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EXCLUSIVE: Major Premium Networks Passed on Series Sony Sold to Netflix

Stocks in this article: NFLXSNETWXCBSAMCX

While this Sony series could end up a "hit" -- whatever that is in Netflix's world of hiding viewership numbers -- you have to wonder why the media gushes over a deal with Sony that wasn't just turned down by networks with more impressive track records than Netflix, but not even deemed worthy of a pilot.

Relatively speaking, it's not expensive to order a pilot. And the big boys wouldn't even do that with a studio -- Sony Pictures -- they all have great respect for and have worked with in the past. But Netflix, basically one of the or the last resort, has no problem ordering thirteen episodes sight unseen.

This is Netflix's mode of operation. Build a brand and an original programming library on hype. On press releases that put pretty faces on less-than-exciting situations. On quantity over quality. The complete antithesis to the strategies that built the HBO and Showtime empires or support the emergence of the story the media really ought to be gushing over -- AMC Networks.

But it works wonders. NFLX stock continues to rise to highs it didn't even see pre-implosion 2011. Why would Reed Hastings and company stop when they have an uncritical media on their side and more money in their own pockets and to throw at Hollywood studios than the Man himself?

It's all fun and games until it doesn't work anymore.

Netflix continues to play with fire. It's the place a big name like Sony can go when it a.) has nowhere else to go and b.) wants to assume very little of the risk associated with original programming, but keep all the rights to future riches if it happens to work out.

The media should be asking if Netflix can outlive money it doesn't have. When will it raise cash again? Will it raise prices? What would such a move do to churn, a metric Hastings also keeps secret from the public?

Particularly on Wall Street, the media and analysts should "model" what Netflix's "profit" would look like if it didn't push billions of dollars in costs off-balance sheet and report contribution profit and margin. It should question Netflix's renewed push to be part of the cable establishment.

But, most of all, the media and, sadly, the analysts shouldn't regurgitate every single (and very expensive) Netflix press release as news, as journalism. It should ask these questions and more. It should do its job and seek the truth behind the smoke and mirrors that comes from executive offices, media relations departments and corporate communication apparatuses.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a columnist and TheStreet's Director of Social Media. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.
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