Media industry cashes in on Netflix deals

It was just a year ago that big media companies were fending off questions about whether Netflix was on the verge of disrupting their traditional business model. Today, Netflix is still the hot topic, but the questions now ask just how good the digital video distributor will be for the industry.

As Time Warner, Discovery Communications and CBS posted strong quarterly results, each company said it was already benefiting from, or soon expecting, a windfall of cash from online video services such as Netflix, Amazon and Hulu. With these three digital distributors battling for market share, and bracing for new competition from Google and Apple, each is aiming to stand apart by spending lavishly for the rights to stream popular TV shows and movies. The new deals represent a lucrative third revenue stream for media companies, supplementing advertising and their longstanding deals with pay-television operators.