Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Netflix (Nasdaq: NFLX ) fell more than 10% in early trading and should close down about the same. Starz announced yesterday that it wouldn’t re-up the company’s streaming deal when it expires next February.
So what: Starz’s statement was anything but encouraging. CEO Chris Albrecht spoke of preserving “appropriate pricing” for his company’s “valuable” content. The implication? Netflix low-balled in its negotiations with the Liberty Global (Nasdaq: LBTYA ) subsidiary.
Now what: Netflix CEO Reed Hastings was more gracious in explaining his company’s decision to walk away, calling Starz a “great content partner” in comments published by Business Insider. He also pointed out the studio now accounts for just 8% of domestic traffic. This is what traders are selling into? A botched deal that spares Netflix from spending $300 million to preserve 8% of U.S. traffic? Hastings made the right call. Do you agree? Disagree? Please weigh in using the comments box below.
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