Here's How Netflix Made Warner Bros. Television Fork Over $300 Million

A lot of things have changed in TV-land since Netflix (NFLX 4.17%) first burst on the scene two decades ago. The landscape is littered with the broken dreams of former industry leaders (I'm looking at your Blockbuster), and several others are in panic mode (Cable TV?). With a trail of sheer disruption in its wake, it's no wonder other players are on the defensive.

Netflix has pulled out all the stops to feed its subscribers seemingly insatiable hunger for new programming, snapping up film festival winners, securing streaming rights to networks' hit shows, and enlisting the aid of Hollywood legends like Martin Scorsese.

If that wasn't enough, over the past year, Netflix has been signing exclusive deals with a number of the television industry's most prolific creators, and in doing so just cost Warner Bros. Television a boatload of money.

Image source: Getty Images.

The details

Producer Greg Berlanti has renewed his deal with Warner Bros. Television -- the broadcast arm of Time Warner Inc. (TWX) -- extending his contract for the next six years. The deal is reportedly worth more than $300 million, and with additional incentives factored in, could net the producer as much as $400 million through 2024. 

It's interesting to note that Berlanti still had two years remaining on his existing agreement with the studio, and has been in their stable since 2011.

Berlanti may not be a household name, but he's one of television's busiest producers, with a record 14 live-action scripted programs currently on the air across broadcast and cable television.

Data source: Deadline Hollywood. Chart by author.

What's this got to do with Netflix?

Netflix has been making groundbreaking deals with some of the biggest names around, and the television industry has been living in fear that Netflix might run the table and gather up the remaining hitmakers.

Netflix initiated its acquisitive ways in August of last year, though it started away from television. The avalanche began by luring comic book legend Mark Millar and his graphic novel production house Millarworld into the fold. Millar is one of the most vaunted names in the industry, called a "modern-day Stan Lee" after the legendary writer of Marvel fame. Millar was responsible for the stories behind a number of widely recognized big-screen adaptations, including The Avengers, Logan, and Captain America: Civil War. 

Netflix then set its sights on television creators, signing Shonda Rhimes to a reported $100 million exclusive contract. Rhimes has been a staple at Disney's (DIS 1.54%) ABC, and the writer and producer has handled some of the most noteworthy programs airing on the network over the past 15 years, including Grey's Anatomy and How to Get Away with Murder. 

Image source: Getty Images.

The company's ravenous run continued in November, inking an "exclusive multi-year deal" with longtime Netflix friend and collaborator Jenji Kohan. Her creations, Orange is the New Black and GLOW, are among the streaming giants most successful programs and Kohan will produce a new series and handle other projects for Netflix. 

Netflix's most recent coup happened in February, securing the talents of Ryan Murphy in a five-year agreement that could net him as much as $300 million. Among Murphy's most recognizable contributions to the television landscape are American Crime Story: The People v. O.J. Simpson, Glee, and American Horror Story. Netflix poached the high-profile producer, writer, and director after a decade-long stint at Twenty-First Century Fox (FOX) (FOXA). 

Go big or go home

Based on Netflix's recent string of six-figure deals, Warner Bros. likely decided it was best to go big and lock down Berlanti while there was still plenty of time left on his contract, thus ensuring that Netflix wouldn't snatch away one of the few remaining prolific creators in the industry.

With 125 million subscribers and climbing, Netflix needs to feed the ravenous appetite of its members, and dealing with the creative talents directly cuts out the costly middlemen and saves boatloads of cash over the long run.