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Report: Netflix Courting Pay TV Providers To Ink Content Deals
Report: Netflix Courting Pay TV Providers To Ink Content Deals

By Jennifer LeClaire
October 14, 2013 1:36PM

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Doing deals with pay TV providers would be consistent with Netflix’ positioning as it works to become more like HBO. Partnering with HBO would make a lot of sense for Netflix because one of its major expenditures is customer acquisition costs, which is one of the reasons HBO is reluctant to offer its services outside of cable, said analyst Ross Rubin.
 



In what would drive a major competitive advantage for Netflix, the streaming video service is reportedly in talks with large cable companies. The Internet movies pioneer could be squashing past disagreements with legacy rivals and inking partnership deals to stream more video content.

The Wall Street Journal is reporting that Netflix is talking to several U.S. pay television providers, including Comcast and Suddenlink Communications, to make its online video service available as an app on their set-top boxes. The Journal cited “people familiar with the matter.”

If the talks lead to a deal, it would mark Netflix’s first partnership with a U.S. cable TV provider. However, the company is no stranger to these sorts of deals. Netflix has already announced an agreement with Virgin Media, a United Kingdom cable operator, to stream its content.

Reinventing Pay TV

Netflix has nearly 30 million streaming customers. The monthly streaming service is $7.99. More content could mean more subscribers, but the company could not immediately be reached for comment on the rumored pay TV talks.

“[It’s] great for Netflix if they can get it done,” Laura Martin of Needham & Co. told MarketWatch. “It would be a service added to the bundle, and good for the cable industry if they can get economics from Netflix to use their high-speed wires into the home.”

Netflix is gaining momentum. In August, the company also inked a new multi-year licensing agreement with The Weinstein Company that will make Netflix the exclusive U.S. subscription television service for first-run films from TWC beginning in 2016.

"The deal that we've just completed with Netflix is probably the biggest deal in the history of The Weinstein Company and together, we are discussing ways to reinvent the pay TV experience so that the audience can get even more for their money," said Harvey Weinstein. "Their enthusiasm for movies of all kinds was the big factor in our choosing Netflix.”

Seeking Integration

We asked Ross Rubin, a principal analyst at Reticle Research, for his take on the talks. He told us inking deals with pay TV providers would be consistent with Netflix’ positioning as it works to become more like HBO.

“Partnering with HBO would make a lot of sense for Netflix because one of their major expenditures is customer acquisition costs, which is one of the reasons HBO is reluctant to offer its services outside of cable,” Rubin said.

“This would also allow for greater integration with the pay TV services that consumers already pay for. And it would allow for integrated billing, which would also reduce some of the friction in singing up for a Netflix account. So there are many reasons why Netflix would be interested in such distribution,” he added.
 

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Comment:

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John Riley:

Posted: 2013-10-14 @ 3:40pm PT
The deal with the cable operators has caused momo play to get into play and investors are just looking to gain from price movements. They should refer to technical and fundamental analysis, like this one: http://goo.gl/uicCwf



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