Netflix, A&E relationship falls apart at deadline

Netflix (Nasdaq: NFLX) and A&E and the History Channel have parted ways (at least for now) after content carriage negotiations fell through. The result is that Netflix will no longer carry A&E and History Channel programming like "Storage Wars," "Pawn Stars," "Ice Road Truckers," "American Pickers," "Dog the Bounty Hunter," "Hoarders" and other reality shows carried on the two cable channels--at least until a new deal is cut.

Earlier this week, inside sources had already hinted that the two sides were coming apart, even as Netflix evinced confidence that things would be fine. Netflix was planning to drop some programming (roughly 40 miniseries) because of low ratings, but industry sources indicated the programmers didn't quite agree with that.

Right now, the content loss is being compared to a February licensing disagreement between Netflix and Starz, when Netflix lost the rights to air movies from Sony (NYSE: SNE) Pictures and Walt Disney Co. (NYSE: DIS).

Consumers have yet to weigh in on the losses, but the financial community made its voice heard again as the company's stock took a hit. A pair of Macquarie Securities analysts, Tim Nollen and James Kopelman, even produced a 35-page financial report that predicts, among other things, that Netflix's profit margins "will always be less than optimal, primarily because movie studios are demanding increasingly bigger prices to license their content," according to a story in DTV USA Forum.

At the same time Netflix is being asked to pay more--and new subscriber numbers are waning--competitors like (Nasdaq: AMZN), Hulu Plus and YouTube are close in the rear mirror of the streaming media provider and getting ready to pass, according to some analysts.

"The market dynamics [have] led analysts to question whether or not Netflix's streaming media empire is soon coming to an end," the DTV USA Forum story speculated.

Netflix, for its part, continues to maintain that the ship is sailing in the right direction. CFO David Wells this week told the Goldman Sachs Communacopia conference in New York City that international business, alone, represents a "massive market opportunity," according to a story in Variety.

For more:
- see this story in DTV USA Forum
- check out this story in DTV USA Forum
- read this story in Variety (sub. req.)

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