“The mechanisms for monetizing content are in disarray.”
That’s what AMC Networks chairman James Dolan told his employees on Tuesday as he broke the grim news that the company will soon face a “major layoff” alongside “significant” operational cuts. The cuts, first reported by the Wall Street Journal, will be 20% of the US workforce, equivalent to about 1,700 employees, AMC said.
In his memo to employees, Dolan said it was a “confusing and uncertain time in our industry.” He blamed the serious situation on the network – which was once home to the hottest TV shows like ‘Breaking Bad’, ‘Mad Men’ and ‘The Walking Dead’ – directly on cutting the cables.
“At the same time, we’ve seen the rise of direct-to-consumer streaming apps, including our own AMC+. We believed losses in cable cutting would be offset by gains in streaming,” Dolan wrote. “This was not the case.”
The dismal state of the company, which also announced the resignation of its CEO, who has served in the position for less than three months, largely reflects the extraordinary challenges facing the entire industry as linear television declines rapidly and businesses falter guessed – or maybe struggled – to build lifeboats to stream.
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And the devastation being wreaked on 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 chief analyst Paul Verna told CNN on Tuesday. “Everyone who [companies] who have not yet announced any layoffs are likely to do so.”
“It’s the entire ecosystem,” added Verna.
Big players like Warner Bros. Discovery (CNN’s parent company), Disney and Paramount all seem to be considering cost-cutting measures and restructuring their companies to focus more on profits and less on exorbitant spending to hunt subscribers.
Verna said he doesn’t think it’s “unreasonable to expect” that companies like NBC Universal, Apple and Amazon will also announce cuts in their media businesses in the near future. While he didn’t entirely agree with Dolan’s claim that the “mechanisms for monetizing content are in disarray,” he blamed streaming’s lower profitability, a crowded market, and the brutal economic headwinds ravaging a number of industries.
“They’ve been faced with the reality that it’s a tough business and there really isn’t room for everyone,” Verna said. “It’s just saturated. And a lot of that goes back into the economy.”
“And more dominoes will fall as a result.”