Netflix explores US cable options, snags Sony TV deal

Reuters

Oct 14 (Reuters) - Netflix Inc, in discussions toexpand its footprint with U.S. cable television operators, hasentered into its first series production deal with a majorHollywood studio.

The company, which streamed political thriller "House ofCards," said it has ordered a new psychological thriller seriesfrom Sony Pictures Television and the creators of the FX legaldrama "Damages."

The 13-episode first season, from the unit of Sony Corp, will premiere exclusively for Netflix members to watchinstantly, the company said on Monday.

"House of Cards," a sleek political drama from a smallproduction company led by actor Kevin Spacey, was released in asimilar manner by Netflix early this year. Its success withcritics elevated the stature of progamming delivered solely overthe Internet, a field that is attracting the biggest names inSilicon Valley and a roster of A-list Hollywood stars.

Cable television operators have been leery of the potentialcompetition presented by Netflix and other Silicon Valleynewcomers, but that hesitation may be fading.

Netflix, which began as a video rental service, isdiscussing with several U.S. cable operators the inclusion ofits streaming video service on their set-top boxes, a sourcesaid on Monday, helping to boost the company's shares nearly 8percent.

Netflix is in talks with companies including Comcast Corp and Suddenlink Communications, said the person, who isfamiliar with the discussions. The talks were first reported bythe Wall Street Journal.

A sticking point in discussions has been the directconnection of the Netflix network to the cable companies'internet service provider systems - a set-up that Netflixbelieves will offer consumers the best experience.

Analysts said such video content deals with cable operatorshave been anticipated. "I think these things are going to becomeubiquitous on television sets of the future," said Morningstaranalyst Michael Corty.

Nevertheless, he said shares of Netflix are "over-valued"with most of the company's growth potential already priced intothe stock.

Netflix shares rose $23.51 to close at $324.36 on the Nasdaqexchange.

Last month, two European cable companies -- Sweden's Com Hemand Virgin Media in Britain -- struck deals to allow theircustomers to access Netflix through Tivo set-top boxes.

Netflix Chief Financial Officer David Wells, speaking at aGoldman Sachs investor conference last month, said that thecompany was willing to strike similar deals with U.S. cablecompanies.

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