'Mad Men' deal a new driver for Netflix stock
Netflix shares are driven by momentum, and a deal to stream the hit AMC show should get them moving.
I love Netflix (NFLX). I love "Mad Men." So, since Netflix might pay between $75 million and $100 million for the ability to stream "Mad Men" into our homes, I guess I should buy a ton of Netflix, right?
But someone else will. Every time Netflix signs a deal that adds content, the stock goes up. Every time a deal is made to take content away or the company announces that it is going to take it away, the stock pauses.
So in this stop-go world, the "Mad Men" deal is a go, especially since the last bearish story thrown at Netflix was that some networks would withhold original programming because Netflix has entered this area. The most finicky, difficult-to-please auteur in the world, Mathew Weiner, is allowing his "Mad Men" to be on Netflix. So you can bet this negative argument -- that is, not enough content is coming to Netflix because of its own competition -- will fall by the wayside.
(I think this deal was done, by the way, because anyone who is artistic and likes movies -- which I believe is the reason most get into the entertainment business, not just for Sammy Glick-like compensation -- loves Netflix!)
As you probably know already, I believe Netflix is a great story, but I am beginning to get more jaded about the stock going up on these content deals. As someone who has waited and bought all of the "Mad Men" box sets, I was more than happy to watch the series that way. I have no mad desire to stream it, and I can't be alone in this. Amazon (AMZN) has done a terrific job of flagging me when the new box sets come in and then sending them to me for little cost.
But we are in a converging world, and Netflix has changed habits incredibly fast. I like to put the "Mad Men" disk in my DVD player and play it on a television, while others watch Netflix on tablets and TVs, and they want it where they want it and when they want it.
In light of that, maybe Netflix got a good deal. More important, though, is that NFLX -- the stock, not the company -- is totally momentum-driven. Nothing drives momentum like the signing of a hard-to-get show that is right up the alley of the Netflix subscriber base.
At the time of publication, Cramer had no positions in the stocks mentioned.
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