Netflix, the video streaming service that’s changing the world of broadcast media, has had a very profitable second quarter.
The company said yesterday that added 1.69 million video streaming subscribers in its June quarter, which was above its forecast of 1.46 million and more than doubled net profits.
Those additional customers joined in spite of the price hike to $US8.99 per month for streaming for new US customers. Existing US customers will continue to pay $US7.99 a month fore the next two years.
The last time the company announced a price rise in early 2011, it shed a million subscribers in a matter of weeks, before the price rise was reversed. Netflix now has more than 36 million subscribers in the US, having added 570,000 in the June quarter, and almost 14 million internationally, a rise of 1.1 million.
The company earned a profit of $US71 million (up from $US29.5 million in the June quarter of 2013, showing the huge profit potential of Netflix), on revenue for the quarter of $US1.34 billion (up from $US107 billion).
Those profits were earned in the US, the company said it lost $US15 million on its international business. Netflix is in the process of changing its old overnight DVD delivery service in the US to a two days operation.
And why is Netflix important? Because it is the face of the future, Nine Entertainment Corp (NEC) has taken a small stake in the local version called Quickflix (QFX), whose shares are trading around one cent yesterday. The Nine moved pushed the price up on Monday. Yesterday it fell back to one cent.
Quickflix is the imitator, Netflix’s success shows the potential, and the threat that’s coming for Nine, Seven and Ten networks.
Netflix shares closed down a few cents overnight at just over $US431.
And still in the US and Time Warner has temporarily shut a loophole in its corporate rules which might have allowed Rupert Murdoch and his 21st Century Fox to storm the company and grab control, in co-operation with other shareholders such as friendly hedge funds.
Time Warner revealed yesterday that its board had eliminated a rule which allowed shareholders to combine to achieve the 15% of the issued shares necessary to call a special meeting of shareholders to consider proposals, such as selling the company. That was tipped to be one of the next steps Murdoch was planning in his assault.
The change to Time Warner’s bylaws came six days after Fox launched the $US85 a share (in cash and non voting Fox shares) worth $92 billion (including Time Warner debt).
Time Warner rejected the approach, saying it saw “significant risk and uncertainty” in a Fox bid and questioned its rival’s “ability to govern and manage” the combined company. (That’s a slap at the presence of sons Lachlan and James Murdoch in Fox’s management).
US brokers are now saying Time Warner’s defensive move sets up the prospect of a prolonged battle with the Murdoch family.
Time Warner management said it would reintroduce the by law after its 2015 annual meeting.
Some US commentators moaned about the poor shareholder democracy (which it is).
Some of those same people have failed to criticise Murdoch and Fox for its poison pill by law which was renewed in June for another year.
That protection is in addition to the control the Murdoch family exercises at Fox with around 12% of the total shares controlling nearly 40% of the voting rights.
Time Warner shares remained above the Fox $US85 share and cash offer price overnight for another night. It’s shares rose a few cents to end at $US86.78. Fox shares were also up a few cents to $US32.72.
