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Netflix's cable venture fruits a production deal with Sony TV

Netflix's cable venture fruits a production deal with Sony TV

By Reuters | Updated: 15 October 2013 11:52 IST

Netflix Inc, in discussions to expand its footprint with U.S. cable television operators, has entered into its first series production deal with a major Hollywood studio.

The company, which streamed political thriller "House of Cards," said it has ordered a new psychological thriller series from Sony Pictures Television and the creators of the FX legal drama "Damages."

The 13-episode first season, from the unit of Sony Corp, will premiere exclusively for Netflix members to watch instantly, the company said on Monday.

"House of Cards," a sleek political drama from a small production company led by actor Kevin Spacey, was released in a similar manner by Netflix early this year. Its success with critics elevated the stature of progamming delivered solely over the Internet, a field that is attracting the biggest names in Silicon Valley and a roster of A-list Hollywood stars.

Cable television operators have been leery of the potential competition presented by Netflix and other Silicon Valley newcomers, but that hesitation may be fading.

Netflix, which began as a video rental service, is discussing with several U.S. cable operators the inclusion of its streaming video service on their set-top boxes, a source said on Monday, helping to boost the company's shares nearly 8 percent.

Netflix is in talks with companies including Comcast Corp and Suddenlink Communications, said the person, who is familiar with the discussions. The talks were first reported by the Wall Street Journal.

A sticking point in discussions has been the direct connection of the Netflix network to the cable companies' internet service provider systems - a set-up that Netflix believes will offer consumers the best experience.

Analysts said such video content deals with cable operators have been anticipated. "I think these things are going to become ubiquitous on television sets of the future," said Morningstar analyst Michael Corty.

Nevertheless, he said shares of Netflix are "over-valued" with most of the company's growth potential already priced into the stock.

Netflix shares rose $23.51 to close at $324.36 on the Nasdaq exchange.

Last month, two European cable companies -- Sweden's Com Hem and Virgin Media in Britain -- struck deals to allow their customers to access Netflix through Tivo set-top boxes.

Netflix Chief Financial Officer David Wells, speaking at a Goldman Sachs investor conference last month, said that the company was willing to strike similar deals with U.S. cable companies.

© Thomson Reuters 2013

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