A media industry battered by streaming losses, anemic stocks, layoffs and executive turmoil unveiled its latest losses on Tuesday: 20% of AMC Networks’ U.S. staff, or about 200 people, as well as the departure of the CEO Christina Spade.
The news follows the equally sudden departure of Bob Chapek last Sunday from Disney after a quarter of heavy streaming losses and months of public relations missteps. No reason was given for Spade’s departure, but it sparked another round of speculation that the cuts could be a prelude to an M&A deal. AMC Networks declined to comment when contacted by Deadline.
Jobs are being cut from Warner Bros. Discovery to Paramount Global, Disney and the CW alongside a virtual bloodbath in technology. Today’s memo from AMC Networks chairman James Dolan, whose family is the company’s majority shareholder, was particularly grim, noting that “content monetization mechanisms are in disarray.”
He said that means “large-scale layoffs” and “substantial cuts in all areas of business” for the company, which is now looking for a new CEO. The board is “confident” that the cuts will “allow AMC Networks to weather this period even stronger and be well positioned to drive future long-term growth.” He said the company had taken notice of the streaming business, putting it in words capable of sending shivers down the spines of corporate media: “We were confident that the cord-cutting losses would be offset by the gains in streaming. This was not the case.
Wall Street expressed unease over the situation and the lack of clarity over Spade’s exit. The shares fell more than 5%. His departure was “a complete surprise and leaves the company in dire need of new leadership, with no apparent successor behind the scenes,” said analyst Doug Creutz of Cowen & Company.
AMC, like others in the space, is facing declining advertising on top of rising streaming costs and declining linear revenue. “It’s kind of been the same for a while, which is a bit of a drag on the top line, with a linear still under pressure. They’ve spent a good chunk of the money on content and if they can’t grow their revenue, it will put pressure on margins. It’s not unique to them,” Creutz said.
Another company in Dolan’s orbit, Madison Square Garden Entertainment, is also cutting costs. “We are holistically reviewing all of our businesses to ensure that all areas continue to be positioned for success in the future,” its chief financial officer said on a recent call.
This is even when AMC/AMC+ has been on a streak with three new series – Dark Winds, Moonhaven and Interview with a Vampire – all well received and earned Season 2 renewals. The network, whose programming team is led by Entertainment & AMC Studios President Dan McDermott, also has high hopes for the next one. Witches of Mayfairwhich debuts in January, as well as the multiple Walking Dead spin-off series in preparation. The layoffs unveiled today and from this week would be widespread and it is unclear which divisions will be hit hardest.
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“Ten years ago we saw that cord cutting was going to be a thing, and we thought the growth in streaming would compensate for it. And streaming grew. It just took a lot more investment than we expected. “, said a media fund manager. “There was a pretty bad cyclical downturn, and everyone had to rethink what they were doing. The same discussions are happening in all media companies.
The question for AMC is how much can be cut before it hits the bone, especially at a company much smaller than a WBD or Disney and which has already suffered a major downsizing in 2020. The longtime CEO Josh Sapan left after that, and former Showtime boss Matt Blank came on as interim chief executive. Spade, a former colleague of his at Viacom, CBS and Showtime, was hired as CFO in January 2021, then added the title of COO, then took over as CEO on September 9 – less than three months ago – with a contract. until 2025. “As I begin my new role as CEO of AMC Networks, I am proud to lead the company at one of the most exciting times in our history,” she said during of a third quarter earnings call on November 5.
The quarterly results were disheartening, joining a pile of other quarterly media and technology figures hit by a broad pullback in advertising. AMC’s ad revenue fell 10% year over year to $180 million for the three months.
Addressing gaps in the office area is a challenge for businesses. Disney brought back Bob Iger. The Disney board has also reportedly approached former Disney executive Kevin Mayer to replace Chapek and will seek to identify a worthy successor to Iger given that the restored CEO’s contract expires in two years. It’s much harder for AMC to lure a heavy hitter given the Dolans’ ultimate control. “At the end of the day, a CEO may not feel like they make the decisions,” Creutz said. Advertising cycles are over. But no CEO can wave a magic wand if the cord-cut continues to squeeze revenue and streaming can’t catch up.
A struggling stock market makes it difficult to exit – will-they-won’t-sell being a perennial question surrounding the Dolan family’s assets. In an already turbulent landscape, with Lionsgate figuring out a new setup for Starz and its studio and the integration of Discovery and WarnerMedia continuing in spurts, the immediate question is a logical buyer, especially against a backdrop of rising interest rates. high interest. environment.
“I’m not saying it wouldn’t be appealing to someone. But are you going to get a decent price for it? With the state of the market and balance sheets and just the reality of streaming right now. I don’t know who will give them a good price. This is not the moment. The market is in the tank right now. Everyone is worried about a recession,” said a Wall Streeter.
“Ask the smartest people, the ones who have sold businesses in the last five years, what they think – Jeff Bewkes, Rupert Murdoch, the Scripps family. Maybe they got lucky, but they sold when the sales were good.Bewkes and Murdoch had a high regard for their own ability and recognized that having a terrible hand didn’t matter.
Bewkes sold Time Warner to AT&T in 2018 for around $85 billion. Murdoch sold most of the film and television assets owned by 21st Century Fox to Disney in 2019 for $71 billion. Scripps Networks Interactive sold Discovery in 2017 for $14.6 billion. However, all of these deals were done in relatively rosier times.
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