Netflix Deal with Warner Bros. a Bad Sign?

Media

Published: January 7, 2013 7:41 am

Last Updated: April 28, 2020 2:28 am

Using words like “unprecedented” and “addictive” and “compelling,” Netflix Inc. (NASDAQ: NFLX) this morning announced that it has struck a deal with Warner Brothers Television Group (WBTV), which is ultimately owned by Time Warner Inc. (NYSE: TWX), to license previous seasons of eight of WBTV’s serialized dramas for streaming to Netflix customers. Two of the key words in the agreement are “next year.”

Netflix’s chief content officer said:

This unprecedented agreement brings to Netflix members earlier and more exclusively than ever before complete previous seasons of some of the most prominent and successful shows on network and cable television. Through deals like this, Netflix is making the production economics right for the continued creation of the kind of compelling serialized dramas and thrillers that our members love.

Netflix got its start by renting DVDs by mail of old movies. When upstarts like Hulu and Amazon.com Inc. (NASDAQ: AMZN) jumped into the streaming video fray, production companies like Warner had struck gold. Netflix and the others had to bid enormous sums to get the licensing rights to movies and TV shows, especially for current movies and shows.

Going back to buying old stuff and not having it available until 2014, and putting out a press release in January of 2013 to shout out the fact, seems like a big step sideways, if not backward for Netflix. This is just filler, not a game-changing deal, which is what Netflix really needs.

Netflix shares closed at $95.98 on Friday and are inactive this morning. The stock’s 52-week range is $52.81 to $133.43.

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