Netflix Agrees To Delay Distribution Of New Releases From Fox And Universal

Reed Hastings

Universal Studios and Twentieth Century Fox, which are both trying to protect sales of their DVDs, have now gotten Netflix (NSDQ: NFLX) to agree to delay renting their new titles until 28 days after they are first available for purchase in stores. In exchange, both studios are letting Netflix make more of their titles available for instant streaming. The deals follow a similar one Warner Bros. (NYSE: TWX) reached with Netflix in January.

During negotiations, Netflix CEO Reed Hastings had publicly acknowledged the impact that cheap rentals were having on DVD sales and said that his company was willing to take new releases at a later date, as long as the studios gave Netflix a significant discount. Netflix says its deal with Universal will give it the “benefits of reduced product costs;” it does not make a similar assertion about Fox.

Both deals do however let Netflix builk up its instant-streaming catalogue. Fox, for instance, says it will make all prior seasons of several hit TV series, including 24, Bones and King of the Hill, available to Netflix instant-streaming subscribers, while Universal says it is doing the same with some “premium domestic titles,” like Gosford Park.

One winner may be Blockbuster (NYSE: BBI), which itself has been negotiating with the studios so it can rent new releases on the same day they are available for sale. So far, it has gotten Warner Bros., Sony (NYSE: SNE) and Fox to agree—and has been loudly advertising its advantage over Netflix and Redbox when it comes to Warner Bros. titles.


News Flash: Blockbuster Execs Still Got Bonuses, For “Fiscal Leadership”


That’s about the only thing you can say working for Blockbuster (NYSE: BBI) now, nevermind those movie studio deals that it closed over the last few weeks. Even Icahn’s given up, further cutting his stake, according to an SEC filing earlier today. But, in its proxy filing couple of days ago, the company outlines compensation for its top execs for 2009, and somehow they all manage to eke out some bonuses for the year.

Here are a sample of the phrases used to justify those, despite it being on the brink of bankruptcy: “their contributions to the completion of a $675 million senior secured notes offering during difficult economic conditions”; “led the efforts to complete the offering”; “Because we believe the completion of the notes offering will enhance our liquidity and improve our operating flexibility, we determined that it was appropriate to compensate these named executive officers for their contributions to the transaction”; “awarded in recognition of his leadership in the amendment and extension of our revolving credit facility and cost-cutting efforts”; etc. Note none of these are for actual business development performance, just financial engineering.

Click on the image below for the full compensation summary chart.

Sony And Fox Give Blockbuster A Break

Movie Rentals

The big studios are coming to Blockbuster’s aid. Two weeks after Warner Bros. (NYSE: TWX) said it would provide Blockbuster (NYSE: BBI) with DVDs and Blu-Rays on the same day they are available for sale, Sony (NYSE: SNE) and Twentieth Century Fox say they will do the same. Unlike Warner Bros., Sony and Twentieth Century Fox have not gotten Netflix (NSDQ: NFLX) and Redbox to accept a delay on new releases. If they do so, however—as is expected—it would mean that Blockbuster would have new titles from all three of those studios for rent before its rivals do.

Sony and Twentieth Century Fox also say they will provide “new enhanced payment terms” to Blockbuster, in exchange for a “first lien” on the assets of its Canadian subsidiary.

Blockbuster says in its announcement that the agreements will “continue a steady supply of top-rated movies” and “are part of our overall recapitalization effort to drive top-line performance while reducing debt and operating costs.”

Will it be enough? Blockbuster warned last month that it might have to file for bankruptcy protection because of its heavy debt load—and one major backer, investor Carl Icahn, has essentially given up on the company.


Want to Watch TV on Your iPad? Pay Up.

In the run-up to the iPad launch, I noted that the TV networks were pretty much sitting this one out: If you want to watch one of their shows for free, you’ll need to do it on something other than Apple’s new gadget.

But just to make sure I wasn’t missing anything, I asked the folks at Clicker, the online video guide, to tally up what kinds of video options the iPad offers for now. And I got the same answer: Plenty of full shows if you pay, very little if you don’t.

Netflix app (requires subscription plan starting at $8.99 per month):
10,000 TV episodes
6,000 movies

iTunes (sold via individual downloads):
25,000 TV episodes
3,000 movies
3,000 music videos

Approximately 200 full TV episodes via app. None via Safari browser.

One full TV episode and clips

No full TV episodes. Some broken up into low-quality clips on mobile site.

No full TV episodes.

Cable networks (FX, AMC, USA, etc.):
No full TV episodes

Clicker would also like us to note to that it has access to another 175,000 clips that will work on the iPad, from sources ranging from ESPN to CNN to Next New Networks. Noted! But if you’re waiting to watch complete episodes of programs like “30 Rock” or “The Daily Show” for free on your iPad, you’re going to be disappointed for quite some time.

And to be clear: This is a business development issue for the networks, not a technical one. They certainly know how to convert their videos from Adobe’s (ADBE) Flash standard to the HTML5 standard Apple (AAPL) is championing–they’re just not sure they want to. We’ll get to the internal debates some of the networks are having on this topic down the line.