The Stock Behind TV's Best Has Near-50% Upside

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Ryan Fuhrmann

NEW YORK ( StreetAuthority) -- In 1994, the season finale of NBC's popular sitcom, "Friends," garnered an estimated 52.5 million viewers. Today, "The Office," one of NBC's most popular comedies, is lucky to have about 2.5 million viewers each week.

The steady demise of network television has been a boon for cable television. In recent years, major subscription-based channels such as HBO, TNT and Showtime have developed such high-quality content that consumers are willing to pay a monthly cable or satellite bill of $100 or more just to be able to have access to these channels.

Steady demand throughout the latest economic downturn only served to prove that the vast majority of cable subscribers were unwilling to cut the cord to save a few bucks. The same has been true of watching shows through the Internet, though the same amount of content just isn't there yet.

One of the most successful cable programmers has become AMC Networks ( AMCX), which burst onto the scene in 2007 with the release of an original program called "Mad Men." The series is about Madison Avenue ad agencies in the 1960s and has been critically acclaimed, winning more than a dozen Emmy and Golden Globe Awards. The first show of the fifth season, which premiered on March 25, garnered 3.5 million viewers, proving that network television now takes a back seat to cable.

In 2008, AMC Networks released another critically acclaimed drama, "Breaking Bad," which attracts a couple of million viewers per episode. It more recently rolled out the zombie horror drama "The Walking Dead," which boasted 9 million viewers during a recent season finale and now holds title to the highest-rated drama among younger viewers.

Mad Men's Joan Holloway (Christina Hendricks)

Other popular shows include "The Killing," "Hell on Wheels," and "Portlandia," which show on AMC and its other paid channels: IFC, IFC Films, WE tv and the Sundance Channel.

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Unsurprisingly, advertisers are flocking to AMC Networks and its highly coveted demographic of 18- to 49-year-olds. Another steady source of revenue is affiliation agreements, which are paid from cable service providers such as Comcast ( CMSCA) and Time Warner ( TWC) for the right to carry AMC's channels.

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