Mad Men, Breaking Bad, The Walking Dead…House of Cards, Orange is the New Black, Hemlock Grove. The first trio of shows belong to AMC's (NASDAQ: AMCX) roster of original programming, while the second group belong to Netflix (NASDAQ: NFLX). Looking at the two sets is interesting because they represent old school verses new school and the past and future all at the same time.
Just as cable giant AMC broke through in a big way following the debut of Mad Men, streaming juggernaut Netflix did the same following the premiere of House of Cards. Both won acclaim from fans and critics and both won Emmy awards. The comparisons continue but what's most of note is how this weekend the two sides will converge in the most unexpected way as an AMC series fully jumps ship to Netflix for its final run.
Making a case
The long drawn out behind the scenes story of The Killing is just as fascinating as the one that played out on screen for three seasons. For AMC it represents another reminder of a longer than expected unlucky streak while for Netflix it represents the continuation of what's been a stellar run.
AMC's first attempt to launch its next big series following The Walking Dead's stunning 2010 debut was The Killing which debuted April 3, 2011. Based on the Danish series Forbrydelsen and developed for the US by Veena Sud, it was a simple concept…a young girl is brutally murdered and the police must determine who was behind the grisly crime. Yet the execution soon became its undoing.
The Killing debuted to 2.7 million viewers which was enough to make it AMC's second-highest original series premiere following The Walking Dead, which opened to 5.3 million viewers. Every aspect of that was good news and many believed the network had again captured lightning. Even when the series began to slip week to week analysts and critics stood by the show because it was still topping what Mad Men and Breaking Bad did during its first seasons (and it was actually a good show).
The simple fact is people will tune out during the middle of any series but return for the finale and that's what happened here with 2.3 million viewers coming back to see the grand reveal. Although that was the problem…there was no grand reveal.
After being on the air for months asking the question "who killed Rosie Larsen?" producers didn't actually answer "who killed Rosie Larsen?" Instead they pulled a cliffhanger that saw its red herring suspect critically wounded and audiences spewing venom.
While AMC executives backed Sud, who swore up and down she never promised to reveal the killer at the end of season one, viewers didn't care. They felt betrayed, conned and just completely ticked off. Producers didn't do much to help the situation either by reminding audiences Forbrydelsen didn't reveal its killer in season one either. That's all well and good but it was something that should have been brought to audience's attention BEFORE the season started, not after the fact.
Not only did the show never recover from that epic stumble but when the show finally did reveal the killer in its season two finale only 1.4 million viewers tuned in, ironically 400,000 less than the number that tuned into the penultimate episode the week prior.
After being canceled and resurrected, a subsequent self-contained third season would average 1.5 million viewers and eventually lead to the show's second cancellation and then second resurrection, this time on Netflix, which partnered with AMC on the cost of that third season. Now the show returns August 1st (solely on Netflix) with a final batch of six extended episodes designed to bring this series to a conclusion.
From an investor's perspective this is an excellent case study that highlights the changing marketplace and give a shining example of where we stand now. These are two networks that broke into the world of pop culture in much the same way, albeit through different avenues, but now going in different directions.
Let me also be clear, I'm not saying the complete mishandling of The Killing is the reason why AMC has failed to launch another big series…though it certainly didn't help. What I'm saying is that a misstep like this is a black eye for a cable industry already reeling from the rising popularity of streaming media.
AMC is not going away anytime soon (Walking Dead will see to that), but it's hard to argue the network is as powerful as it used to be. The flagship network of AMC Networks which also includes IFC, SundanceTV, WE tv, and IFC Films, AMC is the channel in which of all the above, analysts and investors usually watch the closest. It's the granddaddy of a younger collection of alternative TV channels. What was once seen as the go-to destination for new edgier dramas has come on some rough times.
Conversely Netflix has proven to be a valuable resource for the industry and its creative teams as The Killing will be the second series saved by the streaming network (following Arrested Development). For the entertainment industry, cancellation now doesn't mean the same thing it did a decade ago. Now there's a chance for a second life for a series on a second network…and let's be clear Netflix can be considered a network.
Co-founded in 1997 by current CEO Reed Hastings, the company has become a real entertainment industry player and a major thorn in the side of the traditional networks such as AMC. In addition to drawing quality talent, Netflix also doesn't release any type of ratings numbers, which gives it a competitive advantage.
For investors it's a new alternative to a stale entertainment field and one that has been paying off. To be fair to AMC though, Netflix isn't without its own miscues…remember Qwikster? The failed debacle of a idea to spin off its DVD service elicited the same type of vile and venom The Killing's non-ending did, but that was far easier to fix.
When investors look at Netflix they see a company with 50 million subscribers and an arsenal of established movies and TV shows as well as a lineup of strong original series with many more to come. Essentially Netflix has become the AMC of this generation. The Killing is the bridge between the two as Netflix is looking to turn around a brand left for dead multiple times by AMC for the one last hurrah it deserves.
With the return of the surprisingly resilient Hell on Wheels this month, the new season of the incredibly popular The Walking Dead this fall, the final (final) season of Mad Men next year and the debut of Breaking Bad spin-off Better Call Saul in 2015, AMC still has some big cards left to play. The problem is so does Netflix and the impact of shows like The Killing remind analysts and investors which company currently holds the advantage.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.