Analyst Raises Price Target on AMC Networks Stock Amid Dish Trial
The litigation "is going even better than expected" for the parent of cable networks AMC and IFC, says Davenport & Co.'s Michael Morris.
Evercore Partners analyst Alan Gould on Wednesday raised his price target for AMC Networks, saying that its high-profile trial against satellite TV giant Dish Network "is going even better than expected."
His new target price for the stock of the company behind such cable networks as AMC, IFC and Sundance Channel is $43, up from $41.
He now assigns an 85 percent chance of a legal settlement worth $1 billion, up from his previous estimate of an 80 percent chance for a $600 million settlement. Under that scenario, AMC Networks' channels would be restored to Dish, which dropped them mid-year.
Gould also said there is 14 percent chance of a settlement at $3.5 billion, including damages and interest, with the channels remaining off Dish.
He now only sees a 1 percent chance that AMC could lose the litigation and see its channels stay off Dish, down from his prior estimate of a 5 percent chance.
The legal showdown focuses on Voom, the former satellite TV business launched by Cablevision Systems owners the Dolan family, whose successor is now part of AMC Networks.
In the case, AMC is asking for damages of $2.5 billion plus interest of an additional $1 billion.
Several years ago, Cablevision sold the Voom satellite to the predecessor company of Dish, which agreed to carry HD channels created for Voom for 15 years as long as the Dolans' company invested $100 million per year into the Voom service. Dish at one point said that was not the case and ended its carriage of the Voom networks.
AMC argues that the legal dispute drove Dish to also stop carrying the AMC Networks channels as of mid-year. However, Dish has said it simply wasn't willing to pay the carriage fees and argued the networks don't draw many viewers among its subscribers.
"Evidence has shown that Dish had more HD customers than previously claimed, and damaging emails seem to prove Dish was aware that Voom's required annual spend could include non-programming costs," Gould wrote in his report Wednesday.
On Tuesday, Davenport & Co. analyst Michael Morris had highlighted in a report about the season premiere of AMC hit show The Walking Dead that "even without Dish, Walking Dead shows surge in popularity."
He added: "The popularity of The Walking Dead creates an opportunity for AMC’s distribution partners to target Dish subs."
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