Shortly after AMC Networks CEO Christina Spade abruptly stepped down after less than three months in the role, the company’s chairman, James Dolan, sent a memo to staff on Nov. 29 forecasting “a large-scale layoff as well as cuts to every operating area.”
“It was our belief that cord cutting losses would be offset by gains in streaming. This has not been the case,” Dolan wrote, adding: “We of course realize that this will cause significant concern and anxiety for our employees and those who rely on AMC Networks for their livelihood. We do not take this lightly. We will take every step possible to minimize the impact of these actions on our community.”
The company — home of such cable networks as AMC, IFC and Sundance TV, as well as such streamers as AMC+, Acorn TV and Shudder — didn’t immediately provide details about the reasons behind the move and said it was finalizing the process of picking a successor.
Across its brands, AMC Networks has about 10.8 million subscribers and the expectation is that subs will be at 12 million by year end with a plan to reach 20 million to 25 million by 2025. But cord-cutting is accelerating. In the latest quarter, the largest pay-TV providers in the U.S. saw a loss of 785,000 net video subscribers, compared to a loss of 650,000 in the year ago period, per a Leichtman Research tally.
The CEO exit and layoffs news comes shortly after AMC’s most-watched show, The Walking Dead, wrapped its run as the basic cable network next looks to cash in with lucrative streaming and international sales for at least three spinoffs in the works featuring the franchise’s most beloved stars. By bringing the flagship to a “close” AMC voided decades-old streaming and international deals that were closed before the zombie drama became a global phenomenon. Still, revenue from future sales of TWD spinoffs won’t be enough to keep the network and its myriad streaming services afloat as interest (and ad sales) in the franchise continue to shrink.
AMC, in recent years, has turned to more foreign co-productions with short-order originals to remain competitive. The network faces a turning point moving forward after also bringing Breaking Bad prequel Better Call Saul and Killing Eve to their conclusions in 2022. Looking ahead, AMC has high hopes on its Anne Rice franchise with Interview With a Vampire already renewed and Mayfair Witches and Invitation to a Bonfire both due in 2023 along with multiple TWD offshoots and the new Orphan Black sequel, Echoes. Also look for the returns of Saul stars Bob Odenkirk and Giancarlo Esposito in Straight Man and The Driver at some point in the not too distant future.
Wall Street analysts were caught off guard by CEO Spade’s abrupt exit. Amid the uncertainty, stock in AMC Networks tumbled by $1.24, or 6 percent, to $19.34 in mid-day trading.
Spade took the CEO role as of Sept. 9 and surprised investors with her early departure, even though her employment agreement runs through 2025.
Cowen analyst Doug Creutz called the news of Spade’s exit “a complete surprise,” adding that it “leaves the company in need of new leadership, with no apparent successor in the wings.” While Creutz reiterated his “market perform” rating on the stock and $22 price target, he highlighted: “No rationale was given by the company for the exit, which leaves any number of potential reasons, both personal and operations-related. We expect this news to pressure shares unless and until the company finds new leadership and can reassure investors that Spade’s exit was not related to any financial-related issues.”
“We thank Christina for her contributions to the company in her CEO role and her earlier CFO role, and we wish her well in her future endeavors,” chairman Dolan said in a statement on Tuesday.
Dolan’s memo to AMC employees is below:
AMC Networks Community:
As I am sure you are aware our industry has been under pressure from growing subscriber losses. This is primarily due to “cord cutting.” At the same time we have seen the rise of direct to consumer streaming apps including our own AMC+. It was our belief that cord cutting losses would be offset by gains in streaming. This has not been the case. We are primarily a content company and the mechanisms for the monetization of content are in disarray.
It is for that reason that myself and the Board of Directors of AMC Networks have concluded that we as a company need to conserve our resources at this time. We have directed the executive leadership of AMC Networks to undergo significant cutbacks in operations. These will include a large-scale layoff as well as cuts to every operating area of AMC Networks. We of course realize that this will cause significant concern and anxiety for our employees and those who rely on AMC Networks for their livelihood. We do not take this lightly. We will take every step possible to minimize the impact of these actions on our community. However, it is imperative that we begin immediately with this new course of action.
The Dolan Family and the Board of AMC Networks have great pride in the company and products that you have created. This is a confusing and uncertain time in our industry. We are confident that AMC Networks will come through this even stronger. Your executive leadership will follow up with details shortly. We wish only the best for everyone in the AMC Networks community.
Sincerely,
James Dolan