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The Striking Deal That Proves Netflix, Inc.'s Staying Power

By Tim Beyers – Mar 18, 2014 at 6:08PM

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Comcast strikes deals to bring "House of Cards" and "Orange Is the New Black" to Xfinity.

Forget about betting against Netflix (NFLX 8.97%), Fool. Even the streaming sensation's fiercest rivals are taking to the service in ways we'd never have considered just a few years ago.

Count Comcast (CMCSA 0.21%) among the latest to jump on the Netflix bandwagon. According to Variety, the company inked a deal with Sony (SONY 1.61%) to sell the first season of House of Cards to Xfinity subscribers. Sony holds international and home video distribution rights to the series, which was partially funded through Media Rights Capital.

Comcast is also buying early access to certain Sony films, including American Hustle and Captain Phillips. Other TV and film properties to be available via Xfinity include The Amazing Spider-Man, Breaking Bad, and Cloudy With a Chance of Meatballs 2.

Kevin Spacey's Frank Underwood gets his way again. This time, with Comcast. Source: Netflix.

The undeniable influence of excellent TV
Yet it's the Netflix-branded content that makes the agreement so interesting, especially when you consider it's not the only time Comcast has gone shopping for shows originating on the streaming service.

Variety says Comcast has also acquired rebroadcast rights to Orange Is the New Black via Netflix distribution partner Lions Gate Entertainment (LGF-A 2.23%). Xfinity subscribers will be able to purchase single episodes in May. House of Cards arrives mid-April, CNET has confirmed.

Can investors expect the new Xfinity Store to have an impact? Not if history serves. Cable communications still provides an overwhelming share of company profits, and at a healthy 25% margin. Efforts to experiment and diversify are funded almost entirely by Comcast's core business.

Once more proving irony never disappoints
Even so, the company deserves credit for helping bring a better menu of programming to broadcast TV subsidiary NBCUniversal. Consider The Blacklist, which has delivered strong ratings all season while earning James Spader a Golden Globe nomination for best actor in a drama series. Yet, ironically, it's Netflix -- the upstart it once panned -- that Comcast turns to for help completing the Xfinity programming picture.

"What used to be called 'reruns' on television is now called Netflix. We're not seeing it cut into our core business, but we are glad as a producer of content to see the value of that content rising," Comcast CEO Brian Roberts said three years ago in a wide-ranging interview with The Wall Street Journal.

Famous last words, Mr. Roberts. In licensing Netflix content, you've only firmed up Xfinity's status as the sort of "rerun TV" you once accused Netflix of offering. Here's hoping you'll at least profit from the about-face.

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Netflix at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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