LOS ANGELES — Netflix has just made the CW network’s future very secure.
The
subscription video company has struck a four-year agreement to stream
reruns from the CW network, including such popular shows as “Gossip
Girl” and “The Vampire Diaries.”
For CW’s parent
companies, CBS Corp. and Time Warner Inc.’s Warner Bros., the deal will
put the partnership in the black, CBS Chief Executive Leslie Moonves
said.
“It essentially makes the CW a profitable
enterprise,” Moonves said in an interview Thursday. That means CBS and
Warner Bros. will make money off the shows they produce for CW, even if
the network itself does not recover its programming costs with ad
revenue. Warner Bros. Television Group President Bruce Rosenblum echoed
Moonves’ sentiment, saying the joint venture “just became more
valuable.”
Although terms of the deal were not
disclosed, Wells Fargo Securities analyst Marci Ryvicker said Netflix
could ultimately pay close to $1 billion by the time it expires. But the
amount could end up being far less as it depends on how well CW’s
programming performs.
Netflix is buying rights to
repeats of current and future series, and the longer the shows stay on
the air and the higher their ratings, the more Netflix will pay.
For
example, Netflix is paying about $600,000 an episode for “Gossip Girl,”
an established show, but will initially pay much less for newer or
lower-rated programs, people familiar with the pact said. The window
between when a new episode of a show appears on CW and is made available
on Netflix could be as long as a year.
Launched
in 2006 as a result of a merger between the struggling UPN and WB
networks, CW relies primarily on serialized hourlong dramas that appeal
to teens and young adults, such as “The Vampire Diaries.” Its shows have
a loyal following, but serialized programs don’t typically generate
strong rerun revenue of situation comedies like “Two and a Half Men” and
procedural dramas such as “NCIS,” which is key to producers recouping
their investments.
“Serialized dramas do not have the same value” in reruns, Moonves acknowledged.
But
fans of such series do flock to services such as Netflix, where they
can watch multiple episodes on their own schedule and in the order they
choose.
Netflix has exclusive online subscription
rights to all episodes of current CW shows. But CBS and Warner Bros. can
still sell reruns to other outlets, including local stations and cable
networks.
The CW agreement accelerates a trend
that has seen Netflix transform from a service focused primarily on
movies to a home for television repeats, which represent more than 60
percent of the video streamed by its users.
At the
same time, Netflix has been losing movie rights. Pay TV channel Starz
recently said it would not renew a partnership to provide movies from
Sony Pictures and Walt Disney Pictures that expires in February. At the
time, Netflix said it would use the money it expected to spend on Starz
movies for other content.
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%uFFFD2011 the Los Angeles Times
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