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Netflix Is Not Coming to Comcast, TWC (UPDATED)

Stocks in this article: NFLX CMCSA TWX TWC AMCX

Here's my take (as in, my researched opinion of what might have happened, considering what the media reported and what my sources tells me): Across the broad media industry, everyone talks to everybody all of the time. Things come up. But just because something comes up doesn't necessarily mean two or more parties are "in talks." An important distinction exists between "talking" and being "in talks." Between being serious or close to doing a deal and having one party float an idea, quite possibly through media leaks, it would like to see gain traction.

As the Hastings-fueled smoke and mirrors rolls on, I reckon something else might have happened on the way to reality.

This next paragraph is pure conjecture and speculation on my part, albeit well-informed conjecture and speculation.

Hastings knew Comcast's New Internet, Streaming Video Deal, which includes Time Warner's (TWX) Home Box Office (HBO), but not Netflix, was about to happen. Pursuant to the receipt of this knowledge, he strategically makes public his company's desire to be part of the traditional cable establishment. What better way to try to steal HBO's thunder than to anticipate the Comcast announcement with a leak of some half-cocked story you know the Netflix-loving media will not only take and run with but frame in the most positive light.

Thanks to Peter Kafka at All Things D for providing a nice visual on exactly what these new Comcast packages entail:

If you follow Netflix and Hastings' history beyond a surface scratch, you know he would much rather see Netflix's name in place of HBO in that Comcast advertisement.

That said, I can confirm the following tidbits:

  • High-level television industry sources note that not only is the talk about Netflix coming to cable premature, but a) there isn't serious interest to make it happen, particularly on the part of Comcast and Time Warner Cable (TWC) and b) when large cable television investors got wind of last week's Netflix in Talks with Cable Companies reports they freaked out, immediately flooding the executive offices of big cable companies with You Guys Can't Be Serious and Must Be Crazy phone calls.
  • Expect more deals like the Comcast one with basic cable, basic Internet, a cable-company backed streaming offering, HBO and HBO GO to appear soon. This is not what Netflix wants, but when Time Warner Cable, for example, announces a similar package (and I'm almost certain it will) it's likely to include HBO, not Netflix.

That said, it would not shock me to see somebody break away from the pack. I could picture a Charter Communications (CHTR), Cox Communications or other smaller cable company doing a deal where it includes Netflix.

But I would be shocked to see a big name such as CMCSA or TWC go the same route.

In an Oct. 21 article, Stelter noted:

(Netflix) also acknowledged that the company was in talks with some cable operators about making Netflix accessible through set-top boxes, but they said that this sort of integration would take years to achieve.

That bit from Stelter and his Oct. 14 piece basically jibes with what Netflix officially stated in its Q3 Letter to Shareholders:

We are open to more of these integrations with cable set-tops around the world (Netflix recently signed an integration deal with the UK's Virgin Media), but given the fragmented technology footprints, we think it will be many years before cable set-top boxes match Internet set-top boxes for Netflix streaming volume.

While they let the Netflix to Cable headlines blare a week or so prior, days before the Comcast/HBO deal goes public, Hastings and his Chief Financial Officer David Wells claim technological hurdles stand in the way of making Netflix part of cable.

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