Peter Kafka

Recent Posts by Peter Kafka

What Web Video Problem? Netflix Gives CBS a $200 Million Boost.

One day, maybe not that long from now, Web video could really destabilize the TV business. For now, it’s providing it with a nice boost.

The latest example: Yesterday’s Netflix-CBS deal, which will give the streaming video company access to the network’s library of old shows, like “Cheers” — but not the stuff it’s currently putting on the air.

Barclay’s analyst Anthony DiClemente figures Netflix will pay CBS $200 million over the next two years — “similar to other deals struck with broadcasters” — and most of that money will drop straight to CBS’s bottom line. For context, note that CBS recorded $283 million in profits last quarter.

This is the best-case scenario for the networks and studios: That Netflix, and now competitors like Amazon, and likely Microsoft, Apple, etc, line up to write big checks for stuff the networks and studios have already sold a couple times before. So it’s all found money, and doesn’t conflict with their core businesses.

The flip side, of course, is that the more video you consume over the Web, the more likely you may be stop watching conventional TV. So long-term, it’s possible that CBS and the other networks are helping to hasten their demise.

But that’s a tomorrow problem. Today, big media is getting paid.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik