Can Networks Compete With Netflix and Other Original Programming Ahead?

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The recent Golden Globes had the best viewership it has had in years. One of the reasons is the exciting and provocative new programming coming out. What once was the sole bastion of the broadcast networks has now become a wide open field where everybody can compete. Not only are newer media companies competing, in many cases they are winning. The question is, what will the networks do to take back some of the programming ground they have lost?

For years, the networks dominated the fall with new series and pilots. The key there is in the fall. With Netflix, AMC and a host of other networks providing top new programming that can be started at any time of year, the networks are pinned in. Sure they have continuing shows that are coming back now, but that does not bring near the excitement that the second season premiere of the highly acclaimed “House of Cards” on Valentine’s Day does. Starring Kevin Spacey and Robin Wright, who won a Golden Globe for her role, the program has created a huge buzz, similar to what “The Sopranos” and “Breaking Bad” did.

We did some in-depth research to see just what the hot companies are doing, and how the networks plan to counterpunch.

Netflix Inc. (NASDAQ: NFLX) continues to be on fire. The stock is up almost 230% in the past year. Short sellers have been eviscerated as the company continues to aggressively court and add new subscribers. The company is planning to double its original programming in 2014. If the shows are anything like “House of Cards” and “Arrested Development,” the networks are facing stiff competition for viewers. Netflix gained 3 million new subscribers after the debut of “House of Cards” last February, and a windfall of profits. The consensus price target for the content and streaming giant is $345.32. Netflix trades near $333.

Amazon.com Inc. (NASDAQ: AMZN) is pushing way past e-commerce retail and cloud hosting to also join in the original programming battle. The company has five original series and a slew of pilots that were tested last year. “Alpha House” with John Goodman and “Betas” will be the first programming for the Internet giant. Amazon is undoubtedly trying to replicate the success that Netflix had with “House of Cards,” but whether either series will attract new subscribers to the $79-a-year Amazon Prime is far from certain. “Betas” can particularly benefit from having Amazon Studios behind it. The show follows four friends as they try to make it big in Silicon Valley. The show has been compared to “Entourage,” “The Social Network” and “The Big Bang Theory.” The stock is up almost 50% in the past year. The consensus price target for Amazon is $417.24. The stock is trading close to the $400 level.

CBS Corp. (NYSE: CBS) may be in the best position of all the networks. With an outstanding prime time lineup, solid sports franchises like the NFL, March Madness College Basketball, The Masters and other top programming, the venerable network has been an outstanding stock for shareholders. Investors are paid a small 0.8% dividend. The stock is up more than 60% in the past year. The consensus price target is $63. CBS is trading near $61.75.

Comcast Corp. (NASDAQ: CMCSA), which owns NBC, is caught in the network dilemma. The company is fighting back with original programming that will air on its Esquire network. NBC while faring better is tagged with a mediocre program lineup that has no real blockbuster hits. Wall Street is closely watching the consolidation in the cable arena. Comcast may be a player at some point. Shareholders are paid a 2.4% dividend. The stock has risen almost 40% this year and is a top name at almost every firm we cover. The consensus price target is set at $55.17. Comcast trades near $54.53.

Walt Disney Co. (NYSE: DIS) is also well positioned to fight the original programming challenge. With perhaps the widest portfolio of entertainment on Wall Street, the lackluster programming at ABC is not as much of an earnings burden. The strength at sports powerhouse ESPN continues to drive revenue growth, and the stock looks poised for a solid 2014. Shareholders are paid a 1.1% dividend. The stock is up more than 40% in the past year. The consensus price target is posted at $77.48. The stock trades around $74.90.

Twenty-First Century Fox Inc. (NASDAQ: FOXA) is also fighting back. The company plans to launch shows throughout the year and break from the concept of a strict pilot season. Although the move runs the risk of disrupting how big budget ad buyers approach new programming, it also reflects the reality that TV viewers have given up on the idea of a TV season. The company is also bringing back the popular show “24” franchise starring Kiefer Sutherland with a limited, 12-show series. The stock is up almost 38% in the past year. The consensus price target is $38.87. The share price is about $32.88.

The huge success of “The Sopranos” showed Hollywood and the networks the potential for original programming. Much edgier and not subject to the restrictions of broadcast television censuring, the original programming segment will remain a huge challenge for years to come. Will standards on broadcast have to come down? Or will broadcast networks push for more cable and satellite exposure?

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