AMC Networks cuts 20% of US workforce over cable, streaming costs and economic jitters Roil Media

A media industry beset by streaming losses, anemic layoffs and management turmoil announced its latest casualties Tuesday: 20% of AMC Networks’ U.S. workforce, or about 200 people, along with the departure of CEO Christina Spade.

The news follows Bob Chapek’s sudden departure from Disney last Sunday after a quarter of steep stream losses and months of PR missteps. No reason was given for Spade’s departure, but it did start a new round of speculation about the possibility that the cuts could be a prelude to an M&A deal. AMC Networks declined to comment when contacted by Deadline.

Downsizing of Warner Bros. Discovery to Paramount Global, Disney and CW along with a virtual tech carnage. Today’s memo from AMC Networks chairman James Dolan, whose family is the company’s controlling shareholder, was particularly grim, noting that “the mechanisms for monetizing content were messed up.”

He said it meant “massive redundancies” and significant “cuts across all areas of work” at the company, which is now looking for a new chief executive. The board is “convinced” 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 come to a realization about the streaming business, putting it in words that could send chills down the media collective’s spine: “We believed that losses from cable-cutting would be offset by gains in streaming. It was not the case.”

Wall Street expressed concern over the situation and the lack of clarity surrounding Spade’s departure. Shares fell more than 5%. Her departure was “a complete surprise and leaves the company in a new leadership position with no clear successor waiting in the wings,” said Doug Creutz, an analyst at Cowen & Company.

AMC, like others in the industry, is facing a decline in advertising on top of rising streaming costs and declining linear revenue. “It’s been the same for a while, which is a bit of a mix-up on the top line, with Linear still under pressure. They’ve spent a lot of money on content, and if they can’t grow sales, margins will suffer. It’s not unique to her,” Creutz said.

Another company on Dolan Lane, Madison Square Garden Entertainment, is also cutting costs. “We are taking a holistic look at all of our businesses to ensure that all areas remain positioned for success going forward,” the CFO said in a recent phone call.

That’s even because AMC/AMC+ was on its way to success with three new series – Dark Winds, Moonhaven and Interview with a vampire – all well-received and well-deserved renewals for Season 2. The network, whose programming team is led by Entertainment & AMC Studios President Dan McDermott, also has high hopes for the upcoming season Mayfair witchesdebuting in January, as well as the multiple Living death Spin-off series in preparation. The layoffs announced today and this week will be general and it is not clear which departments will be hit the hardest.

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“Ten years ago we saw that thread cutting was going to be a thing and we thought the rapid growth would compensate for that. And streaming has increased. It just required a lot more investment than expected,” said a media fund manager. “There was a pretty bad cyclical downturn and everyone had to think about what they were doing. The same conversations are being held in every media company.”

The question for AMC is how much can be cut before it hits the bones, especially at a company much smaller than a WBD or Disney, which has already undergone major downsizing in 2020. Longtime CEO Josh Sapan subsequently left the company, and former Showtime boss Matt Blank stepped in as interim director. Spade, a former colleague of his at Viacom, CBS and Showtime, was named CFO in January 2021, then added the title of COO and then took over as CEO on Sept. 9 — less than three months ago Contract through 2025 “As I begin my new role as CEO of AMC Networks, I am proud to lead the company through one of the most exciting times in our history,” she said in a third-quarter call on Nov. 5.

The quarterly results were disappointing, joining a stack of other media and technology quarterly earnings hit by a broad advertising decline. AMC’s ad revenue declined 10% year over year to $180 million for the three months.

Correcting deficiencies in the corner office is a challenging endeavor. Disney brought back Bob Iger. The Disney board has also reportedly reached out to former Disney executive Kevin Mayer to replace Chapek, and will be looking for a worthy Iger successor as the reinstated CEO’s contract expires in two years. Given the Dolans’ ultimate control, it is much more difficult for AMC to make a powerful push. “At the end of the day, a CEO may not feel like they’re in control,” says Creutz. Ad cycles are finite. But no CEO can wave a magic wand when cord-cutting revenue continues to decline and streaming can’t make up for it.

A struggling stock market makes it difficult to exit — won’t they sell, which is a lingering question about the Dolan family fortune. In an already turbulent landscape, with Lionsgate trying to find a new configuration for Starz and its studio, and Discovery and WarnerMedia integration continuing at speed, immediate demand is a logical buyer, especially in a high-income -environment.

“I’m not saying it won’t appeal to anyone. But are you getting a fair price for it? With the market and the balance sheets and just the reality of streaming right now. I don’t know who will offer them a good price. This is not the time. The market is now in the tank. Everyone is worried about a recession,” said one Wall Streeter.

“Ask the smartest people to sell businesses in the last five years what they think: Jeff Bewkes, Rupert Murdoch, the Scripps family. Maybe they were lucky, but they sold out when sales were good. Bewkes and Murdoch had great respect for their own abilities and realized that it didn’t matter to have a bad hand.”

Bewkes sold Time Warner to AT&T in 2018 for about $85 billion. Murdoch transferred most of 21st Century Fox’s film and television assets to Disney for $71 billion in 2019. Scripps Networks Interactive was sold to Discovery in 2017 for $14.6 billion. However, all these deals were made in relatively better times.