AMC Networks Decides It Needs to Be Funnier

Though it’s best-known for genre dramas such as The Walking Dead and Better Call Saul, AMC Networks (NASDAQ: AMCX) is betting that a little humor will go a long way. On Tuesday, the network unveiled plans to purchase a minority stake in Funny or Die, a comedy website and production company co-founded in 2007 by Will Ferrell and Adam McKay.

The deal means more of the duo’s programming will find its way to AMC’s IFC network, which already airs the comedy series Documentary Now! and Portlandia. Financial terms weren’t disclosed, though IFC President Jennifer Caserta will be joining the Funny Or Die board.

“Both IFC and Funny Or Die have a proven track record of producing breakout content,” Caserta said in an AMC Networks press release. “The ability to work together more closely and increase our commitment to delivering more content on all platforms makes for an extremely significant partnership for both companies, and for the millions of fans of our comedy. It also marks a small, but important, first step toward my ultimate goal of appearing on Between Two Ferns with Zach Galifianakis.”

Leave it to the head of IFC to crack a joke while making a serious point: Funny or Die is a huge property with a lot more reach than investors may realize. According to the press release, the network reaches some 60 million people on multiple platforms and is the top comedy brand on both Facebook and Twitter. Funny or Die also produces Billy on the Street for truTV and @midnight for Comedy Central. Next year, the company will produce Brockmire for IFC, starring Hank Azaria and Amanda Peet.

Financially, it’s not entirely clear how additive Funny or Die will be to AMC’s results. At the very least, having access to more programming creates a better advertising mix. Ads accounted for 36% of revenue in the company’s signature National Networks division in the third quarter. The remainder derives from distribution, which includes licensing of properties airing not only on AMC channels but also BBC America. Over time, it’s conceivable that AMC Networks could be a license broker for Funny or Die and get a cut of the proceeds for its efforts.

We don’t yet know if that will happen. For now. AMC shares trade for just 10.4 times forward earnings, nearly matching a low set on Sept. 30. The stock has rallied about 4% since and could keep rallying through the end of the year.

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Tim Beyers has no position in any stocks mentioned.

AMC Networks Decides It Needs to Be Funnier