Netflix still piling up viewers and big programming bills

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Netflix is pulling in new viewers and award nominations in droves. But the online video service has a long-term problem: its acclaimed programming line-up is costing far more money than what subscribers pay for it.

That hasn’t been a big issue so far. Investors have been willing to accept scant profits in exchange for robust subscriber growth.

Netflix announced Monday that it added 5.2 million subscribers in the April-June quarter. That’s the largest increase ever during the period, which has always been the company’s slowest time of year.

The company now has 104 million subscribers worldwide. But the success hasn’t come cheaply.

Netflix is locked into contracts requiring it to pay more than $13 billion US for programming during the next three years.

Earnings miss

The company reported second-quarter profit of $65.6 million US.

On a per-share basis, the Los Gatos, California-based company said it had net income of 15 cents.

The results missed Wall Street expectations. The average estimate of 17 analysts surveyed by Zacks Investment Research was for earnings of 16 cents per share.

The internet video service posted revenue of $2.79 billion US in the period, which topped Street forecasts. Twelve analysts surveyed by Zacks expected $2.76 billion US.

Netflix shares have risen 30 per cent since the beginning of the year, while the Standard & Poor’s 500 index has climbed nearly 10 per cent. In the final minutes of trading on Monday, shares hit $161.21 US, an increase of 64 per cent in the last 12 months.

http://www.cbc.ca/news/business/netflix-second-quarter-earnings-1.4209150?cmp=rss

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