Has Netflix Put Its Checkbook Away?
J.P. Morgan analyst Doug Anmuth reports back from a recent huddle with Netflix managers, and says he thinks they’re done writing checks for a while: “We believe the vast majority of Netflix’s domestic streaming spend for 2012 … has already been announced or committed. Accordingly, we would not expect Netflix to spend aggressively or announce major new deals until management has better visibility on U.S. subscriber growth.”
Anmuth gives himself some wiggle room in his prediction — it’s possible that CEO Reed Hastings still has some whopper deals he’s signed but hasn’t announced yet — but the winking and nudging seems to indicate that the checkbook has gone away.
Part of the Netflix pitch in recent months has been that it’s going to be spending a lot of money beefing up its streaming video catalog, in part because it won’t be spending it on a Starz deal that gave it access to Disney and Sony movies. And Hastings says that, increasingly, Netflix is going to be paying a premium for stuff you won’t be able to find anywhere else — it’s one of the reasons his content bill is jumping to $3.3 billion, up from $1.2 billion a year ago.
Recent Netflix deals include a new pact to stream DreamWorks Animation movies, which used to run on Time Warner’s HBO, and a deal to grab reruns from the CW, the broadcast joint venture between Turner and CBS. And the company has made one high-profile commitment to original content, via “House of Cards,” the Kevin Spacey/David Fincher miniseries that will run next year.
Are those kind of deals enough to keep Netflix subscribers happy, or to lure new ones back to the service? We may get some hints from Hastings and company in the next few weeks, as they hit the investor-conference circuit. Netflix CFO David Wells will appear at a Credit Suisse gathering on Nov. 29, and Hastings will speak at a UBS conference on Dec. 6.