Blog Coverage: Netflix Reaches Agreement with Comcast

LONDON, UK / ACCESSWIRE / July 6, 2016 / Active Wall St. blog coverage looks at the headline from Netflix Inc. (NASDAQ: NFLX). On Tuesday, July 05, 2016, Netflix’s shares briefly surged pass $100 following the news that it has reached an agreement with cable titan Comcast Corp. (NASDAQ: CMCSA) that will allow customers to stream Netflix through their Comcast X1 set-top box like a regular cable channel. Register with us now for your free membership and blog access at:

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Netflix has over 81 million subscribers and generated $1.8 billion in revenue in Q1 FY16, as compared with Comcast which generated $18.8 billion in revenue for the same period. X1 is Comcast’s cloud-based TV platform which was introduced in 2012. Nearly 35% of Comcast’s 22.4 million video customers have the X-1 platform. The X1 box is expected to be Netflix-compatible later this year and would likely include a Netflix icon within the X1 interface.

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Netflix has signed similar arrangements with cable operators in the U.S. and across the globe. Netflix streaming app is also accessible on Apple Inc.’s (NASDAQ: AAPL) Apple TV, Alphabet’s (NASDAQ: GOOGL) Google Chromecast and Roku web-based service providers.

Strange Bed Fellows

The agreement can be considered to be a huge step, given the occasionally contentious past between the two companies, who contest for viewers with different visions for the future of video entertainment.

In 2012, Reed Hastings, CEO of Netflix accused Comcast of breaching net neutrality by preferring its own web streaming service over other web video providers. In 2014, Comcast forced Netflix to pay a fee for a more direct connection to ensure customers got better video connectivity, a deal that Hastings later compared to an Internet toll. Comcast justified the fee stating that Netflix accounted for a large proportion of the data used on its network. Although Netflix agreed to pay the charges to Comcast, the streaming provider dragged Comcast to the Federal Communications Commission to agree to look into such practices. The FCC announced in February, 2015 that it was prepared to hear complaints about such “interconnection” fees charged by cable providers.

Hasting also vocally opposed Comcast’s proposed $45 billion merger with Time Warner Cable (NYSE: TWX) in 2015, highlighting the risks of having a single company with so much control, the deal ultimately unravelled and eventually led to a Charter Communications (NASDAQ: CHTR)-Time Warner deal.

Benefits

For Netflix, the deal with the number-one U.S. cable provider enables the company to put its service in front of a large pool of potential subscribers, while making it easy for the customers to sign up without requiring them to purchase new hardware. Comcast will likely get a nominal financial payoff for the new members it helps create, but more importantly this will enhance the experience on its set top box and provide customers one more reason to upgrade.

Share Performance

Netflix shares closed Tuesday’s trading session at $97.91, up 1.28%. A total of 25.85 million shares traded hands. The streaming service company’s stock is up 3.53% in the last twelve months.

Comcast’s stock declined 0.41% closing the session at $65.01 on trading volume of 9.16 million shares. The stock has gained 16.73% since the beginning of 2016.

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