WSJournal. Netflix Signs Streaming Deal With Time Warner
In a sign that Netflix Inc.'s NFLX +3.35% appetite for new content remains as healthy as ever, the video-streaming service struck a licensing deal with Time Warner Inc.'s TWX -0.51% Warner Bros., covering a series of fresh TV shows.
Netflix will be able to stream complete previous seasons of several Warner Bros.-produced shows, including several that debuted this season, starting a couple of months after each season ends. These include "Revolution," a hit show on NBC, and less successful shows such as "666 Park Avenue," which ABC recently canceled. The deal also includes "The Following," whose premiere episode won't air until later in January on Fox.
The deal is expected to be worth hundreds of millions of dollars, depending on how long each of the included shows stays on the air, a person familiar with the matter said. Netflix will pay more per episode for shows that stay on the air longer. It is the biggest deal struck by Time Warner with Netflix other than a 2011 agreement with the CW network, which is jointly owned by Time Warner and CBS Corp. CBS -1.06%
The agreement is the latest in a spate of video-licensing agreements struck by Netflix or its primary rival in video streaming, Amazon.com Inc. AMZN +3.47% On Friday Amazon announced a deal with A&E Networks to stream shows including "Pawn Stars" and "Storage Wars." At the time, Amazon said it had doubled the selection of TV shows and movies available through its Prime service over the past year.
Netflix and Amazon have committed to spend billions of dollars on digital rights over the next several years, but it remains unclear whether they will build audiences who pay enough to justify the big investments.
"You don't want to be the guy who spent so much, only to find that you don't have enough content," said Tony Wible of Janney Montgomery Scott. "In an ironic twist, it makes you want to spend even more money."
Just last month, Netflix committed to pay an estimated $300 million a year for exclusive rights to stream Walt Disney Co.'s DIS -2.34% films after 2016. Even before that deal was announced, Netflix had $5 billion in streaming content liabilities as of Sept. 30, up from $3.5 billion a year earlier.
The liabilities relate to payments scheduled over the next several years.
A spokesman for Amazon, which includes video streaming through its $79-a-year Prime service, said the company doesn't disclose the size of its digital liabilities. In a government filing the company said that the cost of its digital content rose from a year earlier in the September quarter. In December, Amazon bought from Time Warner the rights to stream "The Closer" and "Falling Skies."
Meanwhile, competition in online streaming is intensifying. AT&T T +0.45% said Monday its U-Verse television service will start offering an online video streaming service called "U-Verse Screen Pack" for $5 extra a month, available to U-Verse television subscribers.
The new service will launch with 1,500 mostly older movies, from Sony Pictures Studios and MGM Studios Inc. "among others," AT&T said. A spokesman said that newer releases as well as TV shows are on the way.
AT&T is entering a crowded space. Aside from Netflix and Amazon, several other pay-TV operators have launched streaming services. Comcast Corp.'s CMCSA -0.45% Streampix service lets subscribers stream a variety of movies and TV shows for $4.99 a month. Verizon Communications Inc. VZ +0.88% and Coinstar Inc.'s CSTR -2.18% joint venture dubbed Redbox Instant last month began rolling out its streaming and DVD-rental service, which costs $8 a month. Dish Network Corp. DISH -1.49% has a streaming service for subscribers using the Blockbuster name, which costs $10 a month.
