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Netflix (NASDAQ:NFLX) Restructures Compensation for Comedy Specials
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Netflix (NASDAQ:NFLX) Restructures Compensation for Comedy Specials

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Netflix is changing the deal structure for comic artists to save costs and streamline its businesses. This, however, opens the doors for competitors to enter the much-hyped comedy space.

Netflix (NFLX) is restructuring the new contracts that it is signing with the artists of its famous Comedy Specials. The streaming giant is reducing some of its expenses, which would give comedians less money while giving them more autonomy over their work.

As per a WSJ report, the revised deal involves paying $200,000 in a two-year licensing agreement, lower than the approximately $1 million fee Netflix paid upfront for buying them outright earlier. This has increased the burden of production costs for the artists, who earlier could expend the upfront fees. Nonetheless, under the revised deal, artists have the freedom to use their work for promotional activities on social media platforms once the licensing deal expires.

Commenting on the new compensation structure, a Netflix spokesman said it acts as “an additional, alternative pathway for comedians (at every point in their career) to work with Netflix, in response to the current market.”

An ill-effect of the new deal structure is that competitors who were earlier shy of buying these comic artists owing to the high compensation offered by Netflix can now approach them with higher packages. Moreover, Youtube acts as the biggest threat to Netflix’s comedy special as it allows artists to post videos free of cost as well as take a cut from the advertising revenue, once they pass certain thresholds.

Is Netflix Stock Expected to Rise?

On TipRanks, the highest price target for NFLX stock is $365, which implies a whopping 61.2% upside potential to current levels. On the other hand, the lowest stock price prediction is $157 implying a massive 30.7% downside potential. These price targets imply a very distorted picture for NFLX’s stock trajectory, and an upward trend is not clear.

Notably, NFLX stock has a Hold consensus rating. This is based on nine Buys, 18 Holds, and five Sells. The average Netflix price target of $242 implies 6.9% upside potential to current levels. Meanwhile, the stock has lost 62.1% so far this year.

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