Peter Kafka

Recent Posts by Peter Kafka

Why Netflix Money May Be Expensive for Viacom

spongebob_thumbsupLike lots of other Big Media companies, Viacom has seen a flood of new revenue show up from digital services in the past few years, primarily via Netflix and Viacom.

At first blush this seems like the best-case scenario for Viacom and every other Big Media player: Netflix, et al, pay a lot of money for shows the networks have already aired, and that money is almost pure profit.

And in some cases the story gets even better, as Netflix claims that for shows like AMC’s “Mad Men,” the reruns it carries boost the ratings for the show’s new episodes, as binge watchers/catch-up watchers become new fans.

But Bernstein analyst Todd Juenger is convinced that, at least for kids’ programmers, and Viacom in particular, the Netflix deals are bad ones, because they train Netflix subscribers and their kids to watch the shows on the Internet instead of on TV.

This makes intuitive sense to people like me, who have kids who watch a ton of Viacom shows — and almost never watch them on TV. Viacom has said that this isn’t the case, but today Juenger has a new note making the same argument, with new data.

Here’s what happened to ratings for kids’ programming last year, split up by homes that have Netflix and those without. Note that the only case where a network did better in a non-Netflix household was Time Warner’s Cartoon Network, which didn’t have a syndication deal with Netflix until January 2013:

netflix viacom bernstein


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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