Shares of AMC Networks, Inc. (NASDAQ:AMCX) rallied about 4% amid the news of Rupert Murdoch's unsolicited $80 billion bid to acquire Time Warner. Is that fair? Should investors expect Murdoch or another suitor to target AMC with a rich takeover bid?
Guest host Alison Southwick puts these questions to Fool analysts Nathan Alderman and Tim Beyers, who debate the merits in this episode of 1-Up on Wall Street, The Motley Fool's Web show in which we talk about the big-money names behind your favorite technology, movies, toys, video games, comics, and more.
Tim opens by arguing that AMC has a rich pipeline of more than 60 properties in development. So even if Halt & Catch Fire hasn't earned the ratings executives might like, the show also opened opposite HBO's ultra-hit Game of Thrones. Meanwhile, Revolutionary War drama Turn did well enough to get a second season, while Better Call Saul could anchor the network's fall 2015 season.
AMC is also improving financially. At 19%, returns on capital are running well above the cost of AMC's admittedly significant debts. Mix in more than $500 million in cash reserves on the balance sheet, and there's every reason to believe that AMC can keep investing in the sorts of off-the-beaten path programming that would tempt a suitor. (Source: S&P Capital IQ.)
Nathan counters that the family of Cablevision (NYSE:CVC) founder and chairman Charles Dolan effectively controls AMC and uses the business to further its own interests, a bad sign. He also argues that there aren't enough properties besides The Walking Dead to protect investors were the zombie apocalypse to suddenly end.
Who do you think has the better argument? Click the video to watch as Alison puts Tim and Nathan on the spot, and then leave a comment below to let us know what you think. You can also follow us on Twitter for more segments and regular geek news updates!
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Alison Southwick has no position in any stocks mentioned. Nathan Alderman owns shares of Apple. Tim Beyers owns shares of Apple, Google (A and C class), Netflix, and Time Warner. The Motley Fool recommends AMC Networks, Apple, Google (A and C shares), and Netflix and owns shares of Apple, Google (A and C class), and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.