Does Carl Icahn Know What To Do To Shake Up Netflix?

By | Friday November 2, 2012 @ 4:55pm PDT

Lots of Netflix investors seem to believe that the corporate raider has enough ideas and juice to revive the video rental company, which is struggling to secure its place in the media ecosystem. Shares only retreated 3% since Wednesday, when they popped 13.8% on the startling news that Icahn bought stock and call options that could give him 9.98% of the company. That resulted in widespread speculation that the legendary crusader for shareholder value has a plan to force Netflix to take a new direction following nearly a year and a half period during which Netflix lost 74% of its market value.

Well, if he does, then it will be interesting to see what it is — and how he might prevail if he crosses swords with CEO Reed Hastings. Icahn has fewer options than people think.

Potent anti-takeover provisions in Netflix’s by-laws would make it difficult to wage a hostile effort to take over the board. The company’s staggered elections mean that only a third of the directors are replaced each year. What’s more, Netflix doesn’t allow shareholders to call a special election to pick new directors. If Icahn continues to buy stock, the company can exercise what’s known as a poison pill — a provision that gives the board the right to flood the market with up to 10M preferred shares, diluting the value of his holdings. Corporate law in Delaware, where Netflix is incorporated, also bars companies from combining with a holder of more than 15% of its stock unless the holder has had the shares for at least three years — unless the board approves the transaction. Read More »

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Netflix Says It Now Has 30M Subs Worldwide

By | Thursday October 25, 2012 @ 8:06am PDT

Investors see Netflix‘s disappointing subscriber growth as a glass half empty, and today CEO Reed Hastings apparently wants to persuade the public that it’s more than half full. That’s the only reason I can think of for announcing that the company has more than 30M subs globally including more than 25M in the U.S. It’s no surprise. The number is just a tad higher than the figures Netflix reported two days ago for the end of Q3: It said that it had 25.1M domestic streaming subscribers and an additional 4.3M abroad. That irked Wall Street because it meant the company had to cut its forecast for domestic sub growth in 2012 to about 5M from 7M. “We own it in terms of a bad forecast,” Hastings said on Tuesday. “But in terms of actual performance of the business, to grow 5 million net adds domestic is substantial and we feel good about that and about the growth next year.” That’s the theme he’s reinforcing today in a Facebook posting thanking Netflix customers. Read More »

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Netflix Chief Reed Hastings Decides To Log Off Microsoft’s Board

By | Tuesday October 9, 2012 @ 1:53pm PDT

The Netflix founder joined the Microsoft board in 2007 and is now its lead independent director. But he has taken himself out of the running for re-election when the software company’s shareholders meet in November. “I’ve decided to … Read More »

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HBO Isn’t Talking With Netflix About Programming Deals

By | Wednesday August 1, 2012 @ 9:00am PDT

Time Warner CEO Jeff Bewkes just threw a bucket of ice water on the idea that Netflix chief Reed Hastings raised last week in his quarterly letter to shareholders. “While we compete for content and viewing time with HBO, it is also possible we will find opportunities to work together – just as we do with other networks,” Hastings said. “Consumers who are passionate about movies and TV shows are quite willing to subscribe to multiple services.” Perhaps. But Bewkes isn’t interested in seeing HBO programming appear on Netflix just yet. “There are not talks going on between HBO and Netflix,” he said in his quarterly call with analysts. Although he acknowledges that “sometimes other relationships emerge over time” between competitors, when it comes to Netflix he added: “Not now.” Read More »

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Netflix Stock On Rise After Monthly Viewing Data Revealed

By | Thursday July 5, 2012 @ 2:10pm PDT

Netflix Stock PriceNetflix shares rose 13% today after a the market took yesterday off due to the July 4 holiday, closing at $81.72 thanks to the company’s biggest single-day gain since late January. The surge comes a couple of … Read More »

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Netflix CEO Says Monthly Viewing Exceeded 1B Hours In June

By | Tuesday July 3, 2012 @ 2:59pm PDT

It was the first time the streaming service has pumped out so much content in a month according to a post that CEO Reed Hastings made on his Facebook page. “Congrats to [Chief Content Officer] Ted Sarandos, and his … Read More »

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UPDATE: Netflix Chief Says He’s Still Eager To Buy Programming, Including Originals

By | Monday April 23, 2012 @ 1:11pm PDT

UPDATE, 4:13 PM: Netflix CEO Reed Hastings has some good news for Hollywood: Despite his company’s struggles, he plans to keep spending “aggressively” on content, he told analysts in a conference call. “We have a small fraction of the content that we would like to have.” He pegged the spending rate at “slightly less than revenue growth.” That could include deals like the one Netflix struck with DreamWorks Animation to offer its movies in the premium TV window. Most of the studio deals with channels such as HBO and Starz expire in 2014 and 2014 and “as far as I know, no one else has the right of first refusal.” Hastings also is in the market for original shows. Although “it’s not yet hugely significant” for Netflix, as it adds shows such as House Of Cards — which will debut next year — “it will build to a nice percentage of our total viewing.” Meanwhile, Hastings says he’s pleased with the performance of his exclusive programs. For example, the Norwegian TV drama Lillyhammer, which stars Steven Van Zandt, “was quite successful for the amount we invested in it.” He says that the program licensing deals he’s making now largely are exclusive because “other bidders will not take that content if we also have it, so they’re de facto exclusive.” Although he doesn’t envision having all-exclusive programming, “certainly there’ll be more and more.” Read More »

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Netflix CEO Reed Hastings Collects $9.3M In 2011, A 68% Raise

By | Friday April 20, 2012 @ 11:51am PDT

If you’re a Netflix investor, you might want to reach for some pills to control your blood pressure. Although the home video company lost 62.5% of its market value last year, CEO Reed Hastings did just fine — as did all of the other top executives named in the proxy that Netflix filed today at the SEC. True, Hastings’ salary was cut 3.7% to $500,000. The document says that the Compensation Committee “took into account the Company’s performance during 2011 and reduced the Chief Executive Officer’s total compensation by $1.5 million.” But Hastings shouldn’t feel much pain. His stock option award was up nearly 76% to $8.8M. All of the company’s other top execs also made more in 2011 than they did the previous year — collectively they were up 27.6%. Hastings’s compensation accounted for 40% of the pay for the company’s five top execs. His take was about 2.7 times the average for his colleagues. Corporate governance activists become skeptical when the CEO Read More »

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Netflix Chief Tells UK Regulators To Keep Hands Off BSkyB

Execs often say they hate government regulation, but sing a different tune when officials scrutinize a competitor. That’s why it was so surprising to hear Netflix CEO Reed Hastings say that he wants the UK Competition Commission to keep out of his battle with BSkyB — his most formidable streaming video rival in the market that Netflix entered in January. “We are aiming for a fair fight,” he said at a conference yesterday The Guardian reports. “One of the big advantages is that we are £5.99 (per month), that is a fundamental difference in positioning. Frankly we think many people will get Netflix in addition to (BSkyB’s) Sky Movies or Sky Atlantic.” The Competition Commission has already provisionally determined that BSkyB’s premium TV deals with all of the major Hollywood studios are too restrictive. But last week the regulators said that they would extend their review of the market to July so they could Read More »

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Maybe Netflix Isn’t About To Become A Major Cable Or Satellite Service After All

By | Saturday March 10, 2012 @ 8:54am PST

The story took off, and now seems to be crashing, even faster than Herman Cain’s presidential campaign. Pay TV’s three biggest distributors — Comcast, DirecTV, and Dish Network — aren’t interested in carrying Netflix, industry news service SNL Kagan reports. That could dampen some of the excitement about the idea that built up this week after Reuters said that Netflix CEO Reed Hastings “has quietly met with some of the largest U.S. cable companies in recent weeks” to talk about having them offer his video streaming service. It added that by year end at least one cable company could offer Netflix on an experimental basis. The story grabbed everyone’s attention: Hastings recently told an investor group that cable operators would love to become less dependant on HBO — and offering his streaming service “might be very powerful, especially as we have more original content.” Read More »

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Netflix Negotiating To Become A Cable Service: Report

By | Wednesday March 7, 2012 @ 5:31am PST

Last week, Netflix CEO Reed Hastings said that the prospect of having cable operators offer his streaming video service to their customers was “not in the short term” as a possibility — but was “in the natural direction in the long term.” His definition of “short” and “long” is open to debate, though: He’s already in talks with “some of the largest U.S. cable companies,” Reuters reports. It adds that by year end at least one cable company could offer Netflix on an experimental basis. The story doesn’t identify the operators negotiating with Netflix; Comcast recently unveiled its own online video service called Streampix. A Netflix-cable alliance could diminish the talk about cord-cutting. Some analysts say that pay TV subscribers looking to save money increasingly will cancel the $65-a-month video service and replace it with Netflix’s $7.99-a-month package, which mostly consists of older TV shows and movies. It also would give cable subscribers an alternative to premium channels led by HBO. Read More »

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Could Netflix Evolve Into A Premium Cable Channel? Perhaps, CEO Says

By | Tuesday February 28, 2012 @ 2:54pm PST

Pay TV providers already “know how to deal with HBO and would like to have a competitor to HBO,” Netflix CEO Reed Hastings said today at the Morgan Stanley Technology, Media, and Telecom Conference. So even though he doesn’t expect Netflix to join the pay TV line-up as a premium channel any time soon, “it’s in the natural direction in the long term” and “might be very powerful, especially as we have more original content.” But Hastings won’t give up the company in return for carriage, the way many cable channels have. Also he says that in any distribution arrangement it’s important that “the consumer knows they’re using Netflix and have our application on the TV.” Meanwhile, he says that cable operators have good reason to like having Netflix on broadband — despite their frequent complaint that the video service is a bandwidth hog. “They’re making a fortune,” he says. “Comcast and others are selling a (broadband) service for $40, $50, $60, $70 a month with no content costs.” Read More »

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UPDATE: Netflix Still Eager To Buy Content After 4Q Earnings Soar Past Estimates

By | Wednesday January 25, 2012 @ 1:04pm PST

UPDATE, 4:03 PM: Netflix CEO Reed Hastings has good news for Hollywood: He plans to keep buying movies and TV shows for his streaming service “for a very long time,” he told analysts in a conference call. … Read More »

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Netflix Shares -6.3% As Concerns Grow About 4Q Report And 1Q Forecast

By | Monday January 23, 2012 @ 2:21pm PST

A hard-hitting report today from Wedbush Securities analyst Michael Pachter seemed to reignite investor fears about Netflix ahead of Wednesday afternoon, when the home video company will release its 4Q results. The analyst, who has an “underperform” rating on the … Read More »

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HBO Nicks Netflix By Refusing To Provide Discounted Discs

By | Thursday January 5, 2012 @ 5:41pm PST

Was Time Warner CEO Jeff Bewkes being coy or sarcastic last month when he told a Wall Street gathering that “Netflix is our friend”? You might think so now that HBO has stopped providing discounted DVDs of its programs to the video … Read More »

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Big Media Still Lack Big Ideas; Moguls No Longer Fear Netflix But Now Worry About Internet Video: UBS Confab Wrapup

For some strange reason, I thought at least one Big Media mogul would use this week’s UBS Annual Media and Communications Conference to reset investor expectations about the Industry. I waited for someone to say that it’s time for execs to stop … Read More »

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Netflix CEO Reed Hastings Predicts 50% Of TV Viewing From Web In Decade: UBS Confab

Netflix CEO Reed Hastings had the best line of the day at the UBS Annual Global Media and Communications Conference. Told that last year his company was the object of ”mystique, envy and fear” at the confab, Hastings said: ”Now it’s just pity.” Well, yes — considering that his company’s stock has fallen 77% since mid-July, when Netflix boosted prices by 60% for consumers who wanted to continue to receive DVDs and stream videos. ”We had done so many difficult things that we became overconfident,” Hastings says. “Our big obsession for the year was, ‘Let’s not live and die by DVD.’ ” But the change ”turned out to be a little too fast. … We berate ourselves tremendously for that lack of insight.” But his appearance at the UBS gathering was designed to demonstrate that Netflix is back on track — and that its shares are worth buying again. For investors who believe that Web video is going to soar, ”we’re the leading play on that thesis. … As long as we don’t shoot ourselves in the foot anymore, it’s a great opportunity.” He adds that “there’s no effective competitor for exactly what we do.”

Hastings predicted that within the next 10 years about half of all TV viewing will come via the Internet. He says that TV manufacturers ”want you to live in their device.” While about a third of TV sets sold today can connect directly to the Internet, “in a few years most of the TVs sold will be smart TVs. … It’s a phenomenal revolution.” The biggest loser will be broadcast TV, he says. “It’ll be declining like land-line telephony. … To some degree we’ll look at broadcast in 20 years as being like (telephone) party lines.” And as broadband providers include more fiber optic lines in their networks, they’ll be able to transmit Internet video at speeds of 1 gigabit per second. “Peak Netflix viewing on a Saturday night could still fit through one fiber optic (line),” he says. “A gigabit is a tiny fraction of what’s possible over fiber optic.” Hastings says that providers shouldn’t have to raise prices, or resort to usage-based pricing, to handle all of that Internet video traffic — although they might try to do so. ”It would be unfortunate because it’s not based on the costs,” which are fixed, he says. Consumers also might balk. ”Time Warner Cable tried it a couple of years ago in Texas and backed down. … I doubt it will happen.” Read More »

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Big Media 3Q Corporate Earnings Roundup: Are CEOs Really Worried About Recession? Or Just Looking For Convenient Excuse?

Three months ago, when Big Media CEOs wrapped up their 2Q earnings, they were still relentlessly upbeat about the business. Any worries about the economy? Not then. But the messages they delivered over the past few weeks, as they discussed 3Q, were different. Although they’re still optimistic — remember, they’re paid to be salesmen — now and then you could hear expressions of concern about where things are headed. It stood out when Viacom CEO Philippe Dauman noted that “ad sales growth will face some headwinds.” Other CEOs who are known for speaking bluntly warned that other shocks may bedevil the business. For example, Dish Network Chairman Charlie Ergen said that his satellite company — and others in pay TV — have to fight harder against rising programming costs because “there’s a limit to the price increases that could be passed on to consumers.” Time Warner Cable CEO Glenn Britt warned that premium channels such as HBO, Showtime and Starz “are clearly impacted by the economy as consumers try to cut back.” Either they’re genuinely worried, or they want a scapegoat to blame for things that are going bad, or may soon do so. Whatever the case, we can expect to hear a lot more about the economy when it’s time for the post-mortem on the all-important 4Q earnings.

As for industry performance matters, parents of movie studios had their usual mixed results to brag about or explain away: Time Warner benefitted from Harry Potter And The Deathly Hallows Part 2. Viacom was up on Transformers: Dark Of The Moon. And News Corp beat its chest about Rise Of The Planet Of The Apes and X-Men: First Class. But Disney’s Cars 2 was no match for last year’s Toy Story 3. Comcast’s Universal Pictures had nothing to compare to last year’s Despicable Me. Lionsgate suffered from Conan The Barbarian and Warrior. And DreamWorks Animation’s Kung Fu Panda 2 didn’t contribute as much in the quarter as Shrek Forever After did in the same period last year.

Over at the TV networks, Comcast’s NBC underperformed the Street’s already modest expectations. Execs at almost all the companies were eager to talk about the cash they expect to collect soon from political ads — as well as their favorite new ATM machines: retransmission consent deals and digital streamers including Amazon, Hulu, and Netflix. Speaking of Netflix, CEO Reed Hastings once again tried to reassure investors that he’s focused on “building back our reputation and brand strength” after his decision in July to slap a 60% price increase on customers who wanted to continue to rent DVDs and stream videos. In 3Q Netflix lost 57.7% of its market value and 800,000 subscribers. And since that customer loss was bigger than projected, Netflix shares continued to fall — they’re now down 67.3% since July 1.

Here are some other themes from the latest earnings reports:

Ad sales: They’s good, but for how long? Most television networks report that scatter prices are comfortably above the upfront market from this past summer. CBS chief Les Moonves says prices in 4Q are up by “mid-teens” on a percentage basis, while Discovery says it sees least high single digit percentages. But Disney’s Bob Iger noted that scatter prices have “slowed slightly these last few weeks.” Kurt Hall of National CineMedia — the leading seller of ads in movie theaters — was far more direct when he spoke to analysts after ratcheting down his company’s financial forecasts. “I’m sure that the broadcast and cable guys are sitting there now counting their lucky stars they got their upfront done before August,” he told analysts. “There’s a lot of uncertainty.” Read More »

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UPDATE: Netflix Stock Taking Beating As 3Q Subscriber Numbers & Guidance Weak

By | Monday October 24, 2011 @ 5:30pm PDT

UPDATE, 5:30 PM: It looks like the deal Netflix announced this morning to expand into the UK and Ireland will take its toll on the company, which said during its post-earnings conference call with analysts that … Read More »

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