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The $400 million-plus reason your favorite TV shows are exiting Netflix, Hulu

Stephen Battaglio, Los Angeles Times on

Published in Business News

The finale of the hit sitcom "Seinfeld" aired on May 14, 1998 and has been ubiquitous in reruns on cable and local TV stations ever since.

But more than 20 years later, its 180 episodes will soon become one of the hottest properties in television again. The streaming rights for "Seinfeld," which has been available for streaming on Hulu since 2015, will be back on the market soon just as media conglomerates Comcast, WarnerMedia and Walt Disney Co. look to shore up content for their new direct-to-consumer streaming services aimed at taking on Netflix.

The demand for the 30-year-old series is the latest example of how streaming has altered not only viewing habits, but also unlocked the value of long-running TV shows that first became hits on the broadcast networks. With nearly 500 scripted TV shows currently in production, iconic shows from the pre-streaming era such as "Seinfeld," "Friends" and "The Office" have become the heavy artillery used on the next front of the streaming wars.

After seeing Netflix eat away at their TV businesses, legacy media companies are targeting the streaming rights for shows that became hits at their studios and networks. And with good reason: They are proven entities that have the ability to capture a younger generation of viewers. Prying them away from Netflix could force the streaming behemoth to depend more on original series, which are riskier and more costly to market at a time when the company's subscriber growth has topped out in the U.S.

"The industry is reducing the odds that Netflix is a TV replacement as all this catalog content is removed," said Michael Nathanson, senior research analyst at MoffettNathanson LLC. "They are now more like a premium channel on steroids. I'd expect that they would be competitive in their attempts to land 'Seinfeld.' "

Netflix may soon get its chance. Hulu's rights expire in 2021, but Sony Pictures Television, which handles the distribution of "Seinfeld," is expected to start soliciting bids in the next few weeks.

 

"We're getting a lot of calls about it," Sony Pictures Television chairman Mike Hopkins told The Los Angeles Times in a recent interview. "We're probably going to go out there with it sooner than we would have because there is so much heat on it right now because of the marketplace. I think it's something a lot of other people will want."

While Netflix is often heralded for its distinctive original programs, its two most-watched shows in 2018 were "The Office" and "Friends," according to Nielsen. Other hits in the top 10 included ABC's long-running medical drama "Grey's Anatomy" and the CW's durable sci-fi thriller "Supernatural," both of which have been churning out episodes for the last 15 years.

The trend did not go unnoticed by media conglomerates as they planned to take on Netflix at its own game. NBCUniversal outbid Netflix to get the streaming rights to "The Office" -- a show owned by its TV studio -- for its new direct-to-consumer service scheduled to launch next year, paying $500 million for five years.

WarnerMedia paid a reported $425 million over five years to get Warner Bros. Telvision's "Friends" away from Netflix and now plans to offer it on its streaming service HBO Max, set to launch in spring 2020.

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