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Why AMC Networks Stock Soared Today

By Anders Bylund - May 12, 2020 at 2:56PM

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The cable network might be in Amazon's targets as a buyout idea.

What happened

Shares of AMC Networks (AMCX -0.14%) traded 22.8% higher at 3:25 p.m. EDT Tuesday. Merger analysis firm CTFN reported that the premium cable network operator is looking for a buyer.

So what

Two unnamed insiders told CTFN reporter Diane Alter that AMC Networks is actively looking for a buyer, and that e-commerce giant Amazon.com (AMZN 3.60%) is looking into this opportunity. Earlier this week, Amazon was rumored to entertain a buyout of movie theater chain AMC Entertainment (AMC -5.54%), but Alter's sources suggest that this was a case of mistaken identity -- Amazon's real buyout idea is actually this TV studio, known for managing the Starz premium cable network and creating hit shows like Breaking Bad and The Walking Dead.

An artist is painting a mural of a large yellow fish swallowing a smaller yellow fish.

Image source: Getty Images.

Now what

Alter noted that she couldn't find supporting evidence of AMC Networks' acquisition-shopping from other sources, pinning this entire jump on the word of one banker and one entertainment-industry lawyer.

That being said, AMC Networks shares have fallen 55% over the last year, and the company could use a quick and clean exit strategy. This idea makes more sense than the AMC Entertainment rumor ever did. The movie theater operator is on life support, and you could argue that the premium TV studio's worries are short-lived.

Either way, it's beginning to sound like Amazon is itching to play a more substantial part in the filmed entertainment industry.

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Stocks Mentioned

AMC Networks Inc. Stock Quote
AMC Networks Inc.
AMCX
$29.43 (-0.14%) $0.04
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$113.50 (3.60%) $3.94
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$12.78 (-5.54%) $0.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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