AMC Backlash: Budget Squeezing, Producer "Bake-Offs" and Post-'Breaking Bad' Challenges

5:00 AM PST 08/21/2014 by Kim Masters
Illustration by: Daniel Zalkus

The Emmy darling faces a future without 'Bad' and 'Mad Men' as it tries to maintain momentum

This story first appeared in the Aug. 29 issue of The Hollywood Reporter magazine. 

The AMC network's cupboard is a lot barer than it used to be, and to some in the industry that's because, as one talent representative puts it, "Karma is a bitch."

Since helping usher in TV's so-called golden age in 2007 with Mad Men and its antihero Don Draper, AMC has had lightning-in-a-bottle success, launching TV's top-rated show in the 18-to-49 demographic in The Walking Dead and scoring 207 Emmy nominations and 33 wins. But AMC also has engaged in high-profile battles with several showrunners, leaving some to wonder whether the network is too tough for its own good.

As AMC goes for its sixth Emmy drama series win in seven years on Aug. 25, the network is at a crossroads. Breaking Bad is gone, and Mad Men is down to its last seven episodes. It has yet to leverage Walking Dead to launch a new scripted hit. The drama Low Winter Sun was canceled after one season, and the Revolutionary War series Turn has performed wanly, though AMC ordered a second season. It also ordered a second season of the computer-industry drama Halt and Catch Fire, even though it has failed to — you know. And the stock of parent company AMC Networks is off 21 percent from its March high.

Worse, the network has no new shows scheduled between now and February's Bad spinoff, Better Call Saul. And AMC nearly lost that series during a heated negotiation at the height of Bad's popularity in 2013. Some associated with the show were said to be offended when AMC suggested that Sony TV and Bad creator Vince Gilligan, having brought the network 10 Emmys, first make a pilot. When Netflix quietly offered to take the project straight-to-series, AMC was forced to ante up.

Some showrunners and their reps say AMC's heavy hand in certain circumstances has caused them to avoid bringing top material to the network. In a town thirsting for buyers, even some who have reaped profit from their AMC dealings are almost rooting for failure. "They got lucky," says one agent. "But now they're coming to the end."

AMC's messiest battle involves Frank Darabont, who launched Walking Dead only to find himself fired just days after promoting the outsized hit at Comic-Con in July 2011. Glen Mazzara, his replacement, exited months later. Pending in New York state court now is a lawsuit alleging that AMC cut itself a sweetheart deal in licensing the show to itself and shorted Darabont tens of millions of dollars of his profit participation. CAA is suing on the same grounds.

At the same time, AMC has defenders, including Kevin Smith, who has Comic-Book Men on the network and shows in development. After Smith ruffled feathers by holding a faux auction for his movie, Red State, at Sundance in 2011, he says, "I burned every bridge in this town, and the only people who would still talk to me were at AMC. For most of the creatives I know, it's a safe haven."

An AMC insider attributes some of the negative feelings to a learning curve as the network transitioned rapidly from launching Mad Men in 2007 and Breaking Bad in 2008 to producing and owning Walking Dead, which premiered in 2010. The exec team that brought the network its early hits is long gone. Current president Charlie Collier and executive vp Joel Stillerman have guided AMC through the shift toward ownership from paying stiff license fees to outside studios, including a 2011 standoff with Lionsgate and Mad Men creator Matthew Weiner that delayed season five and ended with Weiner scoring $30 million for the show's final three seasons.

"They had been paying 70 to 80 percent licensing fees on Mad Men and Breaking Bad," says a knowledgeable source. (AMC disputes this.) "That was 10 or 15 percent higher than FX might have paid. But that's the price of entry for a new network." (For Bad's first season, for example, the license fee was $1.65 million for a show that cost $2.1 million an episode.)

Eventually, AMC figured it wouldn't cost much more to produce its programming, and it would reap the benefits of owning. Meanwhile, there were new ways to diminish risk thanks to SVOD and other platforms.

AMC is hardly the only network that wants to control its content. But it's fair to say the transition has been rough and that Stillerman is a focus of wrath among AMC's critics. One of AMC's original sins, to many creative types, was the invention of the "bake-off," in which showrunners who already had sold ideas and spent months developing them were called before top AMC executives — often at Shutters on the Beach in Santa Monica — to give a highly detailed pitch in the hope of getting a pilot order. "After a show has been in development for six months or a year, people feel like, 'Why am I pitching this again?' " says a former AMC insider.

The process was so unpopular that AMC doesn't even want it to be called the bake-off anymore. A company spokesman says it has been changed based on feedback. For example, AMC has started to pay for formats — 20-page detailed descriptions of proposed shows — that producers submit before attending what the network calls "producer meetings," where they lay out the first and subsequent seasons of the proposed series.

Turn executive producer Barry Josephson went through the process two years in a row. The first time, the network didn't pick up the show but kept developing it. Josephson says AMC's insistence on a highly detailed pitch kept him on his toes. "It was kind of refreshing," he says. "A lot of times people [taking pitches] are rushing to another meeting, but it felt like they had done the homework." The network had "very specific input, very strong opinions," but those were "additive."

An AMC spokesman notes that this process has led to AMC picking up every pilot that it has ordered with one exception. But even in success, AMC has been hard on showrunners. After Darabont delivered a version of Walking Dead that exceeded the network's dreams, says one source with knowledge of the situation, "Stillerman immediately looked at the numbers and said: 'We have to cut the budget. It's too expensive.' " Before the show held its premiere party, Darabont was notified by email that AMC proposed to cut his episodic budget from $3.4 million to $2.75 million. At the party, says one witness, Darabont jabbed his finger at Stillerman and said: "This is completely inappropriate! You cut my budget after I've been killing myself in Georgia?" (The show got a generous rebate from that state, but AMC had decided it no longer would apply it to the show's second season.)

Through his attorney, Darabont declined comment. But a source close to the showrunner says, "For that decision to be made unilaterally without any discussion was completely inappropriate and offensive."

The network declined comment specifically on complaints about Stillerman and the network's clashes with showrunners. But AMC provided THR with a statement: "It is never lost on us that AMC's success has been driven by the enormously gifted people we have had the good fortune to work with. It is gratifying that so many of them have chosen to remain at AMC with new projects and opened the door to a growing list of top creative talent that will help define our future."

AMC might have stepped on toes in Hollywood, but on Wall Street, several analysts like what they see despite the parent's recent stock dip. Bryan Goldberg of Bank of America/Merrill Lynch puts a buy on AMC Networks stock even though second-quarter earnings from continuing operations fell to $58.7 million from $135.7 million in the year-ago period, which the company attributes to higher costs for original programming.

"Can they replicate a Walking Dead or Breaking Bad? No one can predict that," says Goldberg. "But owning their productions, the thresholds for financial success are a lot different today. We don't hold the view that it's all downhill from here — in fact, we think they're positioned well for long-term growth."

Analyst Rich Greenfield of BTIG, who has a neutral rating on the stock, isn't so optimistic. He's amazed the parent company didn't offload the network while its shows were peaking. Asks Greenfield, "When you get lucky like that, why didn't they take advantage of it?"

CORRECTION, 7:20 p.m. Aug. 24: Story has been updated to reflect Rich Greenfield's rating.

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