Netflix (s NFLX) has been extremely successful with an online streaming offering that’s primarily “re-run TV” — that is, later syndicated content that has already run its course on the major cable and broadcast networks. But there could also be the possibility for it to work with broadcast companies to keep low-rated shows that have a lot of Netflix viewers on the air.
Netflix just recently got into licensing original programming, with a deal to gain exclusive rights to the Kevin Spacey-David Fincher project House of Cards. That deal will put House of Cards on Netflix instead of a pay TV network like HBO (s TWX) or Showtime. (s CBS) On its earnings call, CEO Reed Hastings said the subscription video provider could see itself doing a few more similar deals before the program becomes available.
So what’s next for Netflix? With plenty of rerun programming and now some original programming, Hastings said the company could keep some shows that are on the chopping block alive, by working with broadcasters and cable networks. In an interview, MediaMemo’s Peter Kafka asked if it would make sense for Netflix to do so. Hastings’ response:
“Yes. For example, Friday Night Lights wasn’t going to get continued two seasons ago on NBC, and DirecTV did a deal to extend that show. So we can see ourselves doing something like that — extending a season of something that was doing well on Netflix.”
Netflix wouldn’t be the first subscription video service to do so. As Hastings mentioned, DirecTV (s DTV) helped save Friday Night Lights from extinction by making a deal with NBC. (s CMCSA) (s ge) DirecTV also picked up the low-rated but critically acclaimed FX show Damages when it was facing cancellation. But DirecTV has decided against doing more show-saving deals in the future.
Keeping an ailing show with a niche audience running could actually make sense for Netflix. Unlike the broadcast networks, Netflix doesn’t depend on ratings from live show airings to appease advertisers; instead, it justifies the cost of licensing through the number of subscribers it has and how often they view the content over the life of the license.
And for the networks, a Netflix deal could provide an additional revenue stream for those shows, which could potentially offer more value than advertising alone. Such a deal could also have the added benefit of boosting viewership during the live airing: Netflix argues that shows with episodes available through its streaming service — like Starz’s Spartacus — pull better ratings as a result. That’s in part because Netflix raises the visibility of those shows, and in part because viewers are able to catch up on shows that they missed through on-demand viewing.