Netflix renews Friends rerun deal
Latest pact allows AT&T to stream show on upcoming direct-to-consumer platform
AT&T Inc.’s WarnerMedia has reached an agreement in principle to keep reruns of its popular comedy “Friends” on Netflix but at the same time give AT&T the flexibility to put the show on its own direct-to-consumer streaming platform due to launch late next year, a person familiar with the matter said.
The multiyear pact is in the process of being finalized, the person said. Unlike the usual Netflix content deals, streaming exclusivity for “Friends” isn’t guaranteed for the length of the deal.
The unusual structure is a sign of the complexities AT&T will have to navigate as it tries to build its own streaming platform without alienating companies such as Netflix Inc. that spend heavily on acquired products. When Netflix first acquired streaming rights to “Friends” in 2014, the price tag was more than $500,000 (U.S.) an episode.
AT&T’s chief executive, Randall Stephenson, touched on the issue in remarks in November.
“Distribution, when you have premium content, distribution is everything,” he said at The Wall Street Journal’s WSJ Tech D.Live conference in California. “And broad and wide distribution is something I feel very strongly about. And so do I—do I care if ‘Friends’ is shown on Netflix and on a Warner Media SVOD service? Probably not.”
Although “Friends” ended its run on NBC in 2004, and reruns have been on local broadcast TV stations and cable networks including TBS and TV Land for roughly two decades, the show is a strong performer for Netflix.
When the “Friends” page on Netflix was updated to say the show would be leaving the service at year-end, many fans took to social media-sites such as Twitter to complain.
Netflix will continue to be the exclusive streaming home of “Friends” for 2019. After that, WarnerMedia has an option to put the show on its own streaming platforms either exclusively or in a shared window, the person said.
While not having the show exclusively is less than ideal for Netflix, it will also likely mean a reduction in price for the sitcom.
At the same time, WarnerMedia can still count on money from Netflix while also having the content to boost its own startup platform.
AT&T has said it plans to launch three direct-to-consumer streaming services in the fourth quarter of 2019. One service would focus on movies and a second would include original programming and more films. The third tier would be a package of the first two along with classic movies, children’s content and other library fare. AT&T hasn’t yet set a price structure or a name for the service.
WarnerMedia Chief Executive John Stankey told analysts last week that shows currently on other platforms including streaming services could migrate back to the new platform.
“Some of the incumbents should expect that their libraries are going to become a lot thinner,” Mr. Stankey said.
The AT&T approach appears to be more flexible than that of Walt Disney Co., which is also launching its own streaming service next year.
Disney has said it will stop selling its movies to Netflix and will likely take a similar approach with television content, some of which is hugely popular on Netflix including the dramas “Grey’s Anatomy” and “Scandal.”
Speaking at the UBS investor conference in New York Monday, Netflix Chief Content Officer Ted Sarandos said he expects that as AT&T and Disney launch their own direct-to-consumer programming services, acquiring and holding onto library content will become harder.
“Our move into original programming was a bet that some of this stuff was going to happen,” said Mr. Sarandos, adding that if the people who sell old content or create new content for Netflix were to evolve, “they are less likely to sell us programming or produce for us.”
Mr. Sarandos also noted that its deals for many acquired shows have years left to run. In addition, the deals Netflix has for reruns of shows that still make new episodes such as the CW Network’s “Riverdale” will keep the show on the service at least through the end of production of first-run episodes.
The idea of two new competitors doesn’t faze Mr. Sarandos. “There is plenty of room in this business for other players to be successful,” he said at the UBS conference.