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June 4, 2014 by · Leave a Comment 

Offering original programming on cable TV may stimulate ratings for the networks doing so, and you might think that AMC, the home of such hits as The Walking Dead, Mad Men and Breaking Bad, would have seen its shares rise accordingly. Alas,such is not the case. Shares in the company have dropped from a 52-week high of $78.39 to $59.98 in early trading today (Wednesday). Investors are apparently reacting to analysts’ concerns over the network’s decision to produce its own original programming rather than buy it from other producers. “We worry that the continued shift of AMC Networks’ schedules from licensed to owned originals will pressure cash flow conversion as upfront program investments cycle through and hits becomes increasingly harder to come by,” wrote MoffettNathanson analyst Michael Nathanson, who on Wednesday downgraded his rating on AMC Networks from “buy” to “neutral.” Last week AMC Networks Chief Executive Josh Sapan told the Wall Street Journal that he sees investment in original programming necessary in order to reap profits down the line through DVD sales and licensing deals to Netflix and other online video renters. However, the initial outlay is greater than it would be by simply licensing the programs to run on its channel. Nevertheless, Sapan acknowledged that “there is a higher risk profile in owning those rights, obviously.”