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There’s been much speculation about the possibility that HBO could one day directly compete with Netflix(s nflx) by offering consumers a way to subscribe to its HBO Go service without signing up for cable. HBO executives have long said they’re not interested in such a proposition, so here’s a different thought: What if AMC (S AMC) took the plunge instead, became the first network to leave the traditional pay TV world and sold its service directly online?

It’s not as crazy a proposition as you might think. It’s also a thought experiment that tells us a bit about how TV on the internet could look, and that reveals why TV is what it is today.

The status quo: What it means to be part of the (cable) system

Right now, AMC is much like most other cable networks. Most of its revenue comes from two sources: Advertising, and there are the fees that cable and satellite TV companies pay to carry the channel. Those fees are also known as retransmission, or “retrans,” fees, and they’ve been at the core of many disputes in recent years.

That’s because retransmission fees, which used to be a minor part of the business, are quickly becoming a big money-maker, and are in turn driving cable bills into the sky. Operators unwilling to pay the ever-increasing fees find themselves confronted with blackouts: Two years ago, for instance, subscribers of Dish (S DISH) were unable to watch Breaking Bad because the operator and the network couldn’t agree on new fees for AMC’s programming.

These retrans fights have grown increasingly fierce over the last few years, with both sides often trying to enlist the public for their cause. However, in the end, people just want their favorite shows from their TV operator, which is why networks almost always win and cable bills increase every year.

But retrans conflicts aren’t just about networks asking for more money for their programming while delivering no added benefits in return. Cable operators increasingly want the rights to do all kinds of things with their programming — letting users catch up on previously aired episodes through TV Everywhere apps or live stream shows on mobile devices. So why shouldn’t the networks ask for more money?

This complicated relationship between networks and operators shapes much of how TV looks like online. You increasingly have to sign in with your cable TV account credentials to catch up on shows online. There are rules about what kind of content networks can or can’t put on their own websites, and about the amount of time that content can stay online. And there’s the hard-to-understand reality that Comcast customers still can’t watch HBO Go on their Roku. And even the huge merger between Time Warner Cable and Comcast won’t change this game,

Could AMC be more like Netflix?

On the other side of the spectrum is Netflix, which shows that you can deliver a compelling service for $8 to $10 a month without forcing consumers to buy into a cable bundle. Industry insiders have long argued that TV networks can’t follow the same economics — that unbundling isn’t possible because it would raise the price of individual TV networks so much that a $100 cable bundle would look cheap in comparison.

This begs the question: How much of that $100 bill goes to each and every network? The answer is that these numbers vary widely depending on the audience a network draws as well as the leverage it has. ESPN for example is a must-have network that can ask for a premium because of the many popular sporting events it carries. It is estimated that ESPN as the most expensive network charges TV providers $6 per month for every subscriber, whether they watch sports or not (to ESPN’s defense, almost half of them do).

The math is starting to look a little different when you are talking about a network like AMC. Mind you, none of these contracts are public, but the analysts at SNL Kagan recently estimated that TV operators pay an average of $0.33 per subscriber for AMC, which makes it not only cheaper than the sports networks, but also puts it behind TNT ($1.33 per subscriber), the Disney channel ($1.15 per subscriber) and USA Networks ($0.71 per subscriber).

AMC is currently in 99 million U.S. households, which means that the network makes about $32.6 million per month from retransmission fees. So if 3.2 million people paid $10 a month for a Netflix-style AMC subscription, it could ditch the retransmission revenue stream entirely. Mind you, the Breaking Bad series finale was watched by 10.2 million people, and the recent Walking Dead season 4 finale attracted 15.7 million viewers.

Of course, this is extremely simplified back-of-the-envelope math, and doesn’t account for a whole bunch of factors. For instance, subscribers of such a service presumably wouldn’t want to see ads, and AMC Networks currently makes about 45 percent of its money with advertising.

There is also the issue of AMC’s other networks like IFC and SundanceTV, some of which are only carried by cable operators because they have to also take them in order get AMC. And while AMC executives haven’t said anything about unbundling, their colleagues at HBO have been expressing common industry sentiment with their firm stance against it. And developments like the merger between Comcast (S CMCSK) and Time Warner Cable and the proposed net neutrality regulations could AMC’s transition to become an online channel even more costly, since the channel may have to pay more to reach the consumer via streaming.

Leaving cable would allow AMC to innovate

Nonetheless, the exercise goes to show that an unbundled AMC channel isn’t completely out of reach, especially since it would allow the network to monetize its videos in a number of other ways. For example, AMC could strike a relationship with a consumer electronics manufacturer to exclusively make a current season of an AMC show available to anyone who owns a certain phone or TV set.

Or it could keep the linear channel, complete with ads and weekly schedules, for those consumers who don’t want to pay for another premium service, and stream or broadcast it on any platform that wants it — whether that’s traditional TV (at a likely much lower retransmission fee rate), a new internet TV service or even a video site like YouTube. (S GOOG) AMC could even sell superfan subscriptions to shows like the Walking Dead that include a bunch of extras, like access to a special community that puts them in touch with the show’s producers.

The possibilities would be endless, and AMC would finally have the freedom to build up a true internet-based TV network that isn’t constrained by the politics of cable contracts. Sure, it would compete with Netflix, but it already competes for eyeballs with the streaming service today. Plus AMC could chose not to renew Netflix’s licenses to its catalog titles, which some at the network feel have been given away for too little. And by being out there with a real streaming product, AMC would arguably be a much stronger competitor not only to Netflix, but also to all those other TV networks that still make you jump through endless hoops, and pay a huge cable bill, to watch their shows.

By going online, AMC wouldn’t just reinvent itself. It would also reinvent television for the internet age, and in turn change the economics of media on the internet.

Check out the rest of our special report below:

Images from Thinkstock/Stevano Vicigor, Shutterstock/Twin Design and AMC. Banner image adapted from Hong Li/Thinkstock. Logos adapted from The Noun Project: Castor and Pollux, Antsey Design, Mister Pixel and Bjorn Andersson.