Netflix Will Keep ‘Friends’ Through Next Year in a $100 Million Agreement

Posted December 4, 2018 2:06 p.m. EST

Are Netflix and “Friends” on a break?

The answer is no — for now. Reruns of Joey’s thespian trials, Chandler’s hapless sarcasm, Monica’s compulsive cleanliness, Phoebe’s feline riffs, and the seemingly permanent courtship of Ross and Rachel will be available to watch on Netflix for at least another year, the streaming service has announced.

But it will come at a steep price: The company will pay around $100 million to continue licensing the program from its owner, WarnerMedia, according to two people with direct knowledge of the matter who spoke on condition of anonymity because they were not authorized to discuss details of the deal.

That’s a significant jump from the $30 million a year that Netflix had paid previously to stream the show. But the new amount reflects the thirst for content in the streaming age. Online viewing is the future of entertainment, and the industry’s biggest players, including WarnerMedia parent AT&T, The Walt Disney Co., Comcast’s NBCUniversal, Viacom, CBS and Discovery, are retooling their streaming operations to take on services like Netflix and Amazon.

WarnerMedia and Netflix declined to comment.

For Netflix, paying big money for hit content is necessary to growing its customer base, now numbering 57 million in the United States and 130 million worldwide.

Questions about the show’s future on the service began over the weekend when customers spotted a notice on Netflix’s “Friends” page that read, “Availability Until 1/1/19.” Some of the show’s fans turned apoplectic. “The only reason I have an account with Netflix is to rewatch Friends,” Hayley Kiyoko posted on Twitter. “Why @netflix are you hurting us.”

The Netflix account responded: “I would never hurt you, Hayley.”

At an investor conference in New York on Monday, Ted Sarandos, head of Netflix’s content division, said the show’s departure “is a rumor.”

Later, the company officially announced the show would remain on the service. “The Holiday Armadillo has granted your wish: ‘Friends’ will still be there for you in the US throughout 2019,” Netflix posted in a tweet, which included an image of the character Ross in an armadillo suit from a scene where he attempts to explain the story of Hanukkah to his son.

The deal to keep “Friends” on Netflix was due to expire by the end of the year, but both Netflix and AT&T had been negotiating for at least a few months to extend it, the people with direct knowledge of the matter said.

Complicating the negotiation was AT&T’s plan to begin a streaming service of its own by the end of 2019. AT&T acquired Time Warner in June for $85.4 billion, landing prized assets such as HBO, CNN and Warner Bros. film and TV studios, which includes shows like “Friends” and “Big Bang Theory” and blockbuster movies like “Wonder Woman.”

“That’s content we definitely want on our platform,” AT&T’s chief executive, Randall Stephenson, said of “Friends” at an investor conference Tuesday. “And clearly it’s important to Netflix as well.”

He added that the new agreement between the two is nonexclusive, meaning “Friends” would likely appear on AT&T’s coming service by 2020. The sides are currently negotiating rates for after 2019 that would be significantly lower than $100 million, since the show would no longer stream exclusively on Netflix, the people with knowledge of the matter said. It’s also possible that “Friends” could leave Netflix after next year, they added.

To attract new streaming customers, AT&T will likely have to keep some of its shows and films off other services like Netflix and have them available only on AT&T’s offering. The Walt Disney Co., which plans to debut its own streaming service by the end of next year, will start pulling some of its films from Netflix after next year.

At AT&T’s analyst conference last month, John Stankey, the executive put in charge of WarnerMedia, said streaming players like Netflix are “going to see a pretty substantial structural shift” in the availability of content over the next 18 to 24 months.

Companies like Netflix “should expect their libraries are going to get a lot thinner,” he said.

Streaming services have anticipated this for years. In order to differentiate one offering from another, Netflix, Hulu and Amazon have stressed the importance of exclusive content. Netflix, for example, has spent billions building up its own original shows, including breakout hits like “Stranger Things.”

“That’s going to make it exciting for us,” Netflix chief executive, Reed Hastings, said on the company’s earnings call in October of the forthcoming competition. “It’s great for consumers. Incredible for producers. I mean there’s never been so much TV and movies being created around the world. So the game is on.”

The market will support two or three on-demand streaming services, including Netflix, Stephenson said Tuesday, “and we want to be one of the two or three.” The entrance of AT&T and Disney into streaming could lead to a situation in which studios hold off licensing their shows and films, or at least drastically cut back on such deals, to help stoke subscriptions to their own streaming services.

“Friends” ran for 10 seasons from 1994 through 2004 on NBC’s once-mighty Thursday night lineup that dominated television.

It has since been syndicated widely, but the show has found an especially receptive audience on Netflix, where it became available in 2015. Its popularity among the streaming set even prompted a 2016 New York magazine article, titled “Is ‘Friends’ Still the Most Popular Show on TV?”

Whether it is or not, Netflix has decided it’s worth $100 million.