Tuesday, September 18, 2012

Netflix, Inc. (NASDAQ:NFLX) recovers After Yesterday’s Slump

Netflix, Inc.(NASDAQ:NFLX)’s shares jumped 1.30% to $57.76 in the opening session on Tuesday after slumping about 6% in yesterday’s session after Macquarie downgraded Netflix on Monday to Underperform with a price target of $50

Macquarie said that media companies like Time Warner and CBS, which owned the content that Netflix made available to its subscribers, had the upper hand in terms of pricing.

Netflix is also facing competition from larger players such as Amazon and Google which have all introduced similar services and with much better negotiating powers with content owners.

The price at which content is available from media companies is a major determinant of the rates at which companies like Netflix can offer their services.

Will NFLX Rebound After The Recent Slump? Find Out Here

In the past Netflix has had to raise its subscription rates leading to protests from subscribers.

A report in Variety said that Netflix could lose A&E Networks library of TV shows like "Pawn Stars," ""Hoarders," and "Gene Simmons: Family Jewels," unless the companies agree to a new contract that expires on Friday.

Netflix has also had recent setbacks. Epix, with whom it had a contract for library content of its movies and music, shifted to Amazon with whom it signed a three-year deal giving the Internet retailer access to more than 15,000 titles.

The video services firm has yet to recover from that. Last month its top boss justified the high prices that it was paying for content by saying that it had to build a huge library of inventory.

However it has been losing subscribers due to the high rates it charges.

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