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 said 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 paranormal thriller Supernatural, both of which have been churning out episodes for the past 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 debut next year, paying $500 million for five years.
WarnerMedia paid a reported $425 million over five years to get Warner Bros. Television's Friends away from Netflix and now plans to offer it on its streaming service HBO Max, set to debut in the spring.
Seinfeld likely will command a price in the same range as The Office and Friends, according to several network and studio chiefs. WarnerMedia, Comcast and Netflix are all expected to compete for the sitcom along with Hulu (which paid what at the time was considered an eye-popping figure of $160 million in the five-year deal made in 2015).
The Big Bang Theory, the long-running hit CBS sitcom produced by Warner Bros. Television that finished its 12-year run in May, will also likely fetch a comparable sum. HBO Max is in talks to license The Big Bang Theory and Two and a Half Men, online publication Deadline reported.
Using library content to build a new TV platform isn't new. When cable channels proliferated in the 1980s and '90s, old broadcast network series were their lifeblood. The Andy Griffith Show, the biggest hit sitcom of the 1960s, was among the most popular shows on TBS. Repeats of NBC's addictive procedural crime drama Law & Order turned A&E into a viewer destination.
Netflix declined to comment for this article.
The Los Gatos, Calif., company, which is building a large presence in Hollywood, is a one-stop-shopping streaming experience for many viewers. The concept of getting consumers to pay monthly fees for multiple services as their favorite shows spread out among them is one of the challenges new entrants face.
Still, the emerging competition is not something Netflix can ignore.
Ted Sarandos, chief content officer at Netflix, has said publicly that Netflix fully anticipated other entertainment companies getting into the streaming business and that it eventually would have to wean itself from outside program suppliers -- a major reason why the company invested $12 billion on content in 2018 and is investing $15 billion this year.
During the company's second-quarter earnings call, Sarandos noted that its subscriber base continued to grow after losing all of its programming from Fox and Nickelodeon in recent years.
The company reported a loss of 130,000 subscribers in the U.S. last quarter -- the first downturn since 2011 -- attributed to a price increase and a lack of new original shows. While Netflix has touted its growth opportunities globally, a recent report from consulting firm PwC said the company's U.S. subscriber level may have reached its peak at 60.2 million.
Nathanson does not see the loss of library content having a major impact on Netflix's ability to add subscribers. But he believes Netflix will need to step up the marketing for its original series, many of which don't generate the kind of attention as its biggest hits Stranger Things and Orange Is the New Black.
The pressure on media conglomerates to use their most potent properties to build competitors to Netflix presents an opportunity for Culver City-based Sony Pictures Entertainment as an independent studio that can make deals with all of them. The company has a vast library of well-known TV series, including the 1970s classics from producer Norman Lear, who has experienced a renaissance of late with ABC's recent live stagings of episodes of All In the Family and The Jeffersons.
"With so many of these services and lots of resources going after them, our best positioning is to be the one selling picks and shovels during the gold rush," Hopkins said. "That's our business right now."
SundayMonday Business on 08/18/2019