In October, the cast of AMC’s “The Walking Dead” descended on the Comic-Con stage in New York to talk about the show’s eighth and current season. Eager fans lined the halls to see their favorite characters from the hit TV show and expressed excitement that the zombie franchise was returning.
It’s been over a month since Comic-Con and longtime fans aren’t as excited about the show. Ratings have fallen to 5-year lows and that poses as a big problem for AMC Networks—the company behind the series—as it has seen its stock fall in the months leading up to October’s premiere.
The show’s waning popularity indicates that the network—and most importantly the company—needs to do something to turn things around. Its best bet is not by expanding “The Walking Dead” franchise, but by finding a bigger, more culturally relevant and tweeted about show. It needs its “Game of Thrones.”
Time Warner, the parent company of HBO, has other properties that affect its stock—CNN and Warner Brother Pictures quickly come to mind—and Netflix, which dominates the cultural zeitgeist, has many shows that could potentially impact its stock. AMC Networks, which has AMC (the channel,) BBC America, IFC and WE TV under its umbrella operates a little differently, according to analysts. The company’s flagship show, “The Walking Dead” is the main indicator in how the company’s stock performs; “The Talking Dead” and “Better Call Saul,” alongside even less popular series, don’t have much of an impact.
Taking a glance at the company’s financials, you could see that the company isn’t doing as well as it would like. The stock performance has considerably declined in the last 12 months, as the ratings for the zombie series and its spinoff, “Fear The Walking Dead” continue to fall. The show has been averaging roughly eight million viewers per episode this season, a far cry from the 14 million average in 2014, which was the largest for the show. In its latest quarterly earnings report, the company missed its revenue projections by $12.15 million, due to declining advertising revenue.
Some analysts feel that the market isn’t treating the company fairly, whose stock is trading slightly above $50, because it’s being lumped together with larger companies with more diverse portfolios.
“The market is undervaluing AMC,” said Leon Cooperman, CEO of Omega Advisors Inc. who recently took a passive position on the company’s stock, “Their viewership is declining for cable. They’re being thrown into a basket of companies.”
AMC needs to have a show that not only helps boost its stock performance and increases its revenue but gets viewers and analysts buzzing again. When the zombie hit premiered in 2010, people were excited; and that eventually led it to be the most watched show on cable. Its fifth season premiere in 2014 had a record 17 million viewers. “The Walking Dead” is still the most viewed series on cable, but viewers have fled. The eighth season’s mid-season finale pegged the lowest mid-season finale ratings since 2011.
“Negan’s pompous character made it intolerable,” said Carla Neil, 36, a longtime viewer of the series who stopped watching after the brash, foul-mouthed, bat-wielding character was introduced at the end of the highly anticipated and watched season six season finale.
The show—about a group of survivors trying to survive a zombie apocalypse—captivated viewers, with its strong cohesive storytelling and over-the-top violence. Despite abandoning the series, Neil is curious to how showrunners will end the long-running show.
“What I do know is that with each season, the stories are no longer epic,” she continued. “It’s gone from nomadic warriors to hopeless captives.”
One way that AMC could test the waters with new, innovative shows that push the envelope further is through its streaming service. In June, the company announced AMC Premiere, a new, $5 streaming service that allows Comcast Xfinity customers access to its shows, movies, and the ability to watch series as they air on TV without ads. The move is similar to CBS’s streaming service CBS All Access, which airs a slate of CBS shows as well as shows exclusive to the platform. However, anyone can access the streaming service, giving it a much broader audience and the chance for success.
AMC Premium allows the company to have greater control of its programming because unlike the network, it isn’t bundled in a larger cable package.
“That’s a space where they do control the pricing,” said Greg Portell, a partner at A.T. Kearney, the global consulting firm. “They’re [AMC] very quickly running into the willingness to pay issue.”
Company CEO, Josh Sapan talked about a new show, “Dietland,” premiering next year during AMC’s recent earnings calls. It stars Julianna Margulies and focuses on the beauty industry. The show may be great, and if her performance from the hit CBS show “The Good Wife” is any indication, Margulies will do an excellent job in her new role, but this show isn’t set in Westeros and that matters.
AMC needs a sprawling fantasy series, akin to “Game of Thrones;” A series with huge set pieces and a loyal, built-in fan base. If the company is ambitious in its programming, die-hard fans and investors will once again be excited.
The problem is that the company does not have the money for something that massive, so it’s going down a familiar path—doubling down on “The Walking Dead”—by expanding on the franchise. AMC spends roughly $2.75 million an episode on “The Walking Dead” compared to the $10 million HBO spends on “Thrones,” according to Forbes. In the latest earnings call to investors, Sapan laid out his plans for the series.
“It really is a franchise that continues to be embraced by a huge and growing fan base,” he said on the call. “And as we further expand this franchise and as we create new and different incarnations of it, we will continue to derive increasing value from it.”
There is only so much of the franchise that people could take, so AMC needs to start acquiring talent that would at least make its network exciting again. If it can’t get the large, big budget shows, by big-name producers, then it should try a push for more programming featuring a diverse cast.
Looking at past and present shows that the company has throughout its networks, many of them feature white male leads, who are typically flawed human beings, i.e., Walter White. Television has changed a lot since “Breaking Bad” left the air in 2013, and more shows feature a diverse cast that has people interested, see FX’s “Atlanta” as a perfect example of this. To AMC’s credit, “The Walking Dead” is pretty diverse, but recent cast departures have mostly consisted of people of color.
Now, the company has made efforts to move away from the male protagonist. BBC America’s “Orphan Black,” which ended earlier this year, features a female lead and was critically acclaimed, BBC’s “Doctor Who” franchise will feature its first female doctor, but it seems that the company is willing to experiment with changing things up with its smaller BBC America property rather than AMC.
Despite missed third-quarter revenues and a fluctuating stock price, the majority of analysts—10 of the 19— are recommending that investors hold on to their stock. It’s a possibility that “The Walking Dead” could be rebound and be a financial boon for investors, but AMC should really consider what its next step is. Putting more money into developing a larger budgeted show may be what it needs make fans and investors happy again.
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