NATPE 2011: Netflix's Sarandos: We Are Content Community's Friend

Head of content says he will make deals with HBO, sees market solutions for net neutrality, attributes cord cutting to economy

By Melissa Grego -- Broadcasting & Cable, 1/25/2011 10:31:59 AM

Complete Coverage: NATPE 2011

Updated at 11:22 a.m. ET

Netflix is the content business' friend. That was the message from the company's chief content officer Ted Sarandos, who positioned the company as a solution for many of the industry's most confounding problems, during a Tuesday morning interview at NATPE in Miami.

The exec characterized Netflix's relationship with studios as "very strong," in an interview with VideoNuze Editor Will Richmond. Sarandos acknowledged there is "a lot of anxiety" about the dramatic shifts in customer demand for more on-demand viewing and the question of how to monetize that viewership. He touted Netflix as a "model around time-shifted content people are willing to pay for."

Sarandos positioned Netflix as a way to "plug the holes" presented by weak sales for off-net syndication of serialized content, and a complement to pay television as it drives viewer interest and awareness of originals and helping to pay for the cost of content by paying license fees for it. "We are writing very large checks" and "keeping viewers engaged," he said.

He contended that Netflix is a complement to all forms of TV-including HBO, whose execs have traded words in the press with those of Netflix. He called HBO the "gold standard" for premium subscription TV. "Their strategy is about exclusivity and I respect that," he said. "Them being a great seller and us being a big buyer, we'll eventually find a way to do business that is great for both of us."

"HBO has no intention of doing a streaming deal with Netflix, as we believe our value is derived from high-quality, exclusive content," an HBO spokesman told B&C on Tuesday. Netflix gets HBO DVDs but does not have any streaming rights to HBO programs.

Sarandos said he expects to aggressively bid against HBO for the Warner Bros. movie window that opens up in 2014, calling it a great thing for Warner Bros., since it ups the price for the package, and a not great thing for HBO for the same reason. "I think that's why there's aggravation and why colorful quotes show up in the press," Sarandos said, alluding to comments made by Time Warner boss Jeff Bewkes to the New York Times last month. Bewkes said he was not worried about Netflix being a threat to major media companies, relating the idea to that of the Albanian army taking over the world.

Sarandos said "no question" Netflix could go toe-to-toe with HBO to bid on movies. However, he said the company is not "going head-to-head with HBO" as a whole "because we're not in the original content business. We're definitely not in the core business of pay TV, which I would say is high-cost original programming."

Sarandos also weighed in on other big issues of the day, shooting down the notion that on-demand services such as Netflix contribute to "cord-cutting" and stating that he sees net neutrality as something of a market problem for which there are market solutions.

"The measurable effects of people canceling their cable is nearly completely attributable to the economy," Sarandos said of cord cutting.

And while the company is in support of net neutrality regulations due to the fact that "all things being equal, we'd like more protection than less," he said it's not necessary for Netflix's survival. The market will work itself out, he said, pointing to the big profits cable derives from its broadband delivery and the fact that people don't upgrade broadband services to get their email but rather "broadband services like ours."