AMC Networks: Cable Spin Off Could Be A Takeover Target

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AMC Networks (AMCX), which operates the AMC, IFC, Sundance, and WE tv cable channels, was spun off by Cablevision (CVC) last week. The spin off separates the popular cable programmer from its much larger parent, possibly making it an attractive takeover target.

In a note last week, Richard Greenfield and Brandon Ross of BTIG wrote, “Given the relatively small size of AMCX (market cap $2.5 billion and an enterprise value of $4.8 billion), we see a long list of potential buyers,” according to the  New York Times. They list NBCUniversal, CBS and Time Warner, as some of the potential buyers.

“A larger media company with a bigger ad sales force could probably take advantage of AMC,” Tom Eagan of Collins Stewart LLC told Bloomberg last week.

AMC, whose business was once limited to broadcasting movies, has successfully shifted its focus to original cable TV programming. Its most popular shows include the critically acclaimed and Emmy award winning series “Mad Men,” “The Walking Dead,” and “Breaking Bad.”

The asking price for AMC could be as high $3B,  according to Bloomberg. This makes the newly-public company a much cheaper takeover target than its rivals Discovery Communications, Inc. (DISCA; $11.59B) and Scripps Networks Interactive, Inc. (SNI; $8.26B).

Wondering which companies might gain from an AMC takeover? To help you with your own research, here is a list of ten stocks with exposure to a possible AMC deal.

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List sorted by market cap.

1. General Electric Co. (GE): Conglomerates industry with a market cap of $202.03B. It is a diversified technology and financial services corporation. Its products and services range from aircraft engines, power generation, water processing, and household appliances to medical imaging, business and consumer financing and industrial products. It holds a 49% stake in NBCUniversal after selling a majority stake to Comcast in January. NBCUniversal could be eyeing AMC as a takeover target.

2. Walt Disney Co. (DIS): Diversified Entertainment industry with a market cap of $74.79B. It operates in five segments: Media Networks, Parks and Resorts (Disneyland, etc), Studio Entertainment, Consumer Products and Interactive Media. It produces and distributes live-action and animated films, including popular Pixar films such as “Toy Story 3”. It also owns and operates the ABC, ESPN, and Disney Channel television networks. It could be eyeing AMC as a takeover target.

3. Comcast Corporation (CMSA): CATV Systems industry with a market cap of $70.51B. It is a provider of video, high-speed Internet and phone services (cable services) to residential and business customers in the United States. Its Programming segment consisted primarily of its consolidated national cable programming networks, E, Golf Channel, VERSUS, G4 and Style. The company acquired a 51% stake in NBCUniversal in January. NBCUniversal could be eyeing AMC as a takeover target.

4. News Corp. (NWSA): Diversified Entertainment industry with a market cap of $45.89B. It has operations in eight segments: Filmed Entertainment, Television, Cable Network Programming, Direct Broadcast Satellite Television, Integrated Marketing Services, Newspapers and Information Services, Book Publishing, and Others. Its TV and cable broadcasting networks operate under the FOX brand. It could be eyeing AMC as a takeover target.

5. Time Warner Inc. (TWX): Diversified Entertainment industry with a market cap of $39.23B. It has three reporting segments: Networks, consisting principally of cable television networks that provide programming; Filmed Entertainment, consisting principally of feature film, television and home video production and distribution, and Publishing, consisting principally of magazine publishing. Its TV networks are operated by its Turner subsidiary and include TBS, TNT, HBO, Cartoon Network, and CNN. It could be eyeing AMC as a takeover target.

6. Viacom, Inc. (VIA): CATV Systems industry with a market cap of $30.4B. It manages its operations through two reporting segments: Media Networks and Filmed Entertainment. Its TV operations include the MTV, BET, VH1, and Nickelodeon networks, as well as Comedy Central, Spike TV, TV Land, and Atom. It is a competitor of AMC’s parent, Cablevision.

7. CBS Corporation (CBS): TV Broadcasting industry with a market cap of $19.07B. It has operations in segments, which include Entertainment, Cable Networks, Publishing, Local Broadcasting and Outdoor. It operates the CBS Television Network and Showtime, a premium cable company and rival to AMC.

8. Discovery Communications, Inc. (DISCA): CATV Systems industry with a market cap of $11.59B. It is a global nonfiction media and entertainment company that provides programming across multiple distribution platforms worldwide. The Company’s U.S. Networks segment owns and operates nine national television networks principally throughout the United States, including Discovery Channel, TLC and Animal Planet. It is a competitor of AMC’s parent, Cablevision.

9. Scripps Networks Interactive, Inc. (SNI): TV Broadcasting industry with a market cap of $8.26B. It is a lifestyle content and interactive services company with television and interactive brands. Its TV operations include Home and Garden Television (HGTV), Food Network, Travel Channel, DIY Network (DIY), Cooking Channel and Great American Country (GAC). It is a competitor of AMC’s parent, Cablevision.

10. Cablevision Systems Corporation (CVC): CATV Systems industry with a market cap of $7.87B. It is a cable operator in the United States. It also operates cable programming networks, entertainment businesses, telecommunications companies and a newspaper publishing business. It spun off AMC Networks last week. AMC Networks’ operations include AMC, WE tv, Independent Film Channel (IFC) and Sundance Channel.

(
List compiled by Andrew Dominguez. Data sourced from Finviz. Disclosure: The author owns GE stock)



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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