Netflix Gets the Last Laugh, Again

Modern Family is apparently a dud in syndication, and no one is laughing harder than Netflix (NASDAQ: NFLX  ) .

It seems that consumer appetite for the show's reruns isn't as strong as Comcast's (NASDAQ: CMCSA  ) USA Network -- the eventual winner of the comedy's syndication rights -- was expecting. It's been airing the show as many as five nights a week since the fall season began, and the early Nielsen ratings aren't encouraging. USA's audience is 40% lower than it was a year earlier when it was running NCIS and Law & Order: SVU reruns during the same slot.

Ouch! 

Digital distribution was front and center in the bidding war for the popular comedy's syndication rights two years ago. Time Warner's (NYSE: TWX  ) Turner Broadcasting vocally dropped out of contention, arguing that the show was too exposed in cyberspace. Hulu and Disney's (NYSE: DIS  ) ABC.com -- but not Netflix -- were streaming earlier episodes. News Corp. (NASDAQ: NWSA  ) COO Chase Carey backed Time Warner's move to pass on the sitcom that had become huge for Disney's ABC.

"A channel's right to say: If I'm going to pay a lot of money for Modern Family I want to buy enough rights so that it's not showing up on a competing platform," Carey said two years ago. "I would not be buying syndication rights to an expensive piece of programming and let it reside on Netflix for 20 million homes."

Carey wasn't knocking the show itself. News Corp. was the show's producer. He was lamenting the growing popularity of streaming earlier seasons of hit shows. Why would someone want to pay up for syndication of earlier episodes when they are readily available -- often without commercials -- through streaming services? This probably played a major factor in keeping Modern Family off of Netflix. It didn't pay off. 

A lot has changed in two years. For starters, Netflix is no longer reaching 20 million homes. It has twice as many subscribers worldwide, with more than 31 million of those as domestic streaming accounts. Netflix has also resulted in ratings increases for shows still on the air -- not decreases -- as we've seen with Breaking Bad and Mad Men. Syndication is an entirely different animal, but it needs to be pointed out that several earlier seasons of Law & Order: SVU -- the show that held up better than Modern Family for USA Network last year -- are streaming on Netflix. 

Studios and cable networks better learn -- sooner or later -- that Netflix is more a solution than a problem.

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Read/Post Comments (7) | Recommend This Article (3)

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  • Report this Comment On November 11, 2013, at 10:23 PM, MUSCLE13 wrote:

    Netflix is a solution? Rick did you happen to notice how all the cable companies are doing on demand for the primetime shows right after they air? I read Comcast has episodes for the top 50 shows on demand on its service? You think Netflix is the solution? How much Cash flow does Netflix have compared to Cable systems and Cable Networks? USA networks is growing cash flow immensely. How do you suppose that is happening? Could it be its dual revenue stream?

    Netflix is more of a solution than a problem. Perhaps Rick you should have said cable has the solution to the Netflix problem.

  • Report this Comment On November 11, 2013, at 10:25 PM, MUSCLE13 wrote:

    We will see if Comcast makes new 52 week highs AGAIN after another negative article by you Rick. Stay Tuned........

  • Report this Comment On November 11, 2013, at 10:31 PM, MUSCLE13 wrote:

    WSJ excerpt -

    To be sure, the show's viewership has risen steadily since its cable debut, according to Nielsen. In the most recent week, the network's ratings for the time slots in which it aired were up from a year earlier in the 18-to-49 demographic, according to Nielsen data provided by USA.

    Enlarge Image

    The show also stars, from left, Jesse Tyler Ferguson. Eric Stonestreet, Aubrey Anderson-Emmons and Ed O'Neill. ABC

    USA says that even the most successful reruns on cable take months to find their footing. So far this year, the show's audience has been an average of 11 years younger, more affluent and better educated than the average USA viewer. That's the group that USA's advertisers "want to reach," says Linda Yaccarino, president of ad sales at NBCUniversal, the Comcast Corp. CMCSK -1.66% unit which owns USA.

    "Modern Family has always been a long-term strategic play for us, and we are pleased with its week-to-week double-digit growth," Ms. Yaccarino added.

    http://online.wsj.com/news/articles/SB1000142405270230486840...

  • Report this Comment On November 12, 2013, at 3:19 AM, kevins71 wrote:

    Networks and Cable Companies listen up, if it's not on Netflix I and millions of other people don't watch your programming, period.

    Stop trying to milk the consumer out of an already aired show that already received it's money from the advertising the night it originally aired.

    It's that simple.

  • Report this Comment On November 13, 2013, at 3:51 AM, DoctorBiobrain wrote:

    Netflix is the solution for whom? USA wanted the show for themselves, and would have been seriously hurt if it was on Netflix, as that would have entirely undermined their purpose for buying it. Perhaps USA overbid, but they certainly wouldn't see Netflix as being the solution. And if the intent is to woo a younger, hipper audience for long-term growth, then this could still be a good strategy for the network.

    And so the big question is: Did the people who own the show make more money by selling it to USA than what they'd have made putting it on Netflix? Obviously, USA bid more than Netflix, so in the short-term, they made the right choice. And then the only question is whether they'd have made more money in the long-term if they had it on Netflix by pulling in even more viewers. I find that debatable.

    I think where Netflix works is on a show with a big story arc, which requires people to get vested in it to really understand why they should keep watching. And that's why things like Breaking Bad or Madmen could pay off, since they might not have done as well at first but Netflix helps people get tuned in. But not all shows are like that. Sitcoms usually don't have epic story arcs and you can miss a single episode without really missing anything. Whether or not Netflix is good for the long-term success of the show depends on the show, and isn't something that should just be assumed.

  • Report this Comment On November 22, 2013, at 7:08 PM, MUSCLE13 wrote:

    Thanks as always Rick! New all time high for Comcast today.........AGAIN. :)

  • Report this Comment On November 27, 2013, at 6:33 PM, MyCrappyHouse wrote:

    Actually, this is a show I'm interested in watching - from the beginning. My typical tv watching habits include putting on shows I've seen a zillion times before. This means Friends and Everybody Loves Raymond are on a lot in my house. In order for me to get into a new show, I like to see it from the beginning. Netflix is HUGE for this purpose. So, I'd like to respectfully disagree with Dr. Biobrain who says that a show being on Netflix would hurt the ratings on regular cable. Syndication means reruns. I love reruns. I've seen the shows before, yet I keep watching. Give me a chance to get hooked on a show like Modern Family on Netflix and I promise you, I would be watching it in syndication on regular cable.

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