Hollywood Hearts Netflix

Tinseltown is warming up to Netflix (Nasdaq: NFLX  ) .

The Wall Street Journal on Monday collected some of the kind things that movie and television studios had to say about Netflix during their own quarterly conference calls last week.

  • "It's great to be in business with them, and they are terrific," said CBS (NYSE: CBS  ) CEO Les Moonves.
  • "Netflix has actually provided some truly incremental value for libraries," said Chase Carey, COO at Fox parent News Corp. (Nasdaq: NWS  ) .
  • Time Warner (NYSE: TWX  ) CEO Jeff Bewkes called Netflix "a welcome addition" to the market.

These aren't just the fortunate recipients of juicy digital licensing checks signed by Netflix. They are also competitors. CBS-owned Showtime and Time Warner's HBO seem to have plenty to lose if couch potatoes cancel their premium movie channels in favor of Netflix.

These are also the same companies that were getting awfully defensive when analysts brought up Netflix in previous calls. Bewkes likened Netflix to an Albanian army's dream of global domination. "I would not be buying syndication rights to an expensive piece of programming and let it reside on Netflix for 20 million homes," FOX COO Carey argued earlier this year after a syndication bidding battle turned cold. Another CEO belittled streaming on Netflix by calling it "Rerun TV."

Netflix itself offered up olive branches in its quarterly report last month, suggesting that its popularity is not the cause of last year's cord cutting. Netflix provides a service that enhances pay television. Studios that play along now know this.

"Content owners that license to Netflix make more money -- now and in the future -- than content owners who don't license to Netflix," CEO Reed Hastings and CFO David Wells wrote in their quarterly shareholder letter.

This won't always be a smooth relationship, but studios are starting to realize that Netflix is the only company willing to write fat checks for digital licensing these days. Rivals that banked on piecemeal streams have struggled. Netflix's Web-served smorgasbord may ding the value proposition of video, but it's the only place where couch potatoes are dining these days.

A big check from Netflix is better than a bunch of tiny checks from everybody else. It may not be how Hollywood mapped out the digital revolution, but it's the one thing that's working.

Can studios and Netflix continue to get along? Share your thoughts in the comment box at the bottom of this queue.

Netflix is a Motley Fool Stock Advisor recommendation. Alpha Newsletter Account, LLC has bought puts on Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz has been a Netflix subscriber -- and shareholder -- since 2002. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On May 11, 2011, at 10:02 PM, cattywampus wrote:

    Not having to listen to 8 to 10 minutes of volume boosted advertising for every 30 minutes of programing, (PRICELESS) Still suffer through it for The Big Bang Theory and some commercials are actually entertaining. Most of the ads on Hulu are pretty good.

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