The Walking Dead's season four recently premiered to a record-setting audience. More than 16 million viewers tuned in to watch the season's first episode, which subsequently had more viewers in the 18 to 49 age demographic than any NFL game this season. It also topped every other show featured on AMC Networks (NASDAQ:AMCX), including the channel's two previous cash cows, Breaking Bad and Mad Men.
Even the highly anticipated, and watched, series finale of Breaking Bad failed to measure up to the new fervor for The Walking Dead. It goes without saying that AMC has enjoyed a tremendous hot streak with many of its shows, including previous seasons of The Walking Dead. However, with the premiere of the fourth season, the ending of Breaking Bad, and the lights dimming on Mad Men, AMC may have found its new cash cow just at the right time.
The 'Dead' Breaks Bad
As if The Walking Dead's new place atop the television ratings—beating programs like Sunday Night Football, and The Big Bang Theory—were not enough, the show also decimated any previous ratings records on its own channel. For a fledgling and relatively young channel like AMC, this may not seem very impressive, except that its previous hallmark show, Breaking Bad's highly talked-about series finale still yielded to The Walking Dead by nearly 6 million viewers.
Ouch! Well, at least we now know that flesh-eating zombies win out over meth-peddlers.
The real question concerns how AMC will capitalize on the tremendous spike in ratings. Obviously the cable channel will increase ad rates for future commercial spots during The Walking Dead, but by how much is uncertain. AMC is officially in a new ratings league. Without a ratings precedent on the network, it is hard to estimate the amount of ad revenue the network will bring in from this new season of The Walking Dead, except to work off of the numbers from previous successful shows.
Turning Viewers Into Cash
According to SmartBrief, AMC asked anywhere from $200,000 to $400,000 for a 30-second commercial spot during the Breaking Bad series finale. These figures are on par with the ad rates for the most watched shows on broadcast television. Given the fact that The Walking Dead absolutely demolished Breaking Bad's ratings—as well as those of any other show currently on TV—it is fair to assume that AMC will be charging higher rates in the future.
AMC Networks will also likely require advertisers to purchase additional ads on its sibling networks, like the Sundance Channel, and IFC, as well as other less popular programming, like Hell on Wheels and some of its unscripted shows.
A Foolish Assumption...
While The Walking Dead may see a bit of a drop-off in ratings in subsequent weeks, it is fair to assume that the show will continue to wrangle the ratings for the rest of its fourth season, which will surely create more ad revenue for AMC, especially when time comes for the finale.
If you're still not sold, just look at the ratings for the show's marathon leading up to the premiere and its follow-up show. The Talking Dead garnered 5.1 million viewers, with the marathon coming in just above at 5.6 million viewers. Not only does this suggest that viewers stayed tune to AMC for the hours preceding and immediately following the premiere, it also solidifies The Walking Dead as the network's new cash cow.
Jamison Hill has no position in any stocks mentioned. The Motley Fool recommends AMC Networks. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.