×
You will be redirected back to your article in seconds

Netflix Stock Boom May Bring Gloom to Hollywood

Virgin Media pact could foretell future problems for TV networks, distributors

A deal announced Monday between Netflix and Virgin Media in the U.K. is the likeliest reason for the streaming service’s stock rocketing past $300 this morning to record highs.

But what’s great news for Netflix may not be as rosy for Hollywood, analysts caution, whether that’s the content companies with which Netflix competes or the pay-TV companies which pay the programmers billions of dollars in affiliate-fee revenue each year.

As Doug Anmuth of J.P. Morgan notes, Virgin Media may be just the first cable operator that gives its subscribers access to Netflix on its set-top box alongside other programming options.

“We believe the deal is significant for Netflix, as it is the company’s first ‘through-the-middle’ partnership with a pay-TV provider, and it could open the door for similar distribution deals in other geographies,” he wrote, noting that only Virgin subs who use its Tivo set-top will get Netflix access.

But as Janney Capital Markets analyst Tony Wible notes, elevating Netflix to the same level as traditional TV networks could ultimately provide them increased competition. What was once a streaming service on a different TV input or device is now something so integrated that Tivo’s implementation will even surface Netflix in search results.

“The real call based on this announcement is that it is incrementally negative for traditional networks,” he wrote. “Netflix content is now only a click away, and we expect to see higher utilization of the Netflix service, which we believe will come at the expense (at least in part) of traditional TV networks, particularly for lesser watched programming.”

Netflix has already been blamed for ratings downturns in the past particularly for Nickelodeon, though parent company Viacom has denied that the short-term downturn was the result of so much of its programming also being available via Netflix.

Ted Hall, senior analyst with Informa Telecoms & Media, believes that the threat Netflix provides on set-top boxes extends beyond the networks to the pay-TV providers themselves.

“The danger for Virgin Media is that its customers will find Netflix to be a revelation that they would not otherwise have stumbled upon, opening their eyes to a low-cost subscription TV service that satisfies their core entertainment needs,” he said. “Rather than strengthening the appeal of TiVo, the addition of Netflix could in fact do the opposite and encourage customers to cut the cord and settle for a cheaper combination of broadband, Netflix (via other devices) and free-to-air TV.”

As of 9:30 a.m. PT, Netflix had surpassed $308, up nearly 14%. Netflix’s previous all-time high was $304.79 per share, hit on July 13, 2011. Highest closing price was $298.73, also on that date.

Popular on Variety

More TV

  • Cara Delevingne'Carnival Row' TV show premiere,

    Amazon Prime Video Signs Distribution Deal With Altice Europe (EXCLUSIVE)

    Amazon Prime Video has unveiled its first distribution deal with a telco in France, signing a pact with Altice Europe, which owns leading French internet, mobile and cable-TV provider SFR. The deal will give SFR customers access to the service via their set-top boxes, which is crucial in France, where households still consume content mostly [...]

  • Courtney Kemp Agboh'Power' TV show final

    'Power' Creator Courtney A. Kemp On Why Starz Series Hasn't Gotten Awards Recognition

    “Power” is a top ratings performer for Starz and has a hugely committed fanbase, but the series has lacked in its awards recognition. Other than honors from the NAACP Image Awards, “Power” has not received any awards or nominations from the Emmys, Golden Globes or SAG — something that star and executive producer Curtis “50 [...]

  • Breaking Bad Movie

    'Breaking Bad' Movie: Watch the First Teaser for 'El Camino'

    In case you hadn’t heard, Emmy-winning drama “Breaking Bad” is cooking up a movie sequel. On Saturday, after details of Netflix’s project quietly leaked online, the streaming giant issued the first teaser for “El Camino: A Breaking Bad Movie,” which will be released on October 11. Starring Aaron Paul as Jesse Pinkman, the “Breaking Bad” [...]

  • Breaking Bad

    'Breaking Bad' Movie Release Date, Title and Plot Revealed

    The “Breaking Bad” movie is coming to Netflix sooner than you might think. The film, titled “El Camino: A Breaking Bad Movie,” is now set to be released on Netflix on Oct. 11, according to a report from the New York Times, with Aaron Paul returning as the series’ popular meth cook Jesse Pinkman. Jesse [...]

  • Laurence FishburneNational Memorial Day Concert Dress

    Laurence Fishburne to Produce 'Marvel's Moon Girl and Devil Dinosaur' Series for Disney Channel

    Laurence Fishburne is stepping into the animation game. The “Matrix” star is set to executive produce “Marvel’s Moon Girl and Devil Dinosaur,” an animated series which has been given the greenlight at Disney Channel. Based on Marvel’s comic book series, the show hails from from Disney Television Animation and follows the adventures of 13-year-old super-genius [...]

  • Aracne

    Chile’s Sanfic, Mexico’s Morbido Fest Pact to Promote Latino Horror (EXCLUSIVE)

    Mexican horror festival Morbido and Chile’s Santiago Intl. Film Festival (Sanfic) have agreed on a long-term collaboration intended to strengthen the genre film industry in Chile and across Latin America. This partnership will see Morbido representatives attend the Sanfic industry section each year to aid in the promotion of horror projects and advise those projects [...]

  • 'The Simpsons' Producers on Disney, Spinoffs

    'The Simpsons' Producers Talk Potential Disney Spinoffs, Confirm Apu Will Remain

    “The Simpsons” has never shied away from lampooning Disney over the years, but maybe that’s no longer the case. Homer, Marge and co. are of course now part of the Disney family and made their first appearance at the Mouse House’s D23 Expo convention, where the show’s producers were asked plenty of questions about what [...]

More From Our Brands

Access exclusive content