Is this why the Murdochs are making a mistake with their break up of 21st Century Fox (which could come any day)? Regarding Netflix as the enemy, as they have long treated Apple, Google and now Facebook, the Murdochs at 21st Century Fox (and News Corp) may be making another empire-changing mistake. Netflix is changing and the change asks the questions why haven’t the Murdochs caught on?

A few months ago we reported on how Netflix was starting to look more like a traditional TV network, cancelling shows based on the level of viewer interest, promoting existing programs and structuring storylines around already popular ideas, and extending the series run for highly viewed series (House of Cards being the best example). In other words rewarding success and quickly killing off failures and their costs.

Now there’s more evidence from the US of this change in the way Netflix does business. It has become most noticeable in its international arm which is showing a rising inclination to grab the non-US rights to new or existing programs produced by US networks — just as TV networks or cable giants have done for years. In fact the way Netflix is building itself into the affairs of US TV networks is intriguing given the looming split up of the Murdoch media empire at 21st Century Fox. Could it be that as with Google and Facebook, the Murdochs have again misjudged Netflix and its intentions – looking at it as an enemy and a disruptor when in fact it clearly has ambitions to be a friend (and foe at times) for its legacy media rivals?

As Deadline Hollywood pointed out:

[At] screenings in May, one of the most recognizable new series titles, the CW’s Dynasty reboot, was not shown to international buyers … because the series already had been earmarked for Netflix, which had taken global rights outside of U.S. and Canada.

Other media commentators have pointed to the growing cooperation between Netflix and various networks in the US, especially with the Comcast/NBC empire. There’s the joint deal with CBS All Access/CBS Studios’ on Star Trek: Discovery as well as several series from Universal Cable Prods (which is part of NBC Universal and Comcast). 

Obviously Netflix’s reported US$7-8 billion spending plans for next year (and US$6 billion this year) doesn’t go very far and part of these budgets are being reserved for product produced outside the company. That has been the trend in linear (legacy) TV and cable for much of the past decade (Modern Family for example is a Fox production for ABC).

But Deadline and other media commentators have pointed out that the trend lately at Fox has been to bring all production in house so that the major programs are either Fox properties or Murdoch empire owned and controlled (the 50% owned Endermol Shine). The rationale for this is to try and maximise syndication and other fees from successful programming. That is a reversion to the old thinking in linear TV from the 70’s onwards. It seems to not be working because the production side will be sold in the break up of Fox with Disney the buyer.

Ignoring and treating Netflix as an enemy seems to have cost the Murdochs the size and shape of their empire at 21st Century Fox. Disney used to be accommodating of Netflix, but it seems to want to buy whatever it can from the Murdochs to give it the content scale to make itself unassailable by Netflix and its imitators at Amazon and Apple.

Cable TV was originally started to improve TV reception in parts of the US where free to air reception was weak or non-existent, and then started offering re-runs of old network TV shows, before starting to spend on its own content as subscriber numbers rose and rose. Netflix has started faster, with a multi billion dollar splurge and more than 104 million subscribers in the US and around the world (which is what the entire US cable sector had at its peak 8 years ago).

Netflix knows that by linking with the likes of CBS and NBC Universal it builds up its content offerings and share costs, always a cheaper way to remain viable than going alone and spending and making mistakes. A year of programming mishaps or overspending could leave it as vulnerable as the Murdochs think they are now with 21st Century Fox being “sub-scale” in their view.

Peter Fray

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Peter Fray
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