Scripps Networks Interactive won’t be renewing its Netflix distribution deal when it expires at the end of the year. The programmer dropped the news during today’s earnings call.
According to BTIG analyst Rick Greenfield, the decision comes down to monetization of content.
“Finally, we assessed and analyzed the universe and made the strategic decision not to extend our agreement with Netflix past the end of this year. In the end, it really is not the kind of dual revenue model that best monetizes our content over the long term,” Scripps execs said, according to a tweet from Greenfield.
According to Broadcasting & Cable, Scripps management was asked if the Netflix news meant the programmer would be refocusing on working with traditional distributors or potentially working on a direct-to-consumer offering. CEO Ken Lowe said that Scripps would continue to pursue the dual revenue model of advertising and distribution.
During the most recent quarter, Scripps saw its U.S. Networks advertising revenue jump 6.6 percent but also saw its distribution revenue drop 2.5 percent to $194.3 million due to rate equalization of certain distributor agreements caused by industry consolidation, and subscriber declines.
As Netflix has increasingly put its focus on producing original content -- the service is spending $6 billion per year -- its library has shrunk as more of its licensing deals have been allowed to lapse. Last year, Netflix ended its agreement with Epix and in 2013 the SVOD decided not to renew its deal with Viacom.
Of course, Scripps and Viacom will soon be a part of another high-profile online video service with AT&T’s DirecTV Now launches later this year. Both programmers -- along with others including ABC/Disney and NBCUniversal -- have signed on to be featured in the $35 per month product, though it’s unclear still if all the networks from the media companies involved will be included at that base price point.