NEW YORK (TheStreet) -- There's no reason to go through a whole slew of "ifs" or "buts" or "just waits" on Netflix (NFLX). The time for that has passed.
The company blew out its most recent quarter. Apparently, Time Warner's (TWX) HBO is now Netflix's bitch. That's what Reed Hastings said so it must be true. Actually he said "Netflix bitch" referring to HBO CEO Richard Plepler's apparent HBO GO password, but, given the editorial clearance by Hastings to start using and playing on the word "bitch," the media took the ball and ran.
Sort of like it took the ball and ran with the wholly false NPD study that said people are ditching premium networks. The one that somehow led Business Insider's Jim Edwards to conclude that HBO has lost 15% of its subscriber base in the last few months. That's the height of misleading irresponsibility, journalistic criminality and plain doing math without actual numbers. The one that NPD had to retract.
Anyway, who am I to pass up the opportunity Hastings opened? If everybody else is doing it ... For what it's worth, I spoke with Plepler this morning. Actually, we emailed, but that's the same as "speaking" and "talking" in the modern digital era. Full disclosure: I consider Plepler a friend. The details of what he said to me are inconsequential to the takeaway that you shouldn't expect to see HBO enter into a pissing contest with Netflix. (I assume that slight of phrase is OK given the whole "bitch" thing, right?). Anyhow -- and this is me talking -- Reed Hastings is trying to create the perception of Netflix versus HBO as the Yankees versus the Red Sox or something like that. They're peers. Both play in the same very major league. It's a great and epic rivalry. That's an obvious move by Hastings. Reality has never meant much within the context of the Netflix story. But, clearly Hastings has succeeded. That said, you rarely see HBO engage in these public displays of relative immaturity. There's a reason for this. They're not the underdog. And their business is doing quite well. Better than ever in fact. Buzzfeed did a nice interview with Plepler the other week. There's lots in there worth listening to. No cursing. Very few one liners. Interestingly, Plepler speaks graciously and intelligently about Netflix at the very beginning ... on Page Two ... along with more analysis and Jim Cramer's take ...
That's pretty much what Plepler has been telling me for that last year or so.
I'm done trying to throw cold water on the Netflix story. I've already made enough of a fool of myself referring to off-balance sheet obligations (now north of $7 billion), the need for Netflix to do even more debt financing (another $400 million), feeble free cash flow (now at $5 million) and the reality that Hastings would give his right arm to license HBO programming. He probably blew up even the most remote possibility of that happening (it wasn't going to happen anyway) on Wednesday's conference call.
Anyhow, I like being wrong. Now I know how Amazon.com (AMZN) bears feel. But, more so, it's a humbling experience to do the work and, much to your surprise, not see the story play out the way you thought it would and on your timeline. As much as I want to disagree, TheStreet's Jim Cramer probably said it best in this video. What he's basically saying here is the Netflix story, while in different spaces, really isn't all that different from the Amazon story: That's life in this business. I'm the kind of guy who actually appreciates getting taken down a notch from time to time. I have been this way ever since I was a 24-year old, who got fired from the best job he ever had (until now) back in 1999 in Dallas, Texas. So if being Netflix's bitch keeps me humble and makes people tempted to get long the stock on the way to $400 wealthier, I'm all for it. I'll take the spanking and like it. Follow @rocco_thestreet --Written by Rocco Pendola in Santa Monica, Calif.
Stock quotes in this article: NFLX, TWX, AMZN Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks. Rocco Pendola is a columnist for TheStreet. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.
No comments:
Post a Comment