Netflix, Inc. (NFLX) Targets Hollywood By Financing Movies


Last week, Netflix, Inc. (NASDAQ:NFLX) has made an announcement about the four-film deal with Actor/Producer Adam Sandler. All four feature films will be premiered for Netflix’s customers to stream and watch. Bloomberg’s Julie Hyman talked on Bloomberg TV about Netflix’s deal with Adam Sandler and the deals implications for the company.

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Hyman mentioned that when a new movie is released in theaters, it takes almost 2-3 months to make it available in video-on-demand and pay TV channels, which happens first. She added it takes almost 8-12 months for the streaming companies like Netflix, Inc. (NASDAQ:NFLX) to strike a deal with studios to make the movie available for its customers.

“[…] Netflix’s ultimate goal or one of its goals in doing these kinds of deals, it just tries to shrink that release window. It wants its customers obviously to get access to this new content as quickly as is possible, that makes its service more attractive, so that’s one of the goals at least when it signs these sorts of financing deals,” Hyman said.

Hyman added that shares of the theater chains have gone down a bit in wake of the financial deals announcement by Netflix, Inc. (NASDAQ:NFLX). But, she pointed at MKM Partners Analyst, Eric Handlers comments that these financial deals might not impact the theater business, since the theater business has grown a lot globally.

Theater chains fear that some of the studios might take the risk of releasing to streaming service like Netflix, Inc. (NASDAQ:NFLX) first before releasing it worldwide in theaters, which might affect the theater business.

Hyman pointed at Stifel Nicolaus’s Ben Mogil’s comments that Netflix, Inc. (NASDAQ:NFLX) is filling a niche in the market through these financial deals. Mogil feels that the medium budget movies are not getting the attention they deserve, but the deals like this could help them out.

Hyman added that this year has been terrible for movies, which also might be the reason behind the dropping share values of theater chains.

As of 30 June 2014, Carl Icahn‘s Icahn Capital Lp hold around 1 million Netflix, Inc. (NADSAQ:NFLX) shares.

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