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Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. Eddie Murphy is laughing at you
If you see a $60 item on your next Comcast (Nasdaq: CMCSK ) (Nasdaq: CMCSA ) bill, it's not some boxing or wrestling pay-per-view event that you forgot you watched. Junior didn't go on a binge of skin flicks. You may have simply decided to watch a new Eddie Murphy movie while it was still screening at the multiplex.
Comcast is going to test the elasticity of couch potatoes, offering Tower Heist -- a comedy action flick starring Murphy and Ben Stiller -- next month to its video-on-demand customers just three weeks after it begins its theatrical run.
The rub is that it will be charging cable subscribers $59.99 for the rental.
Comcast is testing this out in two cities, but don't expect it to be very popular. That's a lot of money for a flick that far into its theatrical life. A night at the movies is expensive, but not that expensive.
It's also bad tactical move by Comcast. See, it owns the studio behind the movie after completing its purchase of NBC Universal this year. Exhibitors aren't going to like seeing Comcast muscle in on their turf, and they may make Comcast pay when future Universal releases come out. Comcast is going out on a limb, chasing incremental revenue at the expense of alienating multiplex operators and coming off as a greedy laughingstock to its customers. Heck, even the movie has "heist" in the title!
2. It's the content, stupid
Netflix (Nasdaq: NFLX ) revealed this week that 50% to 60% of its web-based streaming is for television shows -- not movies.
"That can be misperceived as Netflix giving up on movies, which it's not," Netflix content chief Ted Sarandos explained at the entertainment industry's Mipcom conference. "It's just consumers saying what they want."
He may be right about the former, but he's falling off the ladder with the latter.
Does Netflix really think that we would be watching old Heroes and Psych episodes if it actually had new content? Unless 50% to 60% of its DVD rentals are also television shows, it's not consumers dictating what they want -- it's Netflix dictating that streaming customers choose the lesser of two evils.
3. Costco Kramer
This seems like a lousy time to try to push through an unnecessary price hike.
Come November, Costco will once again be more expensive than rivals Sam's Club and BJ's Wholesale. Loyalists will argue that it's worth it, and paying an extra $5 or $10 a year isn't much. However, this is a very sensitive time and we've seen companies including Netflix and banking giants raked over the coals for bumping rates higher. There's no chance that Costco is equally vilified, but a few months ago the Netflix brand was as good as gold, too.
4. Snoozing through Napster
Best Buy (NYSE: BBY ) can't seem to get the music industry right.
Years after buying -- and selling -- Sam Goody parent Musicland at a loss, the consumer electronics retailer is now unloading Napster after its brief uneventful ownership. Best Buy is handing over Napster's accounts and some related assets to rival music subscription service Rhapsody. Best Buy will receive a small stake in the new company.
It probably isn't a surprise to see Best Buy flop with Napster. The chain has been hesitant in promoting digital distribution because it would simply speed up its obsolescence. Then again, it's happening with or without its blessing. It may as well profit from the disruption, but it never gave Napster the visibility and promotion it needed to succeed.
5. Down in the pit crew
International Speedway (Nasdaq: ISCA ) has a visibility problem on the open road.
The motorsports operator behind the legendary Daytona and Talladega race tracks warned that it would probably miss its revenue guidance of $635 million for the year. How badly will it miss the target? The company's not telling. We can probably agree that the "sluggish economy" is going to result in thinning spectator counts, but if International Speedway was able to throw out a revenue target for 2011 several months ago, why can't it come up with a new gauge when the checkered flag is so much closer?
If you want to track these companies to make sure that they don't make another dumb mistake soon, consider adding them to My Watchlist.