Comcast Deal Doesn’t Change Netflix’s Earnings Forecasts

Yesterday at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco, Netflix CFO David Wells reiterated his company’s financial forecasts. This means that the Comcast deal, recently signed, is not expensive enough for Netflix to change guidance on its future financial performance.

Calling the deal “important because it was an opportunity to shore up the long-term subscriber experience,” Wells described it as a solution to “some choke points around peak period usage times.”

His following comments on the financial impact of the deal were simple:

I would say we are going to be consistent with our guidance on 400 basis points year-on-year margin improvement for the U.S. streaming business. So you are hearing me confirm that nothing has changed there. So you should conclude from that, that the deal in terms of the cost for that, yes, it was incremental but it wasn’t incremental to the point where we’re changing that.

Is Netflix overjoyed with the agreement, which will see the video-streaming company link its servers directly to Comcast’s network? No. Wells “philosophically believe[s] that the consumer is still best served in an environment where a content provider like ourself doesn’t pay an ISP.” Still, the CFO said the Comcast deal, “was an opportunity for us to ensure better service long-term for our subscribers.”

In regular trading, Netflix is up 1.89 percent to $454.