Bloomberg News

Netflix Said to Produce Second New Series to Challenge HBO

February 15, 2012

(Updates streaming subscribers in sixth paragraph.)

Feb. 14 (Bloomberg) -- Netflix Inc., ratcheting up competition with HBO, will produce 13 episodes of a new comedy series, “Orange Is the New Black,” according to a person with knowledge of the situation.

Netflix, the online film and TV service based in Los Gatos, California, will have first rights to the series from “Weeds” creator Jenji Kohan, said the person, who wasn’t authorized to speak before a deal is announced. The show is based on the memoir of a communications executive who served time for drug- related crimes in a minimum-security women’s prison.

The comedy from Kohan is the second original series bankrolled by Netflix, which is positioning itself as a rival to Time Warner Inc.’s HBO. The company also backed the Kevin Spacey drama “House of Cards,” which airs this year. Chief Executive Officer Reed Hastings in December called HBO GO, the online offshoot of the cable network, “the competitor we fear most.”

In an online posting, Netflix yesterday updated the strategy statement it provides to job applicants to reflect competition with HBO, Amazon.com Inc. and others.

The slideshow suggests Netflix could grow as much as three times faster than HBO by licensing more streaming content, adding original programming and improving its website with technology, such as integration with Facebook to let friends know what others are watching.

Subscriber Counts

HBO finished 2011 with 93 million subscribers worldwide, including its Cinemax channel, Time Warner Chief Financial Officer John Martin said on a Feb. 8 conference call. Netflix has more than 23 million streaming customers worldwide, according to a Feb. 7 statement.

Netflix has also has picked up exclusive distribution rights to series produced by others. The Norwegian drama “Lilyhammer” is now available, and new episodes of “Arrested Development” are scheduled for 2013.

By the middle of 2013, the company will have five originals for streaming, according to Ted Sarandos, chief content officer.

That is expected to include a deal with Gaumont International Television for a 13-episode order of the horror series “Hemlock Grove,” the person said. Announcements on “Orange Is the New Black” and “Hemlock” may come as soon as next week, the person said.

The Website Deadline.com late last year first reported Netflix was in talks to secure both deals. “Weeds,” airing on CBS Corp.’s Showtime, is about a suburban mom who becomes a marijuana dealer.

Netflix gained 4.1 percent to $123.15 at 2:11 p.m. New York time. The stock had advanced 71 percent this year before today after declining 61 percent in 2011.

--With assistance from Edmund Lee in New York. Editors: Rob Golum, Jeffrey Tannenbaum

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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