As he aggressively dragged a program licensing dispute into Dish Network's (NASDAQ: DISH) third-quarter earnings report Tuesday, I had to chuckle a bit at this particular Charlie Ergen barb: Choosing to permanently ditch Turner Networks' channels, he said it "would be a little bit tougher if their original programming was a success like AMC."
If I'm Turner, or AMC for that matter, that would come off a little rich to me.
Nine quarterly reports earlier, after all, Ergen did a similar dance on AMC's programming reputation, telling investors that the proliferation of shows like Mad Men, Breaking Bad and The Walking Dead on platforms like Netflix (NASDAQ: NFLX) was devaluing AMC content.
If you were a Dish subscriber the following summer, you missed the entire first half of the last season of one of television's all-time classic series, Breaking Bad, with Dish refusing to renew its deal with--and carry--AMC Networks channels.
It took the third-season premiere of The Walking Dead that October to lure Dish back to the bargaining table.
In those days, the zombie apocalypse hit only averaged around 10 million viewers an episode. These days, it often doubles that audience total. In the pay-TV world, The Walking Dead is equivalent to an Atlanta-sized herd of walkers--you don't try to fight them. You run, by assuring viewers that you'll make a deal with the network and they won't miss an episode, which is what DirecTV essentially did Sunday night.
It was easy to understand why, amid yet another licensing impasse between satellite operator and programming network, it was AMC pushing around DirecTV during Sunday night's Walking Dead commercial breaks, telling viewers to change pay-TV operators if they don't want to be blacked out from their favorite series. All DirecTV (NASDAQ: DTV) could do was play defense.
If only Turner had lucked into a seemingly indestructible horror-genre series based on a widely fascinating concept…
And yes, I'm attributing AMC's ownership to such a cultural phenomenon to blind luck. To me, that's the other rich part of Ergen's screed.
The executive team that developed AMC's first original-series hits, Broken Trail, Breaking Bad and Mad Men, quietly departed amid some acrimony back in 2009. The team that took over the network, led by president Charlie Collier, managed to keep those shows going, notably agreeing to a massive raise in 2011 for Mad Men creator/executive producer Matthew Weiner so that studio Lionsgate could keep him around.
From The Prisoner to The Killing to Hell on Wheels to Low Winter Sun, Collier's team has been less successful at recapturing that Mad Men/Breaking Bad magic. But they did hit the jackpot when they got Frank Darabont, director of one of the most popular theatrical films to ever hit basic (The Shawshank Redemption) to create a show based on Robert Kirkman's popular graphic novels about the zombie apocalypse.
With much of AMC's programming budget committed to Mad Men and Weiner, AMC went through Walking Dead showrunners--Darabont, Glenn Mazzara--faster than the show killed off characters. But like Rick Grimes and his durable band of survivors, The Walking Dead proved too universally appealing for even AMC's strategic ineptitude to destroy. No matter how much creative turmoil the show has endured, the audience just seems to keep on growing.
With Mad Men winding down, AMC's programming strategy now seems focused on a pending Walking Dead spin-off series, as well as companion shows like Talking Dead. AMC is now calling the shots in affiliate fee disputes. It's not a bad situation to stumble into.
If you're Turner, which has finally run into a few challenges after a long, successful, far more stable run under recently departed executives like Steve Koonin and Michael Wright, and which has sports aces in the hole with NBA, Major League Baseball and NASCAR contracts, you have to be looking at AMC and wondering, "How can we screw up like that, too, and get so lucky?"
Don't get me wrong--I love The Walking Dead. And I have no idea what kind of rate increases Turner is demanding from Dish. I figure they can't be small, given the NBA just got the conglomerate to triple its licensing fee. And this is all just rhetoric anyway ...
But the "you should be more like AMC" thing from Ergen? That's ... harsh.
Ergen ended his lengthy takedown of Turner by telling investors how much he hates to kick while down the very first media conglomerate to make a programming deal with Dish.
"It's one of the easier ones to take down in my opinion, but it's like the last one I personally want to take down because they're the guys that helped us get in business," Ergen said. "And I'm a pretty loyal guy, right? I would bend over backwards for Turner because they helped us get in business, right? But we're not--we have a responsibility to our shareholders not to do stupid deals."
Gosh, he just hates to do this … to a friend, no less!
For Turner and its parent company, Time Warner, it would certainly help if the media business could develop ways to more quickly monetize the growing digital success Turner is quietly enjoying with CNN. Having some insight on the long-term health of the TV ad market would, of course, be great. And having some fresh hits for TNT and TBS would certainly help pay-TV operators accept the $1.2 billion a season that Turner will start paying the NBA in 2016.
But as the hiring this week of widely respected TV executive Kevin Reilly to replace Wright and Koonin showed, Turner is still a powerful programming brand. Nobody seriously wedded to a future in pay-TV is really ditching its networks for good.
Some day soon, Reilly and his team are going to develop another original series hit. Then, they'll tell millions of viewers to call their satellite operator and ask them why they don't carry TNT.--Daniel