Bloomberg News

Netflix Reaches Deal to Stream Weinstein Co.’s ‘The Artist’

February 22, 2012

(Updates with closing share price in final paragraph.)

Feb. 21 (Bloomberg) -- Netflix Inc., the online and mail- order video-rental service, reached an agreement with Weinstein Co. for rights to stream the Academy Award-nominated movie “The Artist” and other programming.

“Undefeated,” another Oscar nominee, and other features and documentaries released by the studio, which was founded by brothers Bob and Harvey Weinstein, will make their pay-TV debut on Los Gatos, California-based Netflix, according to a statement. Financial terms weren’t disclosed.

The agreement generates cash for Weinstein Co., which is seeking to raise $150 million to support film operations and retire debt, two people with knowledge of the effort said this week. For Netflix, it gives the company more exclusive content to fend off streaming rivals such as Time Warner Inc.’s HBO unit, online retailer Amazon.com and Hulu LLC.

“The content lets Netflix differentiate itself from competitors like Amazon Prime, or pay TV like HBO,” Justin Colatosti, an analyst with Dawson James Securities in Boca Raton, Florida, said in a telephone interview.

Netflix isn’t adding subscribers fast enough to cover the rising cost of content, said Colatosti, who has a “sell” rating on the shares.

Future Offerings

The company plans to offer at least five exclusive original series on its service by the middle of 2013, Ted Sarandos, chief content officer, has said. The company also is spending more to lock up movie rights to compete with HBO, which in the past has signed licensing contracts with major studios to air their movies exclusively for years after they enter the pay TV window.

Netflix is in a race to acquire new streaming-only customers to balance rising content costs and fund international expansion, Steve Swasey, a company spokesman, said.

“The more subscribers we get, the more revenue we have to buy content,” Swasey said in a telephone interview last week. “It’s a virtuous cycle.”

The company faces increasing competition from so-called TV everywhere offerings from cable, satellite and telephone providers. Comcast Corp. today with its new Xfinity Streampix service joined Dish Network Corp.’s Blockbuster Movie Pass in offering a subscription service to their pay-TV customers.

Verizon Communications is teaming up with Coinstar Inc.’s Redbox DVD rental kiosk business for a joint streaming and DVD service that will be available to anyone in the U.S. with a broadband-Internet connection.

Netflix fell 3.7 percent to $117.40 at the close in New York. The shares have risen 69 percent this year.

--Editors: Niamh Ring, James Callan

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Alexander Yablon in New York at ayablon@bloomberg.net

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


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