Weekly Pay-TV Notes: Netflix’s New Content Deal, NBCUniversal’s Partnership With WWE

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The pay-TV industry saw significant activity this week, with Netflix entering into content deal with Chinese streaming provider LeTV. Additionally, Comcast subsidiary NBCUniversal and WWE will be forming a more integrated partnership in their advertising campaign. On that note, we discuss below these developments related to the pay-TV companies over the past few days.

Netflix Forms A Deal With LeTV

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Netflix (NASDAQ:NFLX) entered into a content deal with Chinese online video provider LeTV for the popular Chinese drama Empresses In The Palace. [1] The show first premiered in 2011 and has been extremely popular in China and other Asian countries. The deal increases in significance as it could be the stepping stone for a major collaboration between the two streaming companies. LeTV is one of China’s leading online video platforms with more than 5,000 movies and 100,000 TV episodes. Netflix had earlier expressed interest in expanding into China and had stated that they have been exploring different options. [2] We believe that Netflix will need a partner in order to deploy its services in China and LeTV offers a streaming platform the company might be interested in.

Netflix’s stock declined around 2.3% over the week through Thursday. We currently have a share price estimate of $376 for Netflix. For the year 2015, we estimate revenues of $6.63 billion, compared to consensus estimate of $6.75 billion, and EPS of $3.44, compared to a consensus estimate of $3.43.

Comcast And WWE Form A More Integrated Partnership

Comcast (NASDAQ:CMCSA) subsidiary NBCUniversal and wrestling giant WWE (NYSE:WWE) will be forming a more integrated partnership in relation to their joint advertising and media campaigns. [3] NBCU’s USA and Syfy have been broadcasting WWE programs such as Raw and SmackDown for the past many years. In the earlier arrangement, NBCUniversal looked after the sales of TV advertising around the two programs while WWE supervised digital and social media marketing. The new deal will lead to a more collaborative approach that spans across different platforms. As the first major sign-up under the new arrangement, Viacom’s (NASDAQ:VIA) Paramount will collaborate with the two companies for the promotion of its new film Terminator: Genisys.

NBCUniversal and WWE had also renewed their contract last year which ensures that NBCUniversal will keep broadcasting Raw, SmackDown and the reality series Total Divas for the next several years in a deal worth $200 million in annual licensing fees. [4]

Comcast’s stock declined around 5.9% over the week through Thursday. We currently have a price estimate of $62.41 for Comcast. For the year 2015, we estimate revenues of $71.6 billion, compared to consensus estimate of $71.4 billion, and EPS of $3.26, compared to a consensus estimate of $3.24.

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Notes:
  1. Netflix To Show Chinese Drama ‘Empresses In The Palace’; Is It Next Step In Entry Into China?, March 20, 2015, Deadline []
  2. Q4 14 Letter To Shareholders, January 20, 2015, Netflix Investor Relations []
  3. WWE, NBCU Team Up To Grapple With Madison Avenue, March 23, 2015, Variety []
  4. WWE Closes Deal to Keep ‘Raw,’ ‘SmackDown’ on USA Network, Syfy (EXCLUSIVE), May 15, 2014, Variety []