Netflix/Epix deal creates a pay-TV threat
Netflix is clearly gambling that the future is digital.
After Tuesday's agreement, Showtime and HBO should start looking over their shoulder, because make no mistake, Netflix is playing on their turf.
Under the agreement, Netflix subscribers will get to stream box-office hits such as "The Last Airbender" and "Iron Man 2" 90 days after their premium pay TV and subscription deals.
And Tuesday's move only builds on a similar arrangement the company made last month
with Relativity, which gives Netflix the licensing rights to all movies
on which Relativity controls distribution. That amounts to some 14
movies over the next 12 months. Post continues after video:
Less than three years since the subscription rental company launched its streaming service with less than 2,000 titles of dubious quality, Netflix is clearly gambling that the future is digital. By turning its subscribers onto streaming, it will dramatically reduce its overhead. The company plans to spend $700 million on postage next year, on its way to $1 billion in postage fees in the next few years.
How much longer can Blockbuster hold on?
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At $42 a share, the transaction represents a 23% premium to the teen-apparel retailer's closing price on Wednesday.
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