TV broadcasters are scrambling to renegotiate some of their rights deals with US TV and film studios in an offensive against the much anticipated arrival of on-demand video powerhouse Netflix.
TV bosses figure they can squeeze Netflix before it launches in Australia by acquiring the so-called "hold back" rights on first-run TV shows and feature films, preventing them from running on subscription video on demand services [SVOD]. The hold back window can be up to 18 months for SVOD operators like Netflix.
Broadcasters are also bankrolling their own local SVOD platforms, striking exclusive and non-exclusive rights for the US studio's back catalogues as well as new TV series and feature film releases.
Seven West Media is at this point aligning with Foxtel's Presto although Seven executives have told TV executives there is "no guarantee" it will align with Presto and say that it is still pursuing potential alternatives.
Nine Entertainment Co and Fairfax Media have jointly committed to invest $100 million into their own SVOD joint venture, Stream Co. Ten has yet to align publicly with an SVOD provider.
One senior TV executive told Fairfax Media his network had retrospectively secured hold-back rights on some its better-ratings shows. But US studios and even local TV executives are still split on whether such spoiling tactics will have much impact.
Shaun James, a director for Foxtel's Presto SVOD service, launched in March, said that Netflix would be an "inferior service" in Australia.
"I'm not trying to undersell the task we have got in terms of raising Presto's brand awareness but [Netflix] will be an inferior local service because of the rights that currently sit with Seven, Nine, Ten, ABC and Foxtel," he said. "They have looked at this market and seen that."
Foxtel's CEO Richard Freudenstein pointed to his deal with HBO which will block Netflix from Australian distribution of critically acclaimed series which Netflix originally commissioned and funded such as Kevin Spacey's House of Cards and Orange is the New Black. HBO has international rights to the show, which Foxtel picked up for Australia.
"You will never see an HBO program on Netflix in Australia," Mr Freudenstein told Fairfax Media. "Netflix will find it is a very competitive market for the acquisition of first-run programming."
Mr Freudenstein's point is potent. At the time it commissioned those shows the US-based start-up did not have global expansion plans and sold the international distribution rights to its shows.
Now Netflix is attempting to close those loops for new high-profile SVOD series exclusives such as its deal last week with Disney-owned Marvel Studios for TV series Gotham.
Netflix retains all international rights on the TV franchise, although it will have to wait until the first-run series finishes on Nine.
"Where they [Netflix] don't have those rights, they're now aggressively trying to claim them back," a studio executive told The Australian Financial Review.
