Netflix, A&E Networks apparently at loggerheads over content licensing

There appears to be more than a small breakdown in communications between Netflix (Nasdaq: NFLX) and the folks who bring you cable channels A&E and The History Channel.

The licensing agreement between the two channels--purveyors of such must-see fare as "Storage Wars," "Ice Road Truckers," "Pawn Stars" and "American Pickers" (on The History Channel), and "Dog The Bounty Hunter," "Gene Simmons: Family Jewels," "Hoarders" and "Intervention" (on A&E) comes to a close Friday. Right now, things appear to be unsettled about what that means.

Variety, quoting "sources familiar with talks between the two companies," indicates that the two companies have "strikingly different interpretations" of the situation. Netflix apparently believes the contract is solid, though it recently cut about 40 series and miniseries "because the viewership didn't justify the licensing cost." A&E and The History Channel, however, still must agree to the terms. If they do consent, Netflix would keep 200 to 300 hours of content from the two channels on its site, said the article.

"Content comes into and out of license periods almost daily," Netflix's Chief Content Officer Ted Sarandos said in a statement relayed to the publication. "While we do not comment on our deals and partnerships, expect some of the A&E and History programming to drop and some to remain on Netflix."

Other sources told the publication that negotiations are far from over and that there are still questions about Netflix's insistence on some program exclusivity. An A&E spokesman declined to comment on this.

Interestingly, it seems that A&E could be hurt worse than Netflix if things go awry.

"Netflix has demonstrated an ability to drive tune-in back to new seasons of TV series by providing viewers a catch-up cache of episodes from previous seasons," the story suggested.

Then again, A&E may be looking at a new world of video distribution that now includes fast-charging Amazon (Nasdaq: AMZN) Prime and Hulu Plus and even TV Everywhere initiatives by multiple MVPDs. While A&E owns other channels such as Lifetime, those other channels are not as deeply invested in the deal as A&E and The History Channel, which apparently have the bulk of the top content.

Then there's the final matter of the content itself.

"Unscripted content tends not to command anywhere near the price of scripted in syndication," the Variety story explained. "However, these networks' best unscripted series are often scheduled on air in marathon formats, which suggests they may have greater value than run-of-the-mill unscripted content conducive to the 'binge'-pattern consumption among Netflix subs," the story concluded.

In a final piece of irony, it turns out Sarandos is a big fan of "Storage Wars," which he listed on a corporate blog as among his personal favorites. 

For more:
Variety has this story

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