Be careful Mr. Hastings

Reed Hastings and Netflix might want to be careful what they wish for.

Reed Hastings is the fabulously successful founder and CEO of Netflix. Netflix has become a dominant force in streaming video sometimes consuming as much as 60% of all Internet traffic in the U.S. at peak times. They have built up a viewership of around 60 million paid subscribers.

I am a big fan and user of Netflix, and have nothing but good things to say about the company as a customer.

I do, however, have major problems with Mr. Hastings’ use of the government to force his competitors.

Mr. Hastings has used his bully pulpit as CEO of Netflix to oppose the mergers of Comcast (I and my clients own shares of Comcast) with Time Warner Cable, and now AT&T’s proposed merger with DirecTV.

He says that such mergers will harm customers when he is really just feathering his and Netflix’s bed. 

He doesn’t want his competitors charging him higher rates, so he is using the government to do what he can’t do in fair competition. This is kind of like asking a referee to change the rules of the game to benefit your team.

Although he has already succeeded in stopping the Comcast and Time Warner Cable merger, and may succeed with the AT&T and DirecTV merger, he may want to consider what will happen when his competitors enlist the government’s help to deal with his dominant position.

After all, his complaint against Comcast was that–if the merger went through–they’d have 60% market share in broadband to the home. Perhaps he should consider his own market share and how that may play out over time.

The problem with getting the government to intervene for you is that as your success grows, you too become a target. The same is true in paying protection money to the mafia–it doesn’t work in the long run.

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.

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Be careful Mr. Hastings