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CBS Playing Nice With Netflix Makes Dollars and Sense

By Rick Munarriz – Oct 7, 2020 at 11:55AM

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The leading premium streaming video platform has been a tastemaker over the years, and ViacomCBS knows what it's doing.

There have been some surprising shows trending on Netflix (NFLX -0.75%) these days, and a couple of them are coming from a highly unusual source. The fourth-most popular piece of content on Netflix in the U.S. as of Thursday morning is Evil, the supernatural drama series that debuted on ViacomCBS (PARA 0.75%) last year. The Unicorn -- a sitcom that also debuted on CBS last year -- is also gaining traction on the world's leading premium streaming platform. 

Netflix didn't wrestle the shows away from the network. Evil and The Unicorn will have their second seasons launch on CBS in the coming months. This is simply a win-win partnership that gets both parties exactly what they want out of this relationship. Netflix gets to pad its industry-leading content on what are likely friendly terms. CBS gets to reach a new audience for its young shows. 

A woman in pajamas curls up on a couch as she watches TV and holds the remote control.

Image source: Getty Images.

Everybody loves Netflix

ViacomCBS isn't exactly planting the flag here. AMC Networks (AMCX -5.88%) cracked the code years ago. It handed streaming rights for Mad Men to Netflix after its fourth season, only to see a 20% spike in viewership on AMC Networks for the advertising-themed drama's fifth season. 

"We believe we found an untapped audience of the show," Netflix chief creative officer and now co-CEO Ted Sarandos said at the time, pointing out that 3.5 million subscribers streamed the fourth season in advance of the fifth season kicking off on AMC. 

Breaking Bad is another AMC show that was a cult favorite but was toiling away largely in obscurity through its first three seasons. Digital distribution of older seasons through Netflix made it iconic. The Walking Dead also benefited from exposure to the larger Netflix audience. 

This new deal is unusual in that the ViacomCBS shows are still in their infancy with just a single season under their belts. Netflix also isn't the only platform with digital rights to the shows. Evil and The Unicorn continue to be available on CBS All Access, the fledgling streaming service that will be rebranded as Paramount+ next year. 

It's easy to see why even the major networks are playing nice with Netflix. Despite concerns that the success of Netflix is eating away at their audiences -- leading the cord-cutting revolution, if you will -- you can't turn your back on a fast-growing platform with a global reach of 193 million paying subscribers. Netflix is a giant among media stocks. It's an influencer. It's a kingmaker. 

Netflix is no longer the enemy of the networks it will inevitably supplant. For now Netflix is the means to get noticed in a competitive world with a glut of quality content. The strategy has worked for others in the past. It will work for ViacomCBS here.

Rick Munarriz owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends AMC Networks. The Motley Fool has a disclosure policy.

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