In Hollywood, you're known by your latest hit. Good talent is hard to come by, and it's especially hard for investors to find management that can continue to deliver hits year after year.

Further complicating matters is when a company like Netflix (NASDAQ:NFLX) comes along and changes the way people watch television. This has been rough on cable operators and the channels they offer.

One company, AMC Networks (NASDAQ:AMCX), has defied these odds. AMC has had a string of successes over the past few years, including Breaking Bad, Mad Men, Hell on Wheels, and The Walking Dead. The company also owns WE tv, IFC, and the Sundance Channel.

Consolidation in the TV industry
Comcast's plan to buy Time Warner Cable and the AT&T deal for DirecTV will shrink the pay-TV industry, but there could be more consolidation on the way, this time in the media industry. AMC is trading 24% off its 52-week highs. The stock trades at only 12 times next year's earnings and has a P/E to growth, or PEG, ratio of only 0.9.

With a market cap below $5 billion and an inexpensive valuation, AMC could be a takeover target. AMC could easily be snatched up by any of the larger players, which include 21st Century Fox, Disney (NYSE:DIS), and Viacom. All three have market caps above $35 billion, and the deal would boost the negotiating power of these major media companies.

The other key is that one of the big media companies would get a rapidly growing content company. For example, analysts expect 19.4% earnings growth from AMC next year. Compare that to 10.5% for Disney, 15% for Viacom, and 16% for Fox. Wall Street also expects AMC to grow its annual earnings more rapidly over the next five years than any of those three.

What about Netflix?
Netflix owns nearly 50% of the market in the U.S. for homes that don't subscribe to a pay-TV service. Anything the major media companies can do to fend off further market share gains from Netflix would benefit them, including buying up AMC. It is worth noting that the major media companies all have stakes in Hulu (the chief competitor to Netflix), including Disney.

Although the major cable companies and Netflix are in a heated battle, Netflix has managed to co-exist with the likes of AMC and Disney. Netflix has had a partnership with AMC for years. It's been a two-way street, with Netflix subscribers becoming AMC fans with the likes of The Walking Dead, The Killing, and Breaking Bad streaming on Netflix, while AMC devotees are turning to Netflix to catch up on other AMC shows. As far as Netflix and Disney go, Netflix is creating content based on Disney's Marvel Comics. Disney is also getting into the streaming market via its ESPN property. It has been streaming FIFA World Cup matches via ABC and ESPN apps.

However, Netflix has been seeing marked success with its own content, such as House of Cards and Orange is the New Back. But AMC also has a strong pipeline. It already has plans to produce the second season of Better Call Saul even before the first season has aired. It's also developing a new zombie series given the popularity of The Walking Dead.

Bottom line
The media industry could be on the brink of consolidation, which should help it better compete with the likes of Netflix and other streaming services. It appears that AMC has a strong pipeline of shows and trades at a very attractive valuation. For investors who look to gain exposure to the entertainment industry, AMC is worth a closer look.