Netflix Defends Chelsea Handler Deal

Content chief Sarandos: Many viewers don't watch latenight TV live anyway

Chelsea Handler TCA
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Chelsea Handler’s talk show on Netflix, slated to debut in 2016, will have a limited shelf life, chief content officer Ted Sarandos acknowledged, but he said it will fit into the streaming company’s overall mix by introducing a new time-shifted model for latenight TV.

“I think Chelsea’s is going to be a great representative of the content on Netflix: movies and pop culture,” said Sarandos, speaking on Netflix’s second quarter earnings call Monday.

He added, “This isn’t instantly perishable content, but it’s not a movie… but the economics (of the deal with Handler) level it out for us.”

Handler is leaving her show on E!, “Chelsea Lately,” after seven years. Netflix announced the pact with the comedienne last month. The deal encompasses Handler’s first hour-long standup comedy performance based on her sold-out tour, “Uganda Be Kidding Me,” taped June 20 and set to debut in October, along with four other specials in 2015.

For Netflix, the foray into latenight TV programming with Handler represents a dramatic departure from its traditional emphasis on binge-watching series. But to Sarandos, it’s simply the evolution of a traditional TV format to the on-demand paradigm that’s becoming the prevailing model for consumers’ viewing habits.

Netflix and Handler want to “create a show that’s built closer to the way people are going to watch it,” Sarandos said, noting that TV viewers are increasingly watching latenight programming “not at 11:30 (p.m.) but days or weeks later.”

In announcing second-quarter results, Netflix was upbeat on its international growth prospects. The company plans launches in six European countries — including France and Germany — this fall. Sarandos said the company spends 10%-20% of its content budgets internationally on locally productions, with the rest largely comprising Hollywood-produced shows and movies. “What’s been really great is how much the content travels,” he said.

With respect to France, which has laws governing the amount of French-produced content that must be available on video services, CEO Reed Hastings was asked whether Netflix was attempting to skirt Gallic regulations. Netflix was reported to be locating its base of operations for France in Luxembourg, in order to avoid French regulations including taxes.

“We are really not trying to get around anything,” Hastings said. “We want to be an avenue for French content to be available around the world,” he said, joking that Netflix would be investing in a “House of Versailles” series.

As for whether Netflix will boost the amount it spends on original relative to licensed content, Sarandos said while more of its focus will be on original productions, “we’ll always be a very valuable off-net buyer” for TV shows. He noted that CBS’s “The Mentalist” is most popular content in France.

“The great thing about this time we are in… there’s so much great content being produced, you could never watch it in your lifetime,” Sarandos said.

On the call, moderated by JP Morgan’s Doug Anmuth and MoffettNathanson’s Michael Nathanson, Netflix execs were asked about the potential impact of 21st Century Fox’s potential takeover of Time Warner.

Sarandos responded that “Fox and Warner are both pretty powerful companies today… so I don’t know how that changes much with them coming together.” He said the merger talks between the two congloms were more likely about TV network consolidation and sports rights than combining production capabilities.