How Did Netflix Land This Shocking TV Deal?

Netflix (NASDAQ: NFLX  ) shares jumped as much as 5.9% on Monday amid heavy trading. The stock has gained 65% in 10 weeks, and my bull call options spread on the stock is above water for the first time in months.

NFLX data by YCharts.

The catalyst this time was another content deal. Netflix sat down with Time Warner (NYSE: TWX  ) and walked away with exclusive rights to eight of Warner's drama TV series. Names include proven favorites West Wing and Fringe, but also newer hit titles Revolution and Longmire. It even looks forward to Kevin Bacon-starring series The Following, which hasn't even premiered on broadcast television yet. And there's a provision for "potential future shows" to round out the package.

Last Friday, (NASDAQ: AMZN  ) snapped up the streaming rights to shows from A&E Networks, effectively stealing them away from Netflix, which used to air them. But whatever sorrows were sparked by the loss of Pawn Stars and Ice Road Truckers drowned in good feelings for the Warner slate.

There's some shock value to a rich deal with Warner, of all studios. CEO Jeff Bewkes has famously compared Netflix to the Albanian army, and the media conglomerate's HBO content will probably be off-limits to Los Gatos forever. I sense the invisible hand of Kevin Tsujihara, Warner Bros.' president of home entertainment services. He's a visionary and not afraid to try new spins on the digital media market, and Netflix investors can only hope that his influence within Time Warner keeps growing.

But this deal actually looks like a direct challenge to Amazon. The e-tailer's Prime subscribers had exclusive streaming rights to Fringe and West Wing this summer, and now the baton has been passed to Netflix.

The back-and-forth content shuffle raises questions aplenty. Did Amazon decide not to renew the deal? Did Netflix simply outbid its rival? Or is Warner trying out its media assets around town to see what works best?

Plenty of question marks, but still an exclamation point behind Netflix shares this week.

Netflix has been a longtime selection of Motley Fool co-founder David Gardner, helping lead his stock picks to gains of more than 122% in our Stock Advisor service since it launched in 2002. Netflix is a six-time recommendation and a current top pick, and has rewarded subscribers with multibagger returns since 2003. David has managed to trounce the market by always being on the lookout for revolutionary stocks and recommending them before Wall Street catches on to their disruptive potential. If you're interested in how David discovers his winners, click here to get instant access to a personal tour behind David's Supernova service.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2184606, ~/Articles/ArticleHandler.aspx, 9/28/2016 8:13:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
AMZN $816.11 Up +16.95 +2.12% CAPS Rating: ****
NFLX $97.07 Up +2.51 +2.65%
Netflix CAPS Rating: ***
TWX $77.88 Up +1.78 +2.34%
Time Warner CAPS Rating: ****