Professional Documents
Culture Documents
AMC Group4
AMC Group4
•Introduction of Financial Interest and Syndication rules, content creation and content delivery was separated,
1970 networks purchased it from creators
•Revenue drop from 2015 ($371 mn) to $271mn in 2016. Due to disputes with cable service providers
2016
•AMC channels reached 90.5 million US households, with rise in income to $471 mn
2017
Industry
Analysis
• Very few • High Entry •# of Suppliers •Many buyers •Few substitutes
Industry Rivalry
1. Advantages
• Ability to control content creation
• Certainty to maintain quality
• Customizable profit-sharing agreement
• Better control over the revenue streams
• Edge over the competitors
• Price Control
2. Disadvantage
• Increased Rigidity; Reduced flexibility
• Limitations to variety of Suppliers
• Limitations to variety of Buyers
• Increased complexity
• Reduced risk taking capabilities
What are the main problems that
Sapan and AMCN faced in the lawsuit?
Vertical Integration Model in Television
Problems:
1. Sapan and AMCN faced the lawsuit over the profit sharing from the network’s hit
show – The walking Dead
2. The lawsuit points out that shows like Breaking Bad and Mad Men, which were
made by non-AMC owned studios, ended up negotiating higher fees than The
Walking Dead.
• Walking dead was part of AMC show after vertical integration, the profit share
was given to studio level
3. The lawsuit also alleged that the 68% of reimbursement was fixed for entire duration
of TWD, show produced by outside studios were faced 100% reimbursement starting
from season 5.
What are AMCNs options?
Feasibility – Low
Kirkman and 4 other parties were seeking more
than $1 billion USD because of show’s success in
past 5 seasons
Option 2: Adopt Direct Internal Negotiations
Recommendation:
Get involved in OTT business to stay in competition and retain the
creative talent.
Thank you