July 18, 2012 8:53pm PT by Alex Ben Block
Netflix's Ted Sarandos to Cable Companies: Don't Try to 'Block Us' (Video)
Netflix chief content officer Ted Sarandos isn’t sympathetic to satellite and cable systems whose executives complain about having to pay high rates to carry channels that also sell shows to the popular streaming service.
“We are faced with increasingly aggressive cable operators who want to do more deals for less money and who try to block us,” Sarandos said Wednesday at The Hollywood Reporter's sixth annual Power Lawyers breakfast, in response to questions from THR news director Matthew Belloni.
Sarandos said that airing old episdoes on Netflix actually benefits cable companies and channels by building their audience. He cited the AMC show Mad Men as an example. During the months between the last and current season of the series, Netflix introduced the critically acclaimed show to a whole new audience. “Then, miraculously, a million more people showed up to watch new episodes when they premiered,” Sarandos said at the annual gathering of America's top entertainment attorneys at the Peninsula in Beverly Hills.
However, he lamented, “in return for having built the ratings, AMC gets into a fight with cable operators [most notably satellite service Dish Network] because they sell to Netflix.”
The truth, said Sarandos, is that for every new innovation that has come along, from pay TV to VOD to streaming, it has actually expanded TV viewing.
Sarandos said Netflix, which has spent $2 billion on content in recent years, will continue to be very aggressive in going after movies and TV shows that otherwise might end up on HBO, Showtime or Starz, among others. He pointed out the company already has major deals in place for the pay TV windowing of movies with Relativity Media, Epix (which includes movies from Paramount and Lionsgate), Weinstein Co. and DreamWorks Animation (which begins in 2014), among others.
Pay TV deals tend to run for years, but Sarandos said as they come up for renewal, Netflix will be part of the discussion. “We’re actively pursuing every pay TV deal,” he declared.
Netflix's current focus is on one-hour serialized dramas, he said, including David Fincher’s House of Cards, starring Kevin Spacey. He says serialized dramas are “an area of the business that is challenged,” for the networks but works for Netflix where they encourage viewing of the shows in sequence, all in one sitting if the viewer desires. “For us,” says Sarandos, “it’s a real sweet spot.”
Netflix currently has about 26 million subscribers in the U.S. and is rapidly expanding around the world. How big can it get? Sarandos thinks there is lots of room left to grow because Netflix is part of the next generation of viewing, which he says will be more about video-on-demand than watching show in a fixed pattern. “We could be in 100 million homes,” says Sarandos, adding: “We want to drive the this entire migration of the future of entertainment.”
The Power Lawyers program opened with Paramount Pictures Chairman and CEO Brad Grey presenting The Hollywood Reporter Raising the Bar award to Michael Fricklas, longtime general counsel of Viacom.
“The name (of the award) is perfect for Michael,” said Grey, “because that is what he does seemly every day.”
Grey credited Fricklas with playing an important role when Viacom acquired Paramount, when it acquired CBS and when it split the companies into two corporations in 2005. “He’s really been part of the fabric of what has become Viacom,” Grey said.
Fricklas, in accepting the award, focused on the battle against piracy. “The issue now is whether the public will pay anything for content,” said Fricklas, noting how frustrating this is for those who own the rights to intellectual property.
He said that piracy hurts individual artists, technicians and executives who create, develop, produce and distribute that content. He declared that those who push piracy are “celebrating lawlessness.”
He asked that everyone who cares about the issue of piracy to blog, write, speak out and communicate to protect not just companies but also the musicians and artists who are hurt by these illegal actions.