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Netflix (NSDQ: NFLX) has locked in a full slate of teen angst from now through the 2014-15 season. The four-year pact covers full past seasons of current CW hits like Gossip Girland The Vampire Diaries plus any future shows that debut by then. It’s not an exclusive for the programs — CW owners CBS (NYSE: CBS) and Warner Bros. (NYSE: TWX) can license streaming rights to Hulu, Amazon (NSDQ: AMZN) and others, for instance — but Netflix will be the only streaming option for full seasons. CNBC’s David Faber pegged the value at around $1 billion; one source tells paidContent that is the potential payout for the network and the studios, while another says it’s far too high.
Current-season shows will hit Netflix when the following season starts so don’t look for Ringer or Hart of Dixie until next fall. But past seasons of The Vampire Diaries, Gossip Girl, One Tree Hill and Nikita start Saturday, Oct. 15, with Supernatural and 90210 to follow in early 2012.
It’s a boost for Netflix, which is still struggling to shake off the after effects of a major price increase for half its customers and the ill-fated effort to spin DVDs into a new service called Qwikster. The network gets some 700 hours of youth-oriented programming to stream and vampire bragging rights.
For both CBS and Time Warner, it’s a master stroke in terms of The CW and their respective licensing strategies.
For CBS, it’s another dollop of vindication for being the only major broadcast network to stay away from Hulu (it has a library deal now with Hulu Japan) and avoiding deep online access for its shows — a strategy that is paying off as CEO Leslie Moonves and company slice and dice in the increasingly competitive streaming video area.
Time Warner has been patient about major deals. CEO Jeff Bewkes evangelized TV Everywhere but that didn’t mean TV immediately or that all deals would be the same. In this case, he told the NYT, Netflix made sense as a location for heavily serialized shows that might not fare well in syndication.”
As for CW, Moonves told the LA Times this one deal “essentially makes the CW a profitable enterprise.” From now through the deal, CW and its studio owners will be able to count on Netflix revenue that increases the value of the network through guaranteed payments for online access to its scripted dramas.
About that $1 billion figure that I’ve been told is right by multiple sources and too high by another: the answer is both. The full potential value is based on a number of variables that all have to be hit, much like an acquisition with a conditional earnout. The LAT says Netflix is paying in the neighborhood of $600,000 an episode for Gossip Girl with a varying scale for other shows.
More details in the release.