6 Companies That Could Acquire 'The Walking Dead' Producer AMC

Twenty-First Century Fox FOXA stunned investors when it was revealed that the company offered to acquire Time Warner TWX for $80 billion. The deal (which valued Time Warner at $85 per share) was ultimately rejected, but that hasn't stopped investors from buying the stock. As of this writing, Time Warner's shares are up more than 16 percent. Peer companies are also on the move. AMC Networks AMCX, which has sparked M&A chatter for more than a year, rose more than five percent on Wednesday's news. AMC is famous for distributing some of the most popular shows on television, including The Walking Dead, Mad Men and Breaking Bad. The company (which has an intraday market cap of roughly $4.5 billion) is one of the strongest players in the entertainment space. Any merger would be big news for both investors and TV producers. Read on to see which companies are most likely to take control of the network.

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CBS Albert Fried & Company analyst Rich Tullo and Sterne Agee analyst Vasily Karasyov told Benzinga that CBS CBS is one of the top contenders for an AMC buyout. The network already dominates primetime with a number of hit dramas and comedies. CBS' pay-TV channel, Showtime, is second only to Time Warner's HBO. By acquiring AMC, CBS would be in charge of one of the most important networks on cable. Viacom Viacom VIA is famous for owning and operating a few key properties, including Paramount Pictures (which distributed the Transformers movies), MTV, Nickelodeon, BET, and Comedy Central. AMC would be a unique addition to this lineup. If nothing else, it could help Viacom gain some much-needed critical acclaim (the company isn't currently known for producing award-winning dramas). AMC could also bring new viewers to the Viacom family.

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Netflix Even without a merger, Netflix NFLX and AMC are already pretty close. AMC uses the streaming video giant to promote and popularize its series. The Walking Dead, for example, grew in popularity because new viewers had a legitimate (piracy-free) way to catch up in between seasons. Tullo has been a strong supporter of a Netflix-AMC merger for more than a year. In 2013, he told Benzinga why he thinks the two entities should unite. "AMC has 96 million cable subscribers," said Tullo. "That provides the cash flow in order to develop original content programming. Then when they do develop new, original content programming, you get a show like The Walking Dead, which demands $350,000 to $600,000 in advertising for a 30-second spot." Tullo said that this model works better for original content than Netflix's model "because you get the 10 million viewers monetized every week." "We think there's a synergy there between a company like Netflix and AMC," he added. Comcast Comcast CMCSA is another company that appeared on Karasyov's list of possible buyers. This one could be difficult because Comcast already owns NBCUniversal. If Comcast attempted to buy AMC, it could look like the firm is trying to monopolize the pay-TV business. Comcast could eliminate that perception by bringing AMC's shows to Hulu, a move that is unlikely to occur with AMC's current owners. Disney Disney DIS loves a good property. From Star Wars and The Avengers to Frozen and a plethora of hit TV series, the company has done everything it can to maximize returns. After acquiring Lucasfilm, Disney announced that it would make three Star Wars sequels and a number of spin-offs. There will be new Star Wars attractions at its theme parks and truckloads of merchandise for kids to buy. AMC has not produced a single property that could rival Lucasfilm or Marvel. The same could be said for ABC, but that didn't stop Disney from acquiring that network. Fox Karasyov also believes that Fox may be interested in acquiring AMC. From a programming perspective, a Fox-AMC union makes perfect sense. Both companies are known for producing some of the darkest dramas. If they worked together on all of their new shows, the results could be very impressive. That said, investors might feel that AMC is a weak substitute for Time Warner. AMC has The Walking Dead, but Time Warner has Batman, Harry Potter, and numerous others. How can AMC compete with that? Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.