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Summary:

What makes the runaway train that is Charlie Sheen so difficult for CBS (NYSE: CBS) to manage is that he delivers too much value to simply s…

Charlie Sheen
photo: Getty Images / Ethan Miller

What makes the runaway train that is Charlie Sheen so difficult for CBS (NYSE: CBS) to manage is that he delivers too much value to simply send him packing even as he wreaks havoc. It’s a predicament not entirely dissimilar to another entity CBS and other TV networks and studios struggle to deal with: Netflix.

As Richard Greenfield noted today in an analysis that graded the broadcasters on their varying strategies re: Netflix (NSDQ: NFLX), the streaming service is both profit and peril. While licensing content to a whole new market entrant provides additional revenue at a time when there’s pressure to create new streams, Netflix may be eroding existing streams like syndication and home video.

If it’s any consolation to the man who must bear the biggest headache due to the Sheen debacle, CBS Corp. CEO Leslie Moonves, Greenfield believes CBS has the best Netflix strategy. That probably won’t make up for the hundreds of millions of dollars to be lost should Two And A Half Men not return for a ninth season, but, hey, small comforts are better than none at all.

Greenfield believes CBS is the most conservative of the four broadcasters when it comes to dealing with Netflix, licensing only the shows that are no longer on air. He predicts Showtime, which CBS owns, will soon follow suit, so if you haven’t streamed Californication yet, you might want get around to that sooner than later.

In contrast to CBS, ABC (NYSE: DIS) is characterized as “liberal” by Greenfield because some of its current-season shows, along with Disney Channel and ABC Family, are available on Netflix. Fox and NBC (NSDQ: CMCSA) are in the middle for restricting their licensing to past seasons of current shows (with the<a href="http://paidcontent.org/article/419-netflix-and-nbcu-strike-broader-streaming-deal&quot; title=" exception of Saturday Night Live“> exception of Saturday Night Live, which is available the day after).

Greenfield concludes, “Our gut instinct is that helping Netflix right now by supplying content (even at astronomical prices Netflix is paying) feels problematic for overall industry health.”

He prefaces that remark by noting “there is no easy answer,” and that’s quite an understatement. As Greenfield himself notes, Starz–the poster boy for bad licensing deals due to its own Netflix pact–actually added a whopping 800,000 subscribers in the fourth quarter; Netflix can’t be hurting it that bad.

The problem is there’s something hopelessly more complex at play regarding consumer appetites than the simple zero-sum calculation that exposure of content in one window means a lost opportunity in another window. It’s going to take years of experimentation–and short-term licensing deals–before a programmer hits on the right formula, so look for some failure along the way.

By Andrew Wallenstein

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  1. It’s not much of a dilemma – the future is the Netflix model, whether it is a company called “Netflix” or not. The choice is either transition to that model or die.

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  2. CBS isn’t going dark in the time slot where “men” did run so your calculation of hundreds of millions “lost” (revenue ? costs ? profit ?) might be misleading.

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