By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) ? Netflix Inc. saw a big advance notched during the first six weeks of the year blunted somewhat Monday after it lost out on scoring the exclusive rights to movies from Sony Pictures to cable TV network Starz.
Netflix /quotes/zigman/87598/quotes/nls/nflx NFLX -1.70% ?was down 2.7% at $176.15 a share after Starz /quotes/zigman/13671225/quotes/nls/strza STRZA +7.44% ?said it reached a deal with Sony /quotes/zigman/197524/quotes/nls/sne SNE +0.47% ?to extend the content agreement between the network and the studio to 2021 from a previous end date of 2016. Starz shares rose as much as 9% after the deal was announced.
The deal covers Sony films such as ?Zero Dark Thirty? and ?Men In Black 3,? which will be shown on Starz this year.
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Netflix had no comment about whether it had made an offer for the Sony content, as some analysts estimated the deal?s value at $2 billion.
Despite the setback Monday, this has so far been an upbeat year for Netflix. The company?s stock price has climbed 92% in about six weeks, and is up 134% since Dec. 4, 2012, when it announced an exclusive agreement to carry films from the Walt Disney Co. /quotes/zigman/245568/quotes/nls/dis DIS +0.16% ?beginning in 2016.
Netflix also reported better-than-expected fourth-quarter results and exceeded its estimates for new U.S. streaming video subscribers. See: Netflix scores upgrades as stock soars.
And on Feb. 1, Netflix premiered its original drama ?House of Cards? starring Kevin Spacey, making all 13 episodes of the show?s first season available for instant streaming at the same time. See: Netflix building a new TV model with ?House of Cards.?
?House of Cards? starring Kevin SpaceyThe move to add original content has given many analysts more reasons to get behind Netflix at just about any time since the company?s stock peaked at $304 in July 2011. That was before a slate of missteps, including what was at the time an unpopular decision to split the company?s subscriptions into separate plans for DVD rentals and video streaming.
?Original content addresses a broader audience with the ability to introduce new subscribers to the service,? wrote Morgan Stanley analyst Scott Devitt in a recent research note.
/quotes/zigman/87598/quotes/nls/nflx NFLX 177.89, -3.08, -1.70%Devitt, who also raised his price target on Netflix?s stock to $200 a share from $160, said he believes the growing impact of original content ? which will include this year?s release of the new season of the TV show ?Arrested Development?? gives the company the opportunity to reach 50 million video-streaming subscribers across all its geographical regions. At the end of its fourth quarter, Netflix had more than 33 million total streaming subscribers, with 27.15 million in the U.S.
Still, while new, original shows have helped give Netflix a boost in the eyes of many investors and analysts, not all are sold on the company?s content moves. Richard Tullo, of Albert Fried & Co., said Monday that losing out on the Sony content to Starz might prove to be critical when it comes to keeping customers from canceling their Netflix subscriptions.
?We think these rights are critical for Netflix, as with the rights, Netflix would have access to roughly 40%, of the top 100 motion pictures,? Tullo said. ? We think they needed these rights to limit [subscriber] churn and grow streaming subscribers and offset the losses we expect from declining DVD subscriptions.?
Tullo has an underweight, or sell rating, and $68-a-share price target on Netflix?s stock.
/quotes/zigman/87598/quotes/nls/nflx
US : U.S.: Nasdaq
Volume: 4.18M
Feb. 11, 2013 4:00p
/quotes/zigman/13671225/quotes/nls/strza US : U.S.: Nasdaq
Volume: 7.30M
Feb. 11, 2013 4:00p
/quotes/zigman/197524/quotes/nls/sne US : U.S.: NYSE
Volume: 1.97M
Feb. 11, 2013 4:00p
Rev. per Employee$513,683
/quotes/zigman/245568/quotes/nls/dis US : U.S.: NYSE
Volume: 6.32M
Feb. 11, 2013 4:00p
Rev. per Employee$258,072
Rex Crum is a reporter for MarketWatch in San Francisco. Follow him on Twitter @mktwcrum.
Source: http://feeds.marketwatch.com/~r/marketwatch/internet/~3/3PZw81x09vI/story.asp
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