‘The Office’: Why NBCUniversal Is Paying $500M to Pull the Hit From Netflix
Michael, Jim, Pam and the rest of the Dunder-Mifflin gang are on the move and they aren’t the only popular television characters expected to decamp from Netflix for new streaming services over the next few years.
NBCUniversal‘s June 25 announcement that it is pulling The Office from Netflix when that deal ends at the start of 2021 is the latest shot across the bow in the streaming wars, a signal that one-time TV hits are the new battlefield as the media giants fight to lure viewers to their direct-to-consumer offerings.
Disney was the first to pull the trigger, revealing in 2017 that it would remove its movie library from Netflix as it began to put the pieces in place for Disney+. Others are expected to follow, including WarnerMedia, which after re-upping its deal with Netflix to keep Friends on the service for all of 2019, is likely to want the sitcom exclusively for its own soon-to-launch service.
“NBCU’s strategy was well-telegraphed so this should come as a surprise to no one,” notes BTIG media analyst Richard Greenfield, alluding to the company’s upfront presentation in May when sales chief Linda Yaccarino told a packed Radio City Music Hall that iconic characters like Jim and Pam would be “coming home.”
But the choice was not as simple as whether NBCU would continue to license the popular show, which aired on its broadcast network from 2005 to 2013, to Netflix or take it back for its still unnamed forthcoming service. Top brass at the company also had to weigh whether they were willing to forgo the millions of dollars that the show, winner of five Emmys, would fetch from third-party distributors. Per sources, NBC’s streaming service, Netflix, Hulu, Amazon and likely Apple all at least took meetings to acquire the Steve Carell starrer. Producers Universal Television held an auction — which insiders say kept the studio at a distance from all buyers as it sought to get a fair price for profit participants (including creator Greg Daniels). Ultimately, NBCU’s offer of $100 million per year — for five years — was deemed the winner, edging Netflix.
Still, major media organizations, as they work to assemble libraries that will woo potential subscribers, will need to weigh whether they want to hold back valuable library offerings or sell them to a third party. WarnerMedia, Disney and NBCU all own studios with vast libraries that will prove immensely valuable when they launch their direct-to-consumer offerings over the next year. Meanwhile, Apple will likely need to build a library from scratch if it wants to charge a fee for access to its slate of high-end original programming.’
Greenfield suggests that Universal TV should consider continuing to license to Netflix, especially given how long it might take before its parent company’s streaming services build up a following. “Why not remain an arms dealer to Netflix and a growing array of streaming services versus entering the fray themselves,” Greenfield asks. “The risk is reducing the visibility of The Office while having to pay the talent as if it were on a service like Netflix.”
In addition to determining the streaming future for Friends, Warners has to do the same for the 279-episode library of TV’s longest-running multicamera comedy: Emmy-winning mega-hit The Big Bang Theory, which has never been available on a streaming platform like Netflix. Chuck Lorre’s nerdy comedy starring Jim Parsons remains a monster hit in syndication (on Warners-owned TBS) after fetching an eye-popping record $1.5 million per-episode deal. That pact included a clause that it not be sold to a streamer.
