Markets

Jon Stewart Solidifies HBO's News Lineup. Will Netflix Follow Suit?

Comedian Jon Stewart just signed a four-year contract with HBO. Image source: Peabody Awards .

HBO is fully embracing the digital streaming business. After releasing HBO Now, a stand-alone streaming service, earlier this year, the company recently signed Jon Stewart to produce short news pieces aimed primarily at the network's digital audience. Per its contract with cable companies, the Time Warner subsidiary will have to make the shorts available to its traditional cable subscribers on their TVs, but there's no mistaking that HBO has a younger audience that's used to getting their news from the Internet and perhaps The Daily Show .

HBO has made a significant push into news lately with other signings like John Oliver, Bill Simmons, and a contract with Vice. Netflix has noticed, and on its third-quarter earnings call, CEO Reed Hastings indicated that he plans to compete with Vice's programming within the next two years. With just one "news" show scheduled for next year, will HBO force Netflix's hand and get it to produce more news programming?

Why news programming?

With the release of HBO Now, HBO is going after the market of consumers that only subscribe to high-speed Internet service. That market typically skews younger, and they're used to getting their news from the Internet through online publications, social networks, and YouTube. If HBO can provide a lean-back experience that's still similar to finding news on the Internet, it could attract more subscribers to its service.

The company already posts clips from Last Week Tonight on YouTube, where it has racked up tens of millions of views and 2.5 million subscribers. Content of the same ilk from Jon Stewart could prove similarly attractive for the young audience, and since HBO is now more accessible than ever, it could drive subscriptions.

As mentioned, HBO continues to add more news programming -- all with a bent toward young viewers. Vice's productions are aimed at young viewers, as is Bill Simmons' brand of sports commentary. All of these projects could spur adoption of HBO's over-the-top service from broadband-only households.

So, should Netflix follow suit?

Netflix is slated to start production of a late-night talk show with Chelsea Handler early next year. Handler has described her vision for the show as "60 minutes, but faster, quicker, and cooler." That show certainly sounds like the potential to be more "newsy" than anything else Netflix has done to date.

But Hastings has backed off his statement that he'll compete directly with Vice or the programming HBO is doing. At the Dealbook conference earlier this month, he said the Chelsea Handler show will have a format that's similar to something Vice might do, but "Vice is really in the news business, and we're not."

And Netflix, for its part, doesn't need to be in the news business. It's already attracted a large portion of the broadband-only market in the United States, and many view Netflix as a complement to a cable subscription or other over-the-top services. With its established foothold on entertainment and a growing slate of original dramas and comedies, there's no need for Netflix to be more than that to a young audience. It already has over 40 million U.S. subscribers.

With a $5 billion content budget for this year, there's not much more room for Netflix to commit to the demanding production requirements of news programming. The company is still running at -$1 billion cash flow. So, subscribers looking for a news fix will likely have to keep looking elsewhere.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early, in-the-know investors! To be one of them, just click here .

The article Jon Stewart Solidifies HBO's News Lineup. Will Netflix Follow Suit? originally appeared on Fool.com.

Adam Levy has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends Time Warner. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

NFLX

Other Topics

Stocks

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More