A number of notable DC Comics characters are set to appear in Gotham, first on Fox and then on Netflix. Credits: Fox/DC Entertainment.

DC Comics characters Catwoman, Penguin, Poison Ivy, and one of my personal favorites, The Riddler, are coming to Netflix (NASDAQ:NFLX) next year in an exclusive worldwide streaming deal for Time Warner's (NYSE:TWX.DL) Gotham.

Premiering Sept. 22 on Twenty-First Century Fox's (NASDAQ:FOXA) broadcast network, Gotham tells the story of how the city that birthed the Batman got to be so bad that it needed the Caped Crusader. Most of the major villains known to fans are expected to make an appearance. Netflix will supply the reruns to those who miss the first appearance of The Joker, or other classic Batman foes.

"Netflix is a perfect home for Gotham," Jeffrey R. Schlesinger, President, Warner Bros. Worldwide Television Distribution, said in a press release. Perfect? I'm not so sure. Nevertheless, Schlessinger's language -- and this deal -- suggests a thawing in what has traditionally been an icy relationship between Netflix and Warner.

Flying hamburgers, a 200-pound chimp, and The Albanian Army

You can see it in comments made over the years by Time Warner chief executive Jeff Bewkes. Let's review:

  • In a December 2010 interview with The New York Times, Bewkes characterized Netflix as a ragtag group of rebels with virtually no chance of disrupting the entertainment industry establishment. "It's a little bit like, is the Albanian army going to take over the world? I don't think so."

  • Then, in January of 2011, he lampooned the company on CNBC. "I would say it [Netflix] is like a 200 pound chimp -- it's not an 800 pound gorilla," Bewkes said.

  • By December, he'd switched to using mixed metaphor to make it seem as if Netflix's very existence defies the laws of physics. "It can do certain things and not other things. It can fly, it's not a submarine ... Don't turn a hamburger into a cow," Bewkes said in an interview with The Financial Times.

Warner and Netflix have partnered in the years since, but the relationship has suffered its share of tense moments. For example, last April the studio introduced its own streaming service aimed at classic movie lovers and then struck a deal to bring older HBO originals exclusively to Amazon.com. Most signs pointed toward Warner distancing itself from Netflix -- in every area but one: DC Comics.

A bigger bet on DC heroes

After years of using the service to distribute animated series such as Justice League Unlimited, last fall Warner added season one of the live action DC Comics adaptation Arrow in time for the season two premiere. The hope? Make it easier for the uninitiated to catch up and get engaged with new episodes. Today, the show is TheCW's top-rated program. Netflix will add more episodes on September 14.

Arrow already has a good-sized following on Netflix. Credit: Netflix.

Warner will be trying a similar strategy with Gotham. But to listen to Bewkes on the most recent earnings call is to know that he also has bigger ambitions:

Warner will have 31 shows on broadcast networks, including at least two primetime series on each network and 60 shows overall across broadcast and cable. Now, what's also really notable and unprecedented is that five of those shows are based on IP from DC Entertainment, including the highly anticipated Gotham on Fox, The Flash on TheCW and Constantine on NBC. That's early evidence of Warner's ambitious plans to further mine the DC catalog across our television, film, video game, and consumer products businesses.

Expect Netflix to get a hold of many, if not most, of the gems Warner and DC Comics bring to market.

Foolish takeaway

Today, Netflix spends billions per year to license programs such as Gotham while also funding Emmy-winning original programming. The stock trades for roughly $477 a share, up over 140% from when that first interview with The New York Times was published. Bewkes was wrong to dismiss the company's competitive chops.

So be it. Good executives learn and improve. In looking to Netflix not so much as a competitor but as a global distribution partner, Bewkes is bringing DC Comics characters to a world that -- judging by the box office numbers -- is hungry for more American pop culture.


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 Apple, Google (A and C class), Netflix, and Time Warner 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.

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