Netflix, Dish walking on eggshells around incumbents

editor's corner

Jim O'Neil

Walking on eggshells can be tricky. Consider Reed Hasting, CEO of Netflix (NASDAQ:NFLX), who has said the video content distribution giant (with nearly 24 million subscribers it now can officially be called a giant) "isn't interested in competing with pay-TV operators" so often that it should be tattooed across his forehead.

He said it during the company's quarterly earnings report last week: "A few media executives are still vocal about their fears of negative long-term impact on MVPD subscriptions from Netflix, but the evidence continues to pile up against their concerns. Our subscribers overwhelmingly enjoy both their Netflix and the variety of sports, current season TV shows, news and entertainment available through MVPDs."

And, he said it again this week at the Wired Business Conference: "There are fears that if Netflix gets bigger, maybe it moves into the current season, recent movies or sports." And, that, he said, isn't Netflix's intent, since it's so "small."

"We're small enough that we don't want to incite World War II or World War III with incumbents" all of whom, by the way, now have fewer subscribers than Netflix does. And, with Netflix looking for a $3 billion year revenue-wise in 2011, some of which also are less profitable.

Charles Ergon, the billionaire owner of Dish Network (NASDAQ:DISH), which last month bought Blockbuster Video at auction, played the "aw, shucks ma'am" game during the company's earnings call on Monday.

"I don't see Blockbuster necessarily being a competitor to the Netflix directly in terms of streaming, because Netflix has a formidable lead and probably insurmountable lead in that business," Ergon said.

Which really, by the way, begs the question, what does Dish have in mind for the dysfunctional retail brand, anyway?

"We think there might be synergies back with Dish Network's business," Ergon said. "We're not sure yet. We're still going to spend some time looking at that, but it's an opportunity that we think that at the price that we got it for that it could make sense for us in the long term."

In short, he doesn't know... and that is not a good place to be after spending $260 million. Maybe that's why he likened the situation to a episode of Seinfeld: "You'll have to just wait and see where it all comes together; It's a little hard to explain it this early in the show."

I think Ergon is playing the wide-eyed role a bit too hammy. "Wow, how about that Netfix? Sure would be great to be just like them. Golly."

And Hastings? Well, he could just take to singing Canned Heat's classic Let's Work Together:

"Make someone happy/Make someone smile/Let's all work together/And make life worthwhile
Let's work together/Come on, come on/Let's work together..."

Or, both fellas could simply fess us and say what's really on their minds, as Soviet Premier Nikita Krushchev so famously did to Western diplomats in 1956: "We will bury you."

But then, that's not very, well, collaborative, now is it?--Jim

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