September 24, 2015
As more consumers are cutting the cord and watching broadcast and cable TV shows via Netflix, Amazon and Hulu, network executives are rethinking their deals with those streaming services. They’re especially eyeing contracts with Netflix, which pays a flat fee, doesn’t have advertising and has upped its production of original content. Just how volatile the field is was reflected in an August sell-off of media stocks during which entertainment companies lost over $60 billion in value in two days.
Investors are worried that short-term deals with companies like Netflix could imperil long-term prospects, says Bloomberg, which notes that BTIG Research analyst Rich Greenfield says, “Netflix has become so powerful that it has cut out TV networks and started striking deals directly with studios for content.”
At a conference hosted by Goldman Sachs, 21st Century Fox chief executive James Murdoch said that, “Certainly the business rules around how we sell to SVOD providers are changing, and our thinking is evolving.”
Murdoch is now doing more business with Hulu, which is jointly owned by Fox, Disney and Comcast, recently giving it exclusive streaming rights to shows on cable channel FX. Hulu allows Fox to control the advertising and pays per subscriber, which could result in more future revenue.
Time Warner, parent company of cable channels TNT and TBS, now asks pay-TV distributors to make all episodes of a season or more than one season available on demand, which allows binge-watching as on streaming services.
Netflix, however, doesn’t seem overly concerned by the potential loss of off-network content. The company will exclusively stream the first season of ABC’s “How to Get Away with Murder” and a Disney deal allows subscribers to stream new movies in 2016. Netflix also continues its push to be in 150 countries by the end of 2016, “certainly a consideration,” says AMC Networks chief financial officer Sean Sullivan, whose company recently sold streaming rights to “Fear the Walking Dead” and other shows to Hulu rather than Netflix.