Why Netflix (NFLX) Spent $80 Million to Keep Friends for Another Year

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NFLX – After a brief scare on Monday, Netflix confirmed Friends would remain on the streaming service “throughout 2019.”.


After a brief scare on Monday, Netflix confirmed Friends would remain on the streaming service “throughout 2019,” forestalling any further freak-outs among fans who’ve grown accustomed to easy, on-demand access to the enduringly popular 1990s sitcom smash. But that doesn’t mean the Central Perk gang will always be there for you — at least not on Netflix. There remains a not-insignificant chance that, as soon as a year from now, Friendswill leave the streaming giant and move to a new subscription-based TV offering being put together by AT&T-owned WarnerMedia (the company that controls the rights to the show). So could the Friends-pocalypse still actually come to pass? And if it does, what will it mean for Netflix? Here’s what we know.

Netflix doesn’t want to go on a break with Friends

It’s very clear Netflix considers Friends Must-Stream TV: The company is paying Warner Bros. Domestic Television Distribution close to $80 million to keep the show as part of its vast programming library through 2019, an entertainment industry insider familiar with the deal tells Vulture. (Reps for both companies declined to comment on the terms of the deal.) Even for Netflix, that’s a lot of money. “Nuts” was the one-word answer a top agent used to describe the payout. Another agent, reflecting on the current state of the showbiz economy and Netflix’s run of huge overall deals with talent, wrote in an email that the sum sounded “reasonable to me because WHAT IS FUCKING REASONABLE ANYMORE?????” Still, the $80 million figure actually may not be completely out of step with other deals Netflix has made for desirable TV shows. Another agent with general knowledge of Netflix’s spending on network reruns says it’s not unusual for the company to drop $10 million per year on a moderately successful series with 100 or so episodes in its library. Given that Friends made 236 episodes over its 10-season run, and was a top-five show in all but its first season, $80 million is not quite as ridiculous as it sounds.

As for its current performance, Netflix famously doesn’t release viewing statistics, so there’s no way to know for sure how many people watch Friends on the service. But Netflix content chief Ted Sarandos told me last spring the series was very much a hit on the site, and not just among American audiences. “Friends is hugely popular all over the world,” he said. And indeed, given the depth of other content Netflix has in its library, it’s not a stretch to suggest that the company wouldn’t be paying this much forFriends if it weren’t one of its most popular titles. Remember: Netflix execs regularly point out that they make programming decisions based on what their subscribers want. Clearly the data is telling Netflix execs Friends is worth the high price tag. Netflix also wasn’t the only streaming service interested in making a deal for Friends — Warner Bros. entertained offers from multiple bidders, a person familiar with the situation tells Vulture. (When I asked Sarandos about the state of Netflix’s Friends licensing agreement earlier this year, he told me it would be “determined by what other buyers are circling it … There will be competitors.”)

Another detail underscoring the show’s value: Netflix’s deal with Warner Bros. includes a provision that could result in Friends’ streaming on both Netflix and WarnerMedia’s upcoming streaming service, which is currently scheduled to launch next fall. It’s not unprecedented for Netflix to share rerun rights on a show: CBS Corp.-owned Cheers, for example, can be seen on multiple on-demand services in addition to Netflix. But Cheers doesn’t cost very much and isn’t anywhere near as high-profile as Friends. That Netflix seems open to a future deal in which it is the non-exclusive home to Friends is telling. (Worth noting: If Friends ends up streaming on the WarnerMedia service, Netflix will almost surely pay a lot less for it.)


Netflix Inc. shares were trading at $275.33 per share on Wednesday afternoon, down $14.97 (-5.16%). Year-to-date, NFLX has gained 43.43%, versus a 2.59% rise in the benchmark S&P 500 index during the same period.

NFLX currently has a StockNews.com POWR Rating of D (Sell), and is ranked #27 of 55 stocks in the Internet category.


This article is brought to you courtesy of Vulture.

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