Netflix in $1B deal with Time Warner, CBS for content from CW

Further proof that hell has frozen over: Chief Netflix (Nasdaq: NFLX) antagonist Jeff Bewkes, chief executive at Time Warner (NYSE: TWX), has signed off on what's being called "it's biggest deal yet" to bring television content from Warner Bros. Television Group and CBS to the streaming video service.

In a massive, eight-year deal, Netflix will pay the two companies $1 billion for the rights to shows from the CW network--a joint venture between Time Warner and CBS--for at least the next eight years, including The Vampire Diaries and Gossip Girl. The shows could begin streaming as soon as this weekend.

The New York Times said the deal comes after Bewkes spent the last year hammering out guidelines for monetizing content via subscription streaming services like Netflix, Hulu Plus and Amazon (Nasdaq: AMZN) Prime.

"Our rules included bypassing the quick and easy money," Bewkes told the Times. "We established a strategy to responsibly work with Netflix."

The deal is a sign that traditional media companies are seeing new media in a new light, and it's becoming more aware of the potential to monetize content to a growing, youthful audience.

Bewkes has been a strong critic of Netflix. In a New York Times article last  December, Bewkes dismissed the Netflix threat to the pay-TV industry, saying, "It's a little bit like, is the Albanian army going to take over the world? I don't think so."

At the time, he also promised to ramp up prices to Netflix in future negotiations.

CBS chief Les Moonves, meanwhile, has been a far less-ardent critic, even singing its praises like a true convert in August, pointing to the profits the digital deals with Netflix--and Amazon--created for the broadcaster in the second quarter and crowing about how it was "another example of how we are capitalizing on the value of our content by selling it to new distributors without taking away from established revenue streams."

Moonves just last December said the broadcaster would "make (online video) deals when it makes sense," and, he added a nod to Netflix: "Some CEOs think Netflix is the anti-Christ. Others embrace it as the Second Coming. We're somewhere in the middle. Caution is not a bad thing here."

Moonves Thursday said the CW deal "further illustrates how new distribution systems are providing premium content suppliers with additive revenue streams while still preserving traditional monetization windows."

Netflix, meanwhile, which cut its teeth with full-length movies, earlier this month disclosed that TV episodes now make up more than 50 percent of its stream.

For more:
- see this New York Times blog

Related articles:
Time Warner CEO Bewkes offers Netflix a peace offering
Time Warner CEO Bewkes' love-hate relationship with Netflix
Netflix says TV episodes make up more than half of its streams

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