James Dolan Plans to Turn Around AMC Networks by Nominating His Wife as CEO

The transition to streaming has been challenging for the cable-TV provider famed for hits like "The Walking Dead," which has considered prospective arrangements with Roku, Sony, and others.

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Soon after taking over as AMC Networks Inc.'s CEO Last October, Christina Spade held a town hall at the Museum of the Moving Image in New York to provide an update on the condition of the company. AMCX increased by 6.30%; green up pointing triangle. She also addressed the worry of workers regarding possible layoffs.

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According to people familiar with the event, which took place in early November, Ms. Spade stated that any job cuts at the media company, whose flagship cable channel is known for such hits as "Breaking Bad" and "The Walking Dead," would be thoughtful and targeted rather than drastic, and would start in early 2023. According to them, Ms. Spade had recruited the consulting company Bain & Co. to develop a methodical strategy.

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AMC Chairman James Dolan revised the script a few weeks later. People close to the corporation claim that he directed a 20% decrease in U.S. staff and expressed his displeasure over the employment of Bain. Three months into Ms. Spade's position, Mr. Dolan fired her.

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Mr. Dolan, whose family owns AMC, is attempting to steer the media company in a significantly different direction. AMC, once one of the biggest success stories in cable TV, has had trouble adjusting to the streaming era. In just five years, its market value has decreased by about 80%, to less than $1 billion.

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Finding a new CEO is Mr. Dolan's first priority now that he has been appointed temporary executive chairman. According to those with knowledge of the situation, the corporation is collaborating on that procedure with the recruiter Sucherman Group. They claimed that Mr. Dolan's wife Kristin Dolan, who is separated from him but remains close to him, had surfaced as a possibility. Ms. Dolan, who owns a different data analytics business, is a regular at AMC, attending meetings and maintaining an office on the executive floor. She is on the board of AMC.

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According to sources with knowledge of the issue, Mr. Dolan and Ms. Dolan have been actively involved with the executive team. They claimed that while maintaining growth in streaming subscriptions, the corporation is looking at other cost-cutting measures. Comparing the third quarter of 2022 to the third quarter of the previous year, net sales decreased by around 16% while operating income decreased by 20%. On Friday, the firm releases its results for the third quarter.

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On the day that the layoffs and Ms. Spade's departure were revealed, Mr. Dolan wrote a memo to the staff in which he claimed it was challenging to make enough money in streaming to offset the collapse of traditional TV. According to Mr. Dolan's letter, "we believed that the losses from cord-cutting would be offset by benefits from streaming." "This has not happened."

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Many present and former AMC Networks employees expressed shock at the statement because they believed Mr. Dolan was noticing a trend that the majority of company management had been aware of for years. According to a source close to Mr. Dolan, he wanted to ensure that each employee was aware of the company's current situation.

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AMC is a minor player in a sector where size is becoming increasingly important, as compared to behemoths like Walt Disney Co. and Netflix Inc. The corporation stayed out of the way while the industry underwent a wave of consolidation in recent years. People with experience in the media industry claim that Mr. Dolan either wasn't interested in selling or had an excessive price in mind.

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According to others with knowledge of the matter, Roku Inc., a developer of streaming devices, and Providence Equity Partners, a private equity firm, approached AMC about a possible acquisition around 18 months ago. The conversation froze. According to persons familiar with the negotiations, during the past few years, Sony Pictures Entertainment, Lions Gate Entertainment Corp., Blackstone Inc., and Apollo Global Management were among the other corporations to consider possible purchases for all or parts of AMC Networks.

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The 67-year-old Mr. Dolan is the son of HBO founder and 96-year-old cable business pioneer Charles "Chuck" Dolan. The family's business consists of AMC Networks in addition to MSG Sports, owner of the New York Knicks and New York Rangers, and MSG Entertainment, owner of venues like Madison Square Garden and Radio City Music Hall.

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He enjoys music and played guitar and fronted the band JD & The Straight Shot. Recent media attention has been drawn to Mr. Dolan's use of face recognition technology at his venues to prohibit the presence of lawyers whose firms have been named as defendants in legal proceedings against his companies.

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People close to Mr. Dolan claim that the 17,500-seat entertainment complex under built by MSG Entertainment, the MSG Sphere in Las Vegas, is his "baby." The most recent cost estimate, which was released in November, was $2.18 billion, but the project has repeatedly gone over budget.

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In 2020, Mr. Dolan took over the AMC chairmanship from his father. He will only hold the position of executive chairman through March 6 or until a new CEO is chosen, whichever comes first, according to the corporation.

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Mr. Dolan is viewed as an unpredictable and tough manager by associates and former AMC employees. They claim that he advocated for staff to come back to work at the beginning of the pandemic and brought it up in board meetings. According to those familiar with the situation, Mr. Dolan complained that the streaming industry wasn't expanding quickly enough in 2021, just after taking over as chairman of AMC.

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Some former hits, like "Breaking Bad" and "Better Call Saul," are no longer accessible on the service because they are now on Netflix. The company's flagship streaming service, AMC+, costs $9 per month and offers popular shows from the AMC channel—among them, series based on Anne Rice novels such as "Interview with the Vampire" and "Mayfair Witches."

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The corporation also runs specialized streaming services like Shudder, which focuses on horror, and Acorn TV, which caters to fans of British and other foreign content.

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By the end of 2025, according to AMC's predictions, its services should have 20 million to 25 million members. In the third quarter, the business attracted 300,000 new subscribers, increasing the total number of its paying customers to 11.1 million.

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With the exception of AMC+, AMC's streaming services are break-even or profitable, according to sources familiar with their financials. However, the gains are insufficient to stop the continuous decline of the profitable cable-TV industry.

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Josh Sapan, the company's longtime CEO, resigned in August 2021 after leading it through the height of hits like "The Walking Dead," and Mr. Dolan appointed Matt Blank, a seasoned television executive who oversaw Showtime for many years, as interim CEO.

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According to those with knowledge of the situation, Mr. Blank supported increased spending on content and marketing while encouraging management to aim for a more ambitious streaming goal of roughly 50 million users by 2025.

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According to those familiar with the discussions, Mr. Blank was in talks with prospective buyers at the same time, including Roku and Providence. According to the sources, Mr. Blank expressed internally his belief that the company would be better suited as a part of a larger corporation even though the company never placed itself up for sale. According to a previous story from Trade Algo, AMC has been contacted about a potential deal by Providence and Apollo.

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When streaming king Netflix announced its first decline in members in more than a decade last spring, the entire industry received a shock and there was a significant selloff in stocks across the media and entertainment industries. AMC Networks decided to move Ms. Spade, who was the chief operating officer and chief financial officer, to CEO despite those uncertainties.

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Several current and former employees said that Ms. Spade, who had previously worked at organizations like CBS, started in September and made it obvious that cost-cutting was a priority. According to those familiar with the matter, she allocated all marketing funds for four concerts during that month in order to gauge the effect they would have on the firm. Antenna, a company that analyzes subscriber data, reported a 27% decrease in sign-ups for all of AMC's streaming services during that month.

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On Mr. Dolan's boat "the Knickerbocker," AMC Networks' top executives, including Ms. Spade, met for a full day in early September to discuss the condition of the company. According to sources familiar with the conversation, Mr. Dolan suggested the corporation was still firmly committed to expanding its streaming business. He also stated that the business could need to make difficult decisions in the upcoming months, according to the sources.

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Financial strains are imminent. According to corporate papers, the company has $400 million in debt that is due in April 2024 and another $800 million that is due in 2025. As pressure to reduce expenses mounts, it could be tempting to reduce programming investments, but doing so would have hazards of its own.

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Michael Nathanson, a seasoned media analyst with SVB MoffettNathanson, remarked, "They are in a dilemma." The simplest solution is to stop creating material, but their economic model demands them to invest in fresh unique content.