AMC Networks to Offer Voluntary Buyouts to 200 Staffers

The Walking Dead S06E16 Still - Publicity - H 2016
Gene Page/AMC

The Walking Dead S06E16 Still - Publicity - H 2016

The cable networks group, which is led by CEO Josh Sapan and is known as the home of 'The Walking Dead,' is the latest industry player to turn to buyouts to reduce staffing levels.

AMC Networks, the company behind The Walking Dead and Better Call Saul, is looking to cut some of its nearly 3,000 staff positions via voluntary buyouts, sources confirmed on Monday.

One source said that about 200 staffers, or a bit more than 6 percent of employees at the cable networks group led by CEO Josh Sapan, would be offered buyouts. The typical take rate for such moves is up to 10-15 percent, which would mean 20-30 job reductions in this case.

AMC Networks is the latest entertainment industry player to turn to buyout offers after the likes of 21st Century Fox and Discovery Communications recently used the same method to shave some costs off organizations. Between 300 and 400 TV and film employees have taken voluntary buyouts at Fox, insiders recently said. The number represented about half of the workers who were offered the buyout. Even so, Fox said it wouldn't start layoffs and instead institute other cost-saving measures.

AMC Networks is understood to not be targeting any particular departments, and it wasn't immediately clear how much money AMC Networks was looking to save via the moves.

Wall Street analysts have been highlighting the company's spending on original programming and weakening ratings for The Walking Dead, as well as weaker-than-hoped-for ratings for such new shows as Preacher. Year-to-date, AMC Networks' stock is down more than 20 percent this year. On Monday as of 1 p.m. ET, it was down minimally at $56.47.

Guggenheim Partners analyst Michael Morris last week lowered his financial estimates "primarily to reflect softer-than-anticipated ratings on several of AMC Networks' scripted originals." But he highlighted: "We now forecast second-quarter advertising growth of 26 percent, down from our prior 31 percent estimate, noting that this pace remains well ahead of the industry average."

He concluded: "We continue to believe that the current share price under-appreciates the company's intrinsic value, but believe that the lack of a clear positive catalyst will remain an overhang as investors fret about Walking Dead ratings."

Macquarie Securities analyst Tim Nollen in a report on Friday reiterated his "outperform" rating on AMC Networks' stock. "The stock has underperformed the S&P 500 by 26 percent year-to-date, as well as most peers since reporting first-quarter results, and now at only 10x 2016 estimated price/earnings ... looks just too cheap to us. Reasons for the weakness include disappointing live-plus-same-day ratings on several new and returning shows and concerns about AMC’s place in a skinny bundle world."

He added that the company's shows gain many viewers within days when including on-demand viewing. "We believe C3 and C7 viewership makes up a lot of ground versus live (+60 percent incremental audience in many cases), and these are the bases on which actual ad sales are made," Nollen wrote. "The TV ad market has been very strong. And total audience viewership adds to the shelf-life value of these shows for future licensing and inclusion of AMC in skinny bundles."