Wednesday, September 18, 2019

Streaming War Spurs Classic-TV Arms Race Rights to ‘Seinfeld,’ ‘Friends,’ ‘Big Bang Theory’ and other old shows attracted over $2 billion in recent months

Netflix acquired the streaming rights to ‘Seinfeld.’ Photo: Castle Rock Entertainment/Everett Collection

Joe Flint and
David Marcelis Updated Sept. 17, 2019 9:41 pm ET

Entertainment heavyweights have spent more than $2 billion on classic television shows in recent weeks while signing talent for new programming, in an effort to win over streaming customers who soon will have many more options to choose from.

This week, AT&T Inc. T -1.04% ’s WarnerMedia struck a deal for “The Big Bang Theory,” while Netflix Inc. acquired “Seinfeld” and Comcast Corp. CMCSA +0.20% ’s NBCUniversal said it would have exclusive streaming rights to “Parks and Recreation.” Two other shows, “Friends” and “The Office,” changed homes earlier this summer. The commitments total over $2 billion, according to people familiar with the matter.

“You will see more of this,” said industry analyst Hal Vogel of Vogel Capital Management, of the recent big programming deals.

The spending frenzy comes as four high-profile services—from Apple Inc., AAPL +0.23% Walt Disney Co. , Comcast and WarnerMedia—are to launch between November and the spring, drastically increasing the entertainment options of customers and likely leading them to grapple with how to spend their money and their time.

Channel Surfing

Monthly Cost: $12.99
Launch Date: Running
Classic Show: ‘Seinfeld’
New Show: ‘Stranger Things’

Monthly Cost: $5.99 (with ads); $11.99 (ad-free)
Launch Date: Running
Classic Show: ‘ER’
New Show: ‘Handmaid’s Tale’

Monthly Cost: $8.99
Launch Date: Running
Classic Show: ‘Sex and the City’
New Show: ‘Marvelous Mrs. Maisel’

Monthly Cost: $4.99
Launch Date: November
Classic Show: N/A
New Show: ‘The Morning Show’

Monthly Cost: $6.99
Launch Date: November
Classic Show: ‘The Simpsons’
New Show: ‘The Mandalorian’

Monthly Cost: To be determined
Launch Date: Spring
Classic Show: ‘Friends’
New Show: ‘The Flight Attendant’

Monthly Cost: To be determined
Launch Date: Spring
Classic Show: ‘The Office’
New Show: ‘Rutherford Falls’

Sources: WSJ reporting; the companies

Streaming-video consumers are willing to pay for a handful of services that cost a total of about $38 a month for about six streaming services, according to a Magid Research survey conducted last year.

Apple said last week that its TV+ service would be launched Nov. 1 for $4.99 a month—cheaper than Netflix’s $12.99 monthly standard option and Disney’s $6.99 monthly fee for a service also expected to arrive in November.

Comcast and AT&T have yet to reveal the cost of their respective offerings, Peacock and HBO Max, both of which are to be launched in the spring. Comcast has said the Peacock service would be free to its existing U.S. cable subscribers, and HBO Max is expected to cost more than $15.

A customer who doesn’t have a cable-TV subscription and wants access to all major streaming services—which also include Disney’s Hulu and Inc. ’s Prime Video—would likely have to fork over $70 a month for packages that lack access to live TV. Factoring in what is known as a skinny bundle, such as Dish Network Corp. ’s Sling TV or Alphabet Inc. ’s YouTube TV, the monthly cost of comprehensive over-the-internet video content would be higher than that of a traditional pay-TV package, which the Kagan unit of S&P Global Market Intelligence said averages over $90 a month.

HBO Max’s deal for “The Big Bang Theory” and Netflix’s acquisition of “Seinfeld”—both of which are said to be worth about $500 million for five years—underscore how important popular reruns are to streaming services. Episodes of hit shows often retain audience acclaim years and decades after their initial run, and are seen as must-have programming.

“There are a very limited number of excellent comedy titles that have a large number of episodes and are evergreen,” said Michael Nathanson of MoffettNathanson Research, who described the prices of the recent rerun deals as “fair value.”

“Netflix had a monopoly on these shows a few years back at fair prices,” Mr. Nathanson said. “That is no longer the case.”

Steve Carell, rear, in ‘The Office.’ Mr. Carrell will be among the stars of ‘Morning Show,’ an original Apple program. Photo: Paul Drinkwater/NBC/Everett Collection

Coming streaming services are also touting new shows anchored by top talent. Apple’s “Morning Show” will star Jennifer Aniston, Reese Witherspoon and Steve Carell; Peacock’s original programming will feature Alec Baldwin and Demi Moore; Disney+ is launching a “Star Wars” spinoff; and WarnerMedia signed producer J.J. Abrams, who will develop content for HBO Max as part of his deal.

The new services’ original-content strategy marks a seminal moment for the industry. Last year, nearly 500 original scripted shows were available across all video platforms, almost twice as many as in 2011, according to research by Disney’s FX Networks.


How many streaming services are you subscribed to? Which ones would you consider adding, and why? Join the conversation below.

But the growing competition is also prompting new streaming services to shell out between $8 million and $15 million an episode, significantly more than what the average TV show used to cost.

Not all players are equally equipped to deal with the investment spree required to acquire classic shows and develop new content. Entertainment isn’t a core business for Apple and Amazon, and both companies generate significant amounts of cash. Amazon recently agreed to spend $250 million just for the rights to develop a “Lord of the Rings” series. Apple said TV+ would be free for a year with the purchase of a new iPhone, iPad or Mac.

Netflix, on the other hand, has borrowed heavily to build its streaming dominance. It leads all rivals with 60 million customers in the U.S. and a further 91.5 million abroad, but its long-term debt is over $12 billion. And for the first time in nearly a decade, Netflix lost U.S. subscribers in its most recent quarter.

Comcast, the nation’s largest cable operator, needs to balance its desire to create a consumer-friendly streaming service without undercutting its core pay-TV business or alienating other pay-TV operators that carry its various networks, including NBC, CNBC, MSNBC and USA. In an effort to navigate these matters, its Peacock service is expected to be available free to Comcast’s more than 21 million cable subscribers in the U.S. In addition, Comcast and NBCUniversal are looking to strike deals with other American pay-TV providers that would allow them to offer Peacock to their subscribers free as well, a person familiar with the matter said.

Netflix's Hollywood Rivals Are Spoiling for a Fight Disney, AT&T and Comcast have plans to enter the streaming-video ring, armed with well-known TV and movie brands. But can they hold their own against industry juggernaut Netflix? Photo illustration: Heather Seidel/The Wall Street Journal

AT&T’s WarnerMedia is in a different predicament. The company already owns a popular direct-to-consumer service, HBO Now, which gives access to all of HBO’s content. But at $14.99 a month, it is more expensive than Apple and Disney’s new streaming services combined. WarnerMedia’s coming service, HBO Max, will feature HBO’s content on top of a vast TV and movie library, as well as original projects from stars such as Nicole Kidman, Ms. Witherspoon and Anna Kendrick. The company has yet to settle on a price for the new service, which has to be higher than $15 so as not to undercut HBO’s existing agreements with pay-TV distributors—but still be affordable enough to remain competitive given the flurry of coming lower-priced alternatives. A person familiar with the matter expects the service to cost slightly more than $15.

Disney expects streaming to become a new source of growth as the traditional pay-TV business—once the engine of its expansion—matures. The company, which already owns Hulu and ESPN+, expects Disney+ to have between 60 million and 90 million subscribers by the end of fiscal 2024. It is spending heavily in an effort to achieve that goal, betting on ambitious shows such as “Star Wars” spinoff “The Mandalorian,” whose cost for an episode approaches $15 million, according to people familiar with the matter. Disney+ also will house episodes of the long-running Fox animated hit “The Simpsons,” as well as the original trio of “Star Wars” movies.

No comments:

Post a Comment

Featured Post

THE MYSTERIOUS PHONE CALL Jack Blanchard's Column February 13, 2021

        Thousands of readers around the world ...