Reed Hastings takes victory lap with Jeff Bewkes in rear-view mirror


Netflix (NFLX -0.4%) CEO Reed Hastings took to Facebook to call attention to what he calls the milestone achievement of the company passing HBO in subscriber revenue.

"HBO rocks, and we are honored to be in the same league," wrote the exec.

During Time Warner's (TWX +1.7%) earnings call earlier this week, CEO Jeff Bewkes was spared any direct questions about the Netflix factor. Perhaps just as well after Bewkes in 2010 famously likened the metamorphosis of Netflix into a streaming giant to the Albanian army trying to take over the world.

TWX earnings call transcript

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Comments (16)
  • Mark Krieger
    , contributor
    Comments (6101) | Send Message
     
    Sometimes Reed can be a pumper. Incidentally, has he been selling any of his shares lately?
    8 Aug 2014, 04:50 PM Reply Like
  • Reiki8
    , contributor
    Comments (3) | Send Message
     
    Reed Hastings is in the same league as the Devil. There were times he would use company money to buy back stock, when the price was at the top, to try ignite a short squeeze, at a loss to his own company. Then when the stock tanked in 2011, they sold the stock at a great loss, to raise cash. Goldman Sachs have been colluding with Reed Hastings, to pump up the stock with their coverage, giving outrageous projections, while Goldman would dump the stock into the rallies. Goldman Sachs never met a stock it couldn't manipulate using its investment research division.
    8 Aug 2014, 05:22 PM Reply Like
  • Darren McCammon
    , contributor
    Comments (3570) | Send Message
     
    And exactly how do you compare to HBO on profit or free cash flow? Hmmh, strange that when you compare yourself to HBO you don't at least mention that they made 772% more profit than you did.

     

    Congratulations NFLX, you are now a little bigger and therefore stand above HBO on the surface. However, when the tide goes out, investors will actually see who is in much better shape and therefore highly likely to win the race.
    8 Aug 2014, 05:47 PM Reply Like
  • James Sands
    , contributor
    Comments (2584) | Send Message
     
    Too bad HBO is not spun off though, then we'd really get a clear picture of comparison.....
    8 Aug 2014, 11:26 PM Reply Like
  • Tvaddic
    , contributor
    Comments (286) | Send Message
     
    If you click on the link you will see that Mr. Hastings says "Minor milestone: last quarter we passed HBO is subscriber revenue ($1.146B vs $1.141B). They still kick our ass in profits and Emmy's, but we are making progress..."
    8 Aug 2014, 11:44 PM Reply Like
  • Sakelaris
    , contributor
    Comments (2493) | Send Message
     
    For me the great difference between Netflix and HBO is that to receive Netflix one does not have to subscribe to any cable or satellite plan.
    9 Aug 2014, 02:21 AM Reply Like
  • mv_sidow
    , contributor
    Comments (97) | Send Message
     
    I have Netflix, I don't have HBO.
    HBO is tied to cable, no thanks.....
    9 Aug 2014, 08:09 AM Reply Like
  • James Sands
    , contributor
    Comments (2584) | Send Message
     
    We have Netflix and Hulu no HBO too. The challenge for premium content tied to cable and satellite continues. How can they transition to a pure streaming model? It seems to not be possible right now.

     

    I might add that we have used multiple cable companies for internet and to date, At&t is the worst.
    9 Aug 2014, 11:04 AM Reply Like
  • june1234
    , contributor
    Comments (4250) | Send Message
     
    Its not rocket science folks. Netflix allows viewers to pay for what they want to watch and when while the cable channels force viewers to buy hundreds of channels to accomplish the same thing
    9 Aug 2014, 11:38 AM Reply Like
  • James Sands
    , contributor
    Comments (2584) | Send Message
     
    But it is still interesting that a company like Time Warner cannot simply offer a streaming service subscription model to anyone.....

     

    As long as cable and satellite companies dictate this through distribution infrastructure, Netflix will continue to thrive. I assume that media consolidation will continue and slowly these models will evolve from the largest content owners. So if/when Time Warner, Comcast, Disney, 21st Century Fox begin to offer streaming subscriptions of old content, this will be interesting for Netflix.

     

    I am long Discovery and considering Scripps Networks for these reasons.
    9 Aug 2014, 11:53 AM Reply Like
  • june1234
    , contributor
    Comments (4250) | Send Message
     
    I don't believe there would be enough demand for most of any contents providers lineup if they tried to go to a streaming model with that content. Streaming has been around now and what people who stream discover is how few channels of that 300+ lineup they paid for but ever watched. Why pay Comcast $150 a month when you can stream what you want for $10. Cable providers and the content producers will never go for it.
    9 Aug 2014, 04:05 PM Reply Like
  • James Sands
    , contributor
    Comments (2584) | Send Message
     
    ESPN and HBO would most likely fetch $9.95 - $14.95/month. The thing is that the content that is available is old. Real-time new content will carry a much higher premium. Additionally, advertising would be generated from this platform.

     

    These companies struggle because demand is there, but how do they switch to the subscriber model without competing with cable and satellite.

     

    Cable providers make a significant amount of money from Internet. Long-term they know that they will not be able to rely upon the cable model. Post baby-boomers are not going to subscribe to cable or satellite.

     

    I think in the next 5 years we will see a major channel start to offer subscription streamed products. However, it may include older content. There are billions to be made via streaming subscribers and advertising...

     

    For instance, how much does Discovery make through giving Netflix content? Maybe $100-200 million. If Discovery opened up more old content for $3.99/month (access to all channels) they could potentially generate around $500 million per year assuming 10 million global subscribers (they have a strong global product).

     

    Including advertising, this could increase to $750 million. Why use Netflix in this scenario???? These waters will be tested. Unlike cable companies who own the distribution infrastructure, Netflix is only a platform. Discovery reaches nearly 881 million global cumulative subscribers. As they diversify, they will have more leverage to test such model.

     

    Again, I agree with your general statement that this is not something lucrative for all players. But for Netflix investors, they definitely need to pay attention to these type of potential scenarios because content owners have all the leverage.

     

    Thanks for your comments june.
    9 Aug 2014, 08:54 PM Reply Like
  • Sakelaris
    , contributor
    Comments (2493) | Send Message
     
    I have Netflix streaming, Netflix DVDs, and Amazon Prime. Thus I have subscription arrangements with two separate companies and I like the present situation. Would I want to have to also subscribe to future streaming services from a third or fourth company in order to have a good selection in the future? A fifth or sixth company? At some point I and most other consumers will likely say no.

     

    So...I hope that the content providers can just deal equitably with the Netflix and Amazon Prime services.
    9 Aug 2014, 11:28 PM Reply Like
  • june1234
    , contributor
    Comments (4250) | Send Message
     
    If you look at HBO, for as long as they've been around they haven't produced that many series.They don't need to.They produce 1 hit series then package it with a lot of junk, rinse and repeat. Structure of cable packages allow providers to sell non Spanish speaking viewers 100 channels in Spanish.That model would not survive on Netflix. Neither would HBOs I think
    10 Aug 2014, 06:47 AM Reply Like
  • James Sands
    , contributor
    Comments (2584) | Send Message
     
    Sakelaris,

     

    I don't think this will be sustainable long-term. But when we say long-term what does this mean? I surely don't know. The more households that opt out of using cable or satellite will fundamentally pressure current models though.

     

    What I do know is that Discovery as a pure content producer and Comcast as an infrastructure distributor and content producer are both more valuable than Netflix, in my opinion. Consolidation will continue to evolve for both content producers and infrastructure distributors. This will lead to new business models related to streaming.

     

    These companies create content and own the infrastructure to distribute it. Netflix is a platform, and in my opinion Hulu is the best platform today. There have been charts presented showing that both Netflix and Amazon are going to invest more in series show content, and Hulu has a significant lead here. Hulu is where Netflix and Amazon want to be. Contrarily, investment in movies will decline for both Netflix and Prime.

     

    Many of the media companies are thinking about ways to create streaming services. They just are stuck because they cannot cannibalize their current agreement system with cable and satellite. I speak with a few of them regularly. They know its coming but no one wants to take a major risk to stick it to a distributor. Plus we are still in the "climax" of revenue for media companies where they can depend on high-priced cable and satellite deals.

     

    Discovery is unique due to their global reach. I do own them in my portfolio, but I mention them as an example because I really believe they could build a global subscriber base in the 5-10 million range rather quickly and generate significantly more money from this direct model versus selling content to Netflix and Amazon, just my opinion.

     

    And ultimately what about this scenario? What if Comcast had a streaming deal, Disney, Time Warner, 21st Century Fox, and Discovery. What if AMC, STARZ, Scripps Networks have all been acquired. What if we could get access to all of these channels via subscription models costing anywhere between $20-$35/month. To me this, would be great. Maybe I'd take a two of them.

     

    What if NBA.com and other sports content owners nixed their agreements with broadcasters and black outs went away. It would be a boon. Right now I can pay $9.95/month or so and get access to 5 NBA teams all season live in HD.

     

    The bottom line is that no one needs over 100 channels, no one probably needs over 50 channels. We will probably never get to pick each channel we want and get our real premium 25 channels. But a smaller "package" of real-time content that is more adaptable than today's system would be a significant improvement.

     

    All the companies I'm mentioning in this post are definitely considering these type of thoughts. So if/when these things begin to formulate outside of the "TV everywhere" concept, Netflix and Amazon will be in trouble because they do not generate substantial owned content and they do not own distribution infrastructure; they are platforms dependent on these two items.

     

    Thanks,
    James
    10 Aug 2014, 11:58 AM Reply Like
  • Matthew Davis
    , contributor
    Comments (4723) | Send Message
     
    Could we see $8.99/mo HBO subs?
    9 Aug 2014, 06:23 PM Reply Like
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