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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