Netflix Inc. is seeking to amend its programming deals with major entertainment studios to allow the streaming giant to put content on an advertising-supported version of the service, reports The Wall Street Journal citing people familiar with the matter.
Among the studios Netflix has begun talks with are Warner Bros., which makes the hit stalker drama “You”; Universal, producer of the dark comedy “Russian Doll”; and Sony SONY Pictures Television, producer of “The Crown” and “Cobra Kai,” the people said.
In addition to shows created specifically for Netflix, the company also will need to renegotiate agreements for the old television shows it carries, such as “Breaking Bad” from Sony and “NCIS” from Paramount Global.
Obtaining such permissions is crucial for Netflix if it wants an ad-supported tier to offer a catalog of programming as robust as the lineup in its commercial-free plans. While Netflix makes a large amount of its own content, it also licenses many of its original shows and acquires content from other companies.
“Any distributor being approached by Netflix is going to take steps to ensure they get proper value,” said Jeffrey Schlesinger, a former president of Warner Bros. Worldwide Television Distribution who now heads the media advisory firm Former Bros. Media LLC.
Amending deals isn’t unheard of in the industry. When Netflix wanted to offer customers the ability to download content, it had to renegotiate its licensing agreements with outside suppliers. The price tag for download rights was an additional 10% to 15% of the agreement, one studio executive said.
Netflix has told content suppliers it wants to debut an ad-supported version of its service by the fourth quarter of this year. The move comes as the world’s biggest streaming service seeks a new revenue stream and source of subscriber growth. In April, the company posted its first subscriber loss in more than a decade.
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