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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 -3.76% ), 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 -1.80% ) among the latest to jump on the Netflix bandwagon. According to Variety, the company inked a deal with Sony ( SONY -2.04% ) 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 -2.12% ). 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$617.77 (-3.76%) $-24.13
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$49.08 (-1.80%) $0.90
Sony Corporation Stock Quote
Sony Corporation
SONY
$119.37 (-2.04%) $-2.48
Lions Gate Entertainment Corp. Stock Quote
Lions Gate Entertainment Corp.
LGF-A
$14.34 (-2.12%) $0.31

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