AMC’s recent austerity moves have Hollywood nervous

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Usually, when a show becomes a hit in its first season, the last thing the producers need to worry about is having to watch their dollars and cents.

But that’s not the case for AMC’s zombie smash “The Walking Dead,” which not only became the cable channel’s most-watched original series ever but even set records for all cable networks for viewership among the coveted adults 18-49 demographic.

Its reward from AMC: A per-episode budget cut of more than six figures for its second season, according to people with knowledge of the situation.

“The Walking Dead” isn’t the only AMC show that the network brass wants to give a haircut. Sony Television, the producer of “Breaking Bad,” is in tense negotiations with AMC over terms for a fifth and likely final season of the show.

The financial restraint is causing a rift between New York-based AMC and the creative community. The cuts being pushed for on “The Walking Dead” and “Breaking Bad” come only a few months after the network shelled out big bucks on a new deal that would keep Matt Weiner, creator of AMC’s signature drama “Mad Men,” on board for at least the next two seasons.

Sony got so irked at the terms AMC offered for a fifth season of “Breaking Bad,” which included making only six or eight episodes instead of the usual 13, that last week it approached other cable networks, including FX, about buying the program.

Cooler heads have since prevailed and AMC and Sony are trying to hammer out a new deal that will likely see the last season of ‘Breaking Bad’ spread out over at least two years. Going that route would likely allow AMC to ease the financial pain of another season of ‘Breaking Bad’ over a longer period of time, much the way keeping ‘Mad Men’ off its network in 2011 also provided short-term relief to the network’s bottom line.

In the case of “The Walking Dead,” not only is the budget being slashed but Frank Darabont, the show’s well-regarded executive producer, was also replaced last week, just days after he appeared at the Comic-Con convention to greet the show’s fan base and promote upcoming episodes.

AMC President Charlie Collier strongly denied that the cost of keeping “Mad Men” is in any way hampering the network’s programming strategy.

“We’re investing more than we ever have before,” Collier said in an interview. “The fact that future seasons of ‘Mad Men’ were going to be expensive is not a surprise to us.”

He was also quick to defend the network against complaints about its recent dealings with producers. “We’ve taken some of the most expensive, riskiest shows around and nurtured them and managed to grow our network.”

Until recently, AMC was a unit of New York-based cable operator Cablevision Systems Corp. In July, it along with sister cable channels Sundance, IFC and WE were spun off into AMC Networks Inc., a stand-alone public company. That will mean greater scrutiny of the company’s spending by Wall Street.

“As a public company, the financials of AMC are gradually going to become much more apparent to investors,” said Barclays Capital analyst Anthony DiClemente. “There will be many more questions about programming expenses and margins.”

Collier stands by AMC’s track record and management strategy. “Are there bumps along the road? Sure, but the net results have turned out pretty well.”

-- Joe Flint

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