makes a small amount of premium content and sells itself as an alternative to cable, undercutting the traditional AMC model. Their core goal in making content is just to have a library they don't have to license from outside. It doesn't have to be current or ongoing, just big.

It's true that both of them rely on premium content as a loss leader but they have very different ways of earning money and capturing an audience. It would be hard to reconcile one with the other.

tptacek• 13 years ago

First, a lower P/E also says the market has lower expectations about future profitability. It doesn't make a whole lot of sense to compare the profits of a company extracting profits from an existing cash cow to those of a company in the middle of a market share race. I think AMCX's P/E tells the opposite of the story you're trying to tell.

Second, AMC doesn't make any content. They fund it via production companies, just like Netflix.

Third, I don't understand your point about "forcing cable companies to carry a mixture". Cable companies pay AMCX for the right to carry AMC channels (AMC, Sundance, IFC, &c); that's a little more than half AMC's revenue. The other half of AMC's revenue comes from the ad inventory AMC sells on its channel.

These are probably nits, because ultimately your point about incompatible business models is correct.

hapless2• 13 years ago

Cable companies pay for AMC. They are compelled to take IFC and the others as a condition of showing AMC.

This is how AMCX, the firm, maintains its ad inventory. It doesn't matter if the content on AMC can't pay for itself as long as the suite of channels in combination can.

xutopia• 13 years ago

This overlooks the reason why AMC has a deal with Netflix. They're in it to promote the current season of their shows. By having older seasons of Breaking Bad, TWD, etc... they can easily pick up new viewers of their new ones.

murtali• 13 years ago

Why buy AMC when they can just hire the executives who made the calls on those shows? With a market cap of about $4b, AMC is pretty damn huge. Sure the content would be included but still hard to justify.

zaidrahman• 13 years ago

The trio of the shows: Breaking Bad, Mad Men, and The Walking Dead — are either on their finishing acts, or too close to finish. This time next year, two of their three flagship shows will be over.

Netflix has a good strategy in their hands. They need to focus on leadership, creative, and funding daring projects.

Side note: Consider this, Netflix already has three hit shows — House of Cards, Orange is the New Black, and Arrested Development.

gametheoretic• 13 years ago

Uh, Netflix has a killer edge within their industry that every other company in the world wishes they had in their own. They should keep doing exactly what the fuck they're doing, and not listen to what anybody else thinks. The peanut gallery has been wrong about them every inch of the way.

But seriously, why on earth would you adopt your losing competitors' business model when you're the new hotness?

joonix• 13 years ago

Doesn't make sense. Why would they buy it for $4.5 billion or more when they have no interest in positioning on cable tv? What they want is content, they can simply bid for it. If they want their management, the people who select shows to produce, they can simply pluck those people away.

mds• 13 years ago

Reading the headline I thought it was going to be "Netflix should buy AMC Theaters". That's an interesting thought...

Macsenour• 13 years ago

That was my thought too. No reason to buy AMC the cable channel since it makes zero content.

Just think, if you could reserve a theater, show some Netflix movie and split the proceeds.

ianstallings3• 13 years ago

But the thing is AMC doesn't make content, producers do. And they go wherever the money is. They own some hot properties now but look at any premium channel and you'll see a history of great shows that have eventually gone away. In fact they could just as easily buy HBO or Showtime and get the same effect, good existing properties but also a network of existing users that are willing to pay for content.

I think Netflix should just do way more original content like they already have: http://en.wikipedia.org/wiki/List_of_original_programs_distr...

billybob255• 13 years ago

Sony Pictures Television produced Breaking Bad[1], and Mad Men was produced by Lionsgate Television [2](who also produced Orange is the New Black). Netflix doesn't need to buy AMC, they just need to outbid other companies when buying content. Which is exactly what they did for House of Cards, they beat AMC and HBO for the rights[3].

[1]http://en.wikipedia.org/wiki/Sony_Pictures_Television#Shows_...

[2] http://en.wikipedia.org/wiki/Lionsgate_Television#Production...

[3] http://en.wikipedia.org/wiki/House_of_Cards_%28U.S._TV_serie...

bcrescimanno4• 13 years ago

Former Netflix employee here--left in August (not super-relevant; but, disclosure, etc.)

Thanks for posting the details here. It's pretty clear that the OP doesn't really have a strong understanding of the mechanics of the TV business. There's simply no value to owning AMC. They could spend billions for AMC or millions for future shows themselves; Netflix is smart enough to see the real value is in the latter.

Moreover, Netflix has absolutely no interest in getting into the "linear TV" business. It doesn't fit well at all with where they are going.

EDIT: The partnership, as it exists today, is hugely beneficial for both companies. AMC gets promotion for new seasons and Netflix gets a huge rush of people watching previous seasons as they become available. There's zero value to either of them in one owning the other.

gonehome• 13 years ago

Are you able to talk a bit about what it was like to work at netflix or why you left? I've always wondered what it's like over there.

MartinCron2• 13 years ago

It's pretty clear that the OP doesn't really have a strong understanding of the mechanics of the TV business.

For anyone who is interested in learning more about the mechanics of the TV business, I strongly recommend the book "Difficult Men" by Brett Martin. It's nominally about shows like the Sopranos and their creators, but there is a lot about the industry that is "quality television".

officemonkey3• 13 years ago

According to Kevin Spacey, Netflix was the only buyer that didn't want "House of Cards" to do a pilot, which, when you think of it, would have been an immense waste of time, talent and money.

objclxt• 13 years ago

Although it's more expensive to do a separate pilot, it's not always a waste of time or money. In many cases, ideas that on paper are very good don't translate well. A pilot lets you catch these problems and remedy them. If you go straight to series you may end up only finding out about these issues when it's too late to fix them.

A few good examples of this: the (unaired) pilot for BBC's Sherlock is a not fantastic 60 minutes with significant pacing problems, which was subsequently reshot and turned into a well received 90 minute miniseries. The US version of Life on Mars got completed re-located and re-cast as the pilot was just bad (...most people wouldn't call what ended up as 'good', but it was a vast improvement on the pilot).

Neither approach is without its problems. Take a show like Game of Thrones, which is very expensive to make. On the one hand, HBO could have saved millions of dollars by not ordering a pilot. On the other, it was pretty clear once it came back from post production that the approach the writers had originally taken wasn't going to work, and a number of changes were made to make the show more accessible to people who hadn't read the books.

So HBO did 'waste' several million dollars on a pilot that never aired, but the ability for the creative team to review the pilot before embarking on a full series commitment meant many changes could be made that resulted in a better show. HBO have easily recouped the lost money.

It's interesting that Amazon have taken the opposite approach to Netflix, and ordered a large number of pilots rather than going straight into series commitments.

mikeryan• 13 years ago

According to Kevin Spacey, Netflix was the only buyer that didn't want "House of Cards" to do a pilot, which, when you think of it, would have been an immense waste of time, talent and money.

I agree with most of Kevin's Spacey's comments but this one was a huge gamble for Netflix. I think pilots in the digital realm will be the media version of an MVP and seed financing before an A round.

Also define "immense" waste, a Pilot is an episode you're making anyway. There's some added expense from ramping production up and down temporarily but its no where near as bad as making 13 episodes where the last 7 or 8 aren't useable.

jonnathanson2• 13 years ago

How is a pilot a waste of time, talent, and money? Pilots are basically the MVPs of TV shows. In many cases it's less wasteful to develop and test a pilot than to develop an entire season of a show, only to have it fail. (Of course, even pilots are imperfect indicators of a show's potential for success, but now we're diving into a deeper rabbit hole and a digression).

Nobody's claiming pilots are cheap, efficient, or anything of the sort. But they do serve a purpose. In the TV development business, it's better to know if a $1M pilot is going to bomb than a $10M+ season is going to bomb.

Netflix is in a unique position to change the way development is traditionally done, however, and over time, if they're successful, they may start to eliminate the need for traditional pilots -- or at least figure out how to make the pilot a more truly MVP, i.e., a lot quicker and less costly. But for the time being, they're paying above-market rates for development and production, and if anything, they're taking bigger risks on production and development than networks do.

It's all part of a gameplan, and I respect that. They're buying a lot of short-term risk in hope of nailing a sustainable, scalable, long-term model for original content. It's basically what HBO had to do back in the day, and what AMC had to do to become what it is today. This is why Netflix doesn't need to buy AMC; Netflix needs to replicate AMC (sort of), and eventually replace AMC (among others).

PanMan• 13 years ago

In this talk http://www.youtube.com/watch?v=P0ukYf_xvgc he explains the series itself doesn't work well in a pilot: He wanted long story lines, and multiple complex characters, both of which are impossible in a pilot.

orbitur• 13 years ago

AMC's biggest shows are about to end and they can't seem to create another hit. Also, as others here have pointed out, AMC doesn't actually make those shows.

Holmes• 13 years ago

Buy the production companies not the networks.

shmerl• 13 years ago

I personally don't see Netflix growth as anything good. They are the ones who push for DRM in HTML. We don't need more of that.

jmduke2• 13 years ago

The author doesn't seem to understand how the television industry works, which is okay because it's kind of a cesspool but as a result the article loses a lot of its force (and this is as someone who's a hopeless AMC devotee and Netflix addict!)

AMC is perhaps most critically recognized for Breaking Bad and Mad Men, but they picked up those shows the same way anyone else can (including Netflix) -- by outbidding everyone else for them.

Netflix doesn't need help getting critically/publically lauded programming -- Orange is the New Black was a critical hit, and House of Cards was also well received. Their opportunities for growth lie in the people who don't really care about 'critical TV': the vast majority of consumers who have basic cable, are satisfied by basic cable, and don't pay attention to streaming services because the value proposition isn't attractive enough.

Put another way -- what if Netflix got into sports broadcasting?

ianstallings3• 13 years ago

They have another one on the way too called Derek with Ricky Gervais, which was originally on BBC's channel 4.

ameister14• 13 years ago

That's exactly what I was thinking; to start, though, what about entering into the university sports broadcasting field?

If you broadcast every university sport, you'll get a large number of family, friends and fans of specific teams that are under-served with existing content. It's not worth the cost of creating a new channel for each, but it might be doable online.

jevanish• 13 years ago

Interestingly enough, ESPN has been getting into trouble for "hoarding" such content as they own so much of it in big contracts they can't air all of it, but it boxes out others from showing it.

npguy• 13 years ago

Netflix is also making a huge mistake in its product strategy on the device front that will probably haunt them forever.

http://statspotting.com/the-one-mistake-that-might-haunt-net...

eric_the_read• 13 years ago

That post makes no sense. The great that Netflix is available on every platform known to man is exactly why they are one of the dominant players in online video streaming. What possible benefit is there to Netflix for all the expense and hassle required to release a Netflix-branded device, when all they have to do is port an app, and let someone else take all the risk?

albeec13• 13 years ago

Curiously missing from this post and most of the subsequent comments is AMC's Hell On Wheels.

Maybe I'm the only one watching it, but it's one of the better shows on TV, in my opinion.

jtoeman• 13 years ago

literally every single comment here that talks about the quality of AMC shows is utterly irrelevant to this topic. AMC doesn't OWN any of these shows, they currently own the CABLE RIGHTS to those shows.

buying AMC is just buying a cable channel and those rights.

NOT a good move for netflix. they could simply start outbidding AMC/others for quality shows. oh wait, thats exactly what they've been doing....

LaSombra• 13 years ago

I think this idea the "Why X should/needs to buy Y" is getting tiresome. No one should/needs to buy anyone else IMHO. I think partnerships are almost always in theirs and ours best interest.

brown9-2• 13 years ago

The negotiations for the most recent seasons of Breaking Bad and Mad Men were not because AMC is in financial trouble but rather because they were trying to be ruthless with not having to pay more money to the creators who know that they have the best shows in TV, and that AMC really wanted them.

znmeb• 13 years ago

There's only one reason for Netflix to buy AMC - if they can reduce content cost by firing a bunch of dead wood in AMC management.

sjs382• 13 years ago

While its an unscientific poll, I have found it hard to find anyone I know that watches television who doesn’t love at least one of their hits: Breaking Bad, Walking Dead, and Mad Men.

One of those shows has only a few episodes left, while another has one season remaining.

Also, AMC doesn't produce Mad Men or Breaking Bad.

Why Netflix should buy AMC

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