Netflix Spending on Streaming Content Rises to $1.18 billion

Regulatory filing also discloses royalty talks with music rights organizations

 

NEW YORK -- Netflix had commitments to spending $1.18 billion as of Sept. 30 to pay Hollywood studios for rights to stream content as it continues to evolve its business online, ALLThingsD's MediaMemo (http://mediamemo.allthingsd.com/20101027/those-bits-arent-free-netflix-could-be-racking-up-a-2-billion-content-tab/) reported Wednesday.

That's the amount that Netflix disclosed in a regulatory filing Tuesday for the latest quarter, up from just $229 million three months earlier.

The gain is driven by a five-year content deal struck previously with premium TV service Epix. The latest figure seems to confirm that the Epix deal costs Netflix nearly $1 billion a year.

Next year, Netflix's current content deal with Starz expires, and the pay TV service is expected to ask for a major fee increase if it renews it.

In its regulatory filing, Netflix also said it is currently involved in negotiations with performing rights organizations that hold the rights to music used in connection with streaming content. It currently accrues for estimated royalties and adjusts accruals based on changes in estimates. The outcome of these negotiations is uncertain though, Netflix cautioned.

"Additionally, pending litigation between certain PROs and other third parties could impact our negotiations," it said. "If we are unable to reach mutually acceptable terms with the PROs, the company could become involved in similar litigation."

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