CBS is Cheering a $200 Million Win-Win Deal with Netflix

CBS and Netflix have joined forces to provide streaming TV shows to subscribers. Netflix gets more content, CBS gets a new revenue source, and everyone is happy. That is everyone except competitors Amazon and Hulu. Amazon just included unlimited, commercial-free, instant streaming of 5,000 movies and TV shows in its Prime membership package. Hulu, partly owned by CBS? competitors, ABC, Fox and NBC, lists ABC?s Outsourced, Season 1 Episode 16 titled "Take this Punjab and Shove It" as coming soon. You?ll have to deal with Netflix to see your favorite CBS shows, but Hulu still has the rights to more shows from alternative sources.

Among the shows you will be able to catch with Netflix are Cheers, the friendly Boston bar scene series, and two other comedies, Frasier and Family Ties.

Other offerings include Medium, the supernatural show that was just canceled, Flashpoint, and episodes from the original Hawaii Five-0 which should entice subscribers addicted to the newest version which was nominated for Favorite Drama in the 2011 Fan Favorite Awards, presented by TVGuide Magazine.

Fans and executives alike think the CBS-Netflix contract is good news. "This deal recognizes the increasing value of our content in today’s marketplace," said Scott Koondel, President of Distribution, CBS Television Distribution. "More and more, people want to be able to access our programming on a wide variety of platforms."

Ted Sarandos, Chief Content Officer for Netflix. "Netflix is now the only online premium subscription service with shows featured on all four broadcast networks and dozens of cable TV’s biggest brands."

Late last year, even as they were losing Barry McCarthy, their CFO of 11 years, Netflix signed a deal to stream on-line video from the Disney Channel, as well as the ABC Family and ABC TV. The events seemed to work out well for the company. Netflix saw a rise in January of its stock with analysts predicting that the company?s growth should come from "the mainstream adoption of Netflix-enabled devices like connected televisions, Blu-ray players, and smart phones, along with improvements in the streaming user experience and additional content." New customers seem to be attracted to the $7.99 per month stream-only plan introduced in November. Sign-ups account for one third of recent subscribers.

Today saw Netflix stock selling for $212.90. Still not everyone on Wall Street is comfortable with the apparent success. "Netflix’s High Stock Price Is Indefensible" reads the headline on The Street.

On the other hand, Barclays says the recent CBS-Netflix agreement is worth around $200 million to the TV company. CBS is a mass media company involved in Entertainment, Cable Networks, Publishing, and Local Broadcasting. The Entertainment segment includes the CBS Television Network, CBS Films and CBS Interactive. Their stock is going down from a 52 week high of $23.10 to $21.68 today. 

Still, CBS is holding back its biggest shows citing their position that TV comes first and the Web runs second. We won?t be holding our breathe to see which company will fare the best or whose stock will be favored. We?ll just be sitting enjoying old episodes of  the ’60s classic, The Twilight Zone.