NETFLIX-CABLE:EXCLUSIVE - Netflix in talks for cable partnership
By Yinka Adegoke and Lisa Richwine
REUTERS - Netflix
In what would ratchet up its competition with HBO, the talks could lead to Netflix becoming available as another on-demand option for cable subscribers through their set-top boxes, according to three people familiar with the talks. If a partnership came to fruition, a cable operator might offer Netflix as an additional option added onto a subscriber's cable bill, according to a fourth person.
Any partnership would be a major about-face for many in the traditional cable industry who had initially seen Netflix as a threat to their $100 billion-a-year business.
Hastings has strongly hinted at investor conferences in recent weeks about the possibility of Netflix one day being a cable channel rival to premium networks like Time Warner Inc's
"It's not in the short term, but it's in the natural direction for us in the long term," said Hastings, speaking at an investor conference last week. "Many (cable service providers) would like to have a competitor to HBO, and they would bid us off of HBO."
While most industry watchers considered Hastings' comments as little more than thoughts about the future, people familiar with the talks said he has already met with senior cable executives to discuss how such a partnership might work. At least one cable operator could experiment with offering Netflix by the end of the year, said one of the people.
A Netflix representative declined comment on any talks with cable operators.
While Netflix offers mainly old TV shows and movies through its Web streaming service, it had been seen as a threat by some cable operators and cable networks worried the $7.99 a month service would lead to customers dropping the much more expensive cable TV package, a fear that has become known in the industry as "cord cutting."
Time Warner Inc
Netflix also faces more competition from incumbents including Verizon Communications'
There are also significant plans still in the works at Google Inc
Even if a deal is reached in the near-term, actually receiving Netflix through a cable provider could still take months to launch. Hastings would first need to rework his licensing deals with programmers since most existing contracts will not allow Netflix to deliver their shows on a cable box, according to a senior programming executive.
Offering Netflix through a cable package could help the streaming service avoid a separate potential clash with cable operators over rising costs for online video traffic over their Internet pipes. Cable operators are the dominant high speed Internet providers in the U.S. and have been trying to devise methods to manage their costs and traffic of online video.
Time Warner Cable
(Reporting By Yinka Adegoke in New York and Lisa Richwine in Los Angeles; Editing Peter Lauria and; Tim Dobbyn)