'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.
Follow Cramer's trades for his Charitable Trust.
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