Netflix shares climb after Credit Suisse upgrade

Shares of Netflix Inc. got a boost Tuesday after a Credit Suisse analyst upgraded the online movie rental company following a recent drop, and said any perceived risk around mounting competition in the movie streaming space is now "more fully reflected" in the shares.
THE SPARK: Analyst John Blackledge upgraded Los Gatos, Calif.-based Netflix to "Outperform" from "Neutral" and said he does not expect a material effect on Netflix from Amazon's new movie streaming service, which it offers to its premium members who pay $79 a year for free or low-cost shipping on their orders.
THE BACKGROUND: The announcement from Amazon.com Inc., along with news that Warner Bros. was testing out a service to offer movies through Facebook, proved a drag on Netflix shares recently. The company made its name renting movies by mail and sending them out in those ubiquitous red envelopes. But more recently it's been focused on its streaming service, which lets people watch movies and TV shows over an Internet connection.
THE ANALYSIS: Blackledge said he doesn't see the Warner Bros. Facebook service as a material competition to Netflix. First, it's just a test with one movie. Second, the movies will be rented on an a la carte basis, rather than a subscription model like Netflix's. This business model, the analyst noted, "has not proven to be an effective competitor" to Netflix.
"(Netflix) has coped well with competing a la carte rental services for several years at this point, namely, Apple, the cable and satellite companies ... (Amazon's) a la carte service, etc.," Blackledge wrote.
Based on a Credit Suisse survey, the analyst also said that Amazon's new streaming service is unlikely to get Netflix users to cancel their subscriptions. Blackledge raised his target price to $280 from $180 and said Netflix is likely looking to expand further into international markets in the second half of this year and beyond.

New Showtime-Netflix deal excludes 'Dexter,' 'Californication' and other new shows

A week after Netflix said it was jumping into the business of original programming, another potential competitor -- premium cable channel Showtime -- changed the ground rules for dealing with the fast-growing movie and TV show rental service.Showtime said Tuesday that its newly negotiated deal with Netflix, which takes effect this summer, no longer includes online streaming rights to its currently airing first-run series, such as "Dexter" and "Californication."  
When the new agreement kicks in, episodes of those shows will disappear from Netflix and will be offered exclusively on Showtime's online service.
"A number of Showtime original series will continue to be available and stream on Netflix including 'The Tudors' and 'Sleeper Cell,' among others," Showtime said in a statement, referring to programs that have gone off the air.
This is a significant departure from Showtime's current arrangement with Netflix, which expires this summer. Under that pact, the cable channel provided several seasons of "Dexter" and "Californication" to Netflix in an effort to introduce its signature shows to a wider audience.
When TV networks and studios first made deals with Netflix a few years ago, the Los Gatos company was considered an innocuous movie rental service much like the corner Blockbuster store. But now that Netflix has more than 20 million customers and its Internet streaming is more broadly accessible, the television industry is increasingly viewing Netflix as a deep-pocket rival that could eventually supplant cash-cow premium cable channels.
Showtime's chief rival, Time Warner Inc.'s HBO, has been particularly uncooperative, holding back all of its new television shows and movies. The smaller Starz and Epix premium channels, meanwhile, currently provide their movies and original programs, such as "Spartacus."
Showtime decided to clamp down on the rights to its first-run programs in an effort to use them as bait to sign up and retain subscribers. (Showtime doesn't control the rights to its popular series "Weeds," which is owned by Lionsgate.)
CBS Corp.-owned Showtime still sees a role for Netflix -- as a digital syndication outlet for older product.  Last month, CBS similarly announced a $200-million deal with Netflix to distribute such classic CBS-owned shows as "Frasier," "Cheers," "Twin Peaks" and "The Twilight Zone."
If people want to watch recent Showtime programs online, they must pay for the channel. "Current and past seasons of our original series will be available to our authenticated subscribers via our TV Everywhere service Showtime Anytime," the company said in a statement.