“The mechanisms for the monetization of content are in disarray.”
That’s what AMC Networks Chair James Dolan told his employees on Tuesday when he delivered the grim news that a “large-scale layoff,” in addition to “significant” operating cuts, will soon take place at the company. The cuts, first reported by The Wall Street Journal, will amount to 20% of its US workforce, which is roughly 1,700 employees, AMC said.
In his memo to employees, Dolan said it is a “confusing and uncertain time in our industry.” He blamed the grave situation at the network — which was once home to television’s hottest shows, such as “Breaking Bad,” “Mad Men,” and “The Walking Dead” — squarely on 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,” Dolan wrote. “This has not been the case.”
The dire state of affairs at the company, which also announced the departure of its chief executive who served in the position for less than three months, largely reflects the extraordinary challenges facing the entire industry as linear television rapidly declines and companies scramble — or perhaps, struggle — to build lifeboats to streaming.
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And the havoc being wreaked upon AMC Networks could foreshadow what is yet to come for others.
“We’ve already seen layoffs and restructuring for a handful of companies,” Insider Intelligence principal analyst Paul Verna told CNN on Tuesday. “Any of the [companies] that have not yet announced layoffs probably will.”
“It’s the whole ecosystem,” Verna added.
Major players such as Warner Bros. Discovery (CNN’s parent), Disney, and Paramount all appear to be eying cost cutting measures and restructuring their businesses to focus more on profits and less on exorbitant spending to chase subscribers.
Verna said he does not find it “unreasonable to expect” that companies such as NBC Universal, Apple, and Amazon will also announce cuts to their media business in the near future. Though he didn’t entirely agree with Dolan’s assertion that the “mechanisms for monetization of content are in disarray,” he blamed lower profitability from streaming, an overcrowded market, and the brutal economic headwinds battering an array of industries.
“They’ve bumped up against the reality that it’s a tough business and there really isn’t room for everybody in it,” Verna said. “It’s just saturated. And a lot of it does get back to the economy.”
“And, as a result, more dominoes are going to fall.”