Why Netflix should buy AMC

Earlier today AMC announced they have secured the prequel to Breaking Bad, a show based on the popular supporting character, Lawyer Saul Goodman. What was particularly fascinating was that an article I read reported that Netflix bid for the show. This got me thinking…

Netflix should buy AMC. Here’s why:

1) AMC has more top content than any other network.

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. Their passion is to the degree they rave about it and tell anyone who doesn’t watch that they must. There is no other basic cable network that produces shows with such rabid followings (unless you count juggernaut ESPN’s sports programming).

What’s more is that Netflix knows this. They’re known as a heavily analytical company as they used it to create their hit show, House of Cards, and now they gave Breaking Bad a ratings boost that saw their premiere of Season 5 Part 2 double their previous ratings high. Given Breaking Bad is a continuous story, there is no other explanation than the Netflix binging helped widely expand their audience.

2) Netflix is at war with Amazon.

There is no doubt this is a 3 horse race for streaming supremacy between HBO, Netflix and Amazon. HBO owns its own content so the play here is directed squarely at Amazon. With such an acquisition, suddenly, to see those shows your friends have been raving about, you would have no choice but to join Netflix’s over 37 million subscribers. Amazon wants to be the first place you check for shows just like so many other goods. Losing out on multiple popular series would be a blow to that mindshare goal.

With Netflix’s subscription and retention strategy this is equally huge. There are 35 episodes of Walking Dead already aired with 9 coming this fall, 62 Breaking Bad episodes by the series finale in a few weeks, and 78 Mad Men episodes with a final season looming. A subscriber committed to watching even one of those shows through is likely to stay a subscriber for a few months to finish any of those series.

3) AMC needs Netflix.

As a passionate fan of Breaking Bad from the first season, I followed it closely between subsequent seasons. The ratings were tough but Bryan Cranston’s multiple Best Actor awards made it very hard to give up on it and the fan base grew as there were more and more shocking episodes. AMC often had tough negotiations, but they kept renewing.

However, things really got tough with the final season. AMC only had the budget for 12 episodes, but Vince Gilligan wanted 16 to end the show the way he had planned it. There were rumors of him even thinking about soliciting other networks. AMC worked it out but you also notice there was a huge 6 month break between the first 8 and second 8 episodes, thus spreading out the costs significantly.

It seems these conflicts weren’t the first time the network had to squeeze budgets on a hit show as there’s been rumored conflict for both Mad Men and Walking Dead. There has also been their feud with Dish network which caused an estimated $31 million in lost revenue, which is a big deal when your net income over that time was only $15 million on $367 million in revenue.  Getting a stable budget from Netflix would cushion them like never before. 

4) Netflix needs more content and AMC knows how to make it.

Netflix knows the value of letting artists follow their vision, as they spent over $100 million on their first show, House of Cards. Their model ditches the pilot and wait and see approach of television to instead trust artists to tell a full story in a complete season from the start. When this works it will be widely praised, but a series of misses would get costly fast.

AMC has shown they can make hit after hit. That is the kind of talent that Netflix needs to continue to grow their content arm. The AMC team that has discovered multiple unexpected projects could help see the story behind the analytics Netflix is so known for. Would their analytics predict these as hits:

  • A 60s and 70s era period piece about alcoholics and philanderers at an ad agency.
  • A graphic novel about zombies (ok maybe, that one they could see)
  • A cancer-ridden high school chemistry teacher turns into Scarface. (no way)

Taking the eye for talent at AMC and augmenting it with the analytics of Netflix could create a content powerhouse.

5) Netflix is already invested in AMC.

Underlying all of this is the bulk payments Netflix has to make to AMC to stream their content. They’ve been working together for years already and the relationship has proven positive for both as the halo effect of Netflix binging brings new viewers to AMC. As the network continues to grow its catalogue of hits I envision those checks getting bigger and bigger. Like any good partner to acquisition move, I suspect this could be the catalyst for such acquisition discussions to begin. Of course, the ratings boom Netflix is helping them with is driving up their price to cable companies, so the longer Netflix waits the more expensive it will get.

I don’t believe nor have a heard that any such deal is imminent or in talks. However, I do believe it makes a lot of sense especially as people cut the cord with their cable providers and a great network like AMC considers its role in such a post cable world. It would be an expensive move given AMC’s revenues, but they’ve already been willing to spend over $100 million on one season’s worth of a single show. AMC presents a one of a kind opportunity that fits Netflix’s expanding vision.


Per some really insightful comments on Hacker News and some of the comments below, it appears I misjudged what AMC owns and not. What I would change this article to say then is why Netflix and AMC are going to become stronger and stronger partners going forward. There’s no reason to buy AMC, but they are proving very helpful to one another and potentially better served as two independent businesses with unique interests. I expect many more deals between the two companies.

11 thoughts on “Why Netflix should buy AMC

  1. AMC’s market cap is $4.5 Billion. Netflix could either buy AMC or make a whopping 45 SEASONS of (insert $100 Million Indie shows here). Lower risk to do the latter, one/two/three shows at a time.

  2. Pingback: Why Netflix should buy AMC | Rocketboom

  3. sigg makes a good point. Netflix doesn’t want a cable TV channel (though the economics of that might be nice for Netflix).

    What Netflix needs to do is do an overall development deal with AMC, where Netflix puts up some money, say $1B and AMC puts up, say $500M, and they underwrite shows together, with netflix getting the post-cable business. (EG: Shows go on netflix after the season airs.)

    This way netflix gets more leverage and fills its content pipes.

    Also, I find it hilarious how people so often think that Amazon is such a threat. Amazon is doing nothing real in streaming video. It’s just another way for Amazon to blow money. They have a few successes (like AWS which is a technical failure but business success because their customers are dumb) …. but Amazon wastes massive amounts of money on “businesses” that they shut down after a few months. REmember A9? Amazon Movies? Amazon Restaurant Guides? Their program to scan paper catalogs?

    The race is really between Apple, Netflix and whatever cable property or cable company decides to join the streaming race. HBO has good products but is locked into the cable value chain and so will never be a real streaming service (at least not until it’s too late.)

  4. I guess I don’t see why Netflix needs to spend a lot of money on *anything* right now? *every* number they have is going up, and they are doing a great job acquiring content rights they want.

    also – AMC doesn’t own Breaking Bad, Walking Dead, etc… so what exactly are they buying? a cable channel.

    • They’re buying the content, not the channel. And Google’s numbers go up every quarter, but they still average about one acquisition a week…so success doesn’t negate the desire for more success.

  5. 1- Breaking Bad ends this year and Mad Men ends next year. So they will only have one popular show they air (Walking Dead). Their top content is done soon.

    2- They got Mad Men because HBO passed and Breaking Bad because both Fox and FX passed. The two other shows that they’ve developed in-house are Low Winter Sun and Hell on Wheels, both of which are average at best. They’re not on the level of creating great shows just yet.

    3- Their budget constraints almost made Breaking Bad end prematurely and it made Frank Darabont leave Walking Dead. They forced all of season two to be filmed on the farm to reduce cost, and that was by far the weakest season.

    Its’ a good premise but makes no fiscal sense for Netflix because they already receive the episodes after they air from AMC based on a previous deal.

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