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Will Netflix Have to Pay $1 Billion to Air 'Narcos' Season 2?

Zacks Equity Research

The popular Netflix, Inc. NFLX crime drama Narcos will apparently cost the company much more than anticipated.

Narcos, which is based on the real story of Colombian drug lord Pablo Escobar, was scheduled to be aired again in September, after the success of the first season (2015). However, the streaming giant will have to overcome another hurdle prior to that.

Roberto Escobar, who claims to be the "successor-in-interest rights” to the Escobar family, has reportedly demanded a whopping $1 billion from Netflix for content rights. Roberto Escobar is the brother of Pablo Escobar (assassinated by Colombian Police back in 1993). In addition, he looked after accounts of Pablo Escobar’s Medellin Cartel drug operation.

In a letter to Netflix, Roberto Escobar has stated that the rights of Escobar family and Pablo Escobar’s life are registered under a company called Escobar, Inc. They have claimed a fair share of the profits from Netflix. In addition, Escobar has also insisted on reviewing the second season as he believes “In the first season of Narcos, there were mistakes, lies and discrepancies from the real story.”

Per a Newsweek article, Escobar even went ahead to threaten the premier of the show saying “If they decline my offer we have attorneys ready to proceed with necessary actions…I don't think there will be any more 'Narcos' if they do not talk to me. You have to pay to play, and they are playing me without paying.”

'Narcos' which is one of the most popular Netflix original programs had been nominated for Best Television Series – Drama category in both the Golden Globe Awards (2016) and the Satellite Awards (2015). It was also nominated in the Best International category for the BAFTA TV Awards (2016).

It remains to be seen whether Netflix will have to shell out such a huge sum of money (especially when content acquisition costs are already affecting its profitability). For 2016, Netflix had estimated to spend $6 billion on content.  Also, it’s important to note that the company had taken a debt of nearly $1 billion last year for the development of original programs.

Netflix carries a Zacks Rank #3 (Hold).

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Better-ranked stocks in the same space include Discovery Communications, Inc. DISCA, The E. W. Scripps Company SSP and Starz STRZA. All three stocks have a Zacks Rank #2 (Buy).

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