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The $400 million-plus reason your favorite TV shows are exiting Netflix, Hulu

With nearly 500 scripted TV shows currently in production, iconic shows from the pre-streaming era such as “Seinfeld,” “Friends” (pictured) and “The Office” have become the heavy artillery used on the next front of the streaming wars. After seeing Netflix eat away at their TV businesses, legacy media companies are targeting the streaming rights for shows that became hits at their studios and networks. (Warner Bros. Television/TNS)
With nearly 500 scripted TV shows currently in production, iconic shows from the pre-streaming era such as “Seinfeld,” “Friends” (pictured) and “The Office” have become the heavy artillery used on the next front of the streaming wars. After seeing Netflix eat away at their TV businesses, legacy media companies are targeting the streaming rights for shows that became hits at their studios and networks. (Warner Bros. Television/TNS)

The finale of the hit sitcom “Seinfeld” aired on May 14, 1998, and has been ubiquitous in reruns on cable and local TV stations ever since. But more than 20 years later, its 180 episodes soon will become one of the hottest properties in television again.

The streaming rights for “Seinfeld,” which has been available for streaming on Hulu since 2015, will be back on the market soon just as media conglomerates Comcast, WarnerMedia and Walt Disney seek to shore up content for their new direct-to-consumer streaming services aimed at taking on Netflix.

The demand for the 30-year-old series is the latest example of how streaming has altered not only viewing habits, but also unlocked the value of long-running TV shows that first became hits on the broadcast networks. With nearly 500 scripted TV shows currently in production, iconic programs from the pre-streaming era such as “Seinfeld,” “Friends” and “The Office” have become the heavy artillery used on the next front of the streaming wars.

After seeing Netflix eat away at their TV businesses, legacy media companies are targeting the streaming rights for shows that became hits at their studios and networks.

And with good reason: They are proven entities that have the ability to capture a younger generation of viewers. Prying them away from Netflix could force the streaming behemoth to depend more on original series, which are riskier and more costly to market at a time when the company’s subscriber growth has topped out in the United States.

“The industry is reducing the odds that Netflix is a TV replacement as all this catalog content is removed,” said Michael Nathanson, senior research analyst at MoffettNathanson.

“They are now more like a premium channel on steroids. I’d expect that they would be competitive in their attempts to land ‘Seinfeld.’”

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Netflix soon may get its chance. Hulu’s rights expire in 2021, but Sony Pictures Television, which handles the distribution of “Seinfeld,” is expected to start soliciting bids in the next few weeks.

“We’re getting a lot of calls about it,” Sony Pictures Television Chairman Mike Hopkins said.

“We’re probably going to go out there with it sooner than we would have because there is so much heat on it right now because of the marketplace. I think it’s something a lot of other people will want.”

While Netflix is often heralded for its distinctive original programs, its two most-watched shows in 2018 were “The Office” and “Friends,” according to Nielsen.

Other hits in the top 10 included ABC’s long-running medical drama “Grey’s Anatomy” and the CW’s durable sci-fi thriller “Supernatural,” both of which have been churning out episodes for the past 15 years.

The trend did not go unnoticed by media conglomerates as they planned to take on Netflix at its own game. NBCUniversal outbid Netflix to get the streaming rights to “The Office” — a show owned by its TV studio — for its new direct-to-consumer service scheduled to launch next year, paying $500 million for five years.

WarnerMedia paid a reported $425 million over five years to get Warner Bros. Telvision’s “Friends” away from Netflix and now plans to offer it on its streaming service HBO Max, set to launch in spring 2020.

“Seinfeld” likely will command a price in the same range as “The Office” and “Friends,” according to several network and studio chiefs.

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WarnerMedia, Comcast and Netflix are all expected to compete for the sitcom along with Hulu — which paid what at the time was considered an eye-popping figure of $160 million in the five-year deal made in 2015.

“The Big Bang Theory,” the long-running hit CBS sitcom produced by Warner Bros. Television that finished its 12-year run in May, will also likely fetch a comparable sum. HBO Max is in talks to license both “Big Bang Theory” and “Two and a Half Men,” Deadline reported.

Why are companies willing to break the bank for streaming rights to shows that have been readily available to viewers for years?

They may be repeats to fans who first experienced them during their network and syndication runs. But viewers under age 35, whose viewing of broadcast and cable TV has dropped dramatically over the past five years, are discovering them on Netflix as if they were new.

“The Office” is a prime example. The series, which finished its network run on NBC in 2013, was not a big success when its repeats were syndicated on local TV stations, where sitcoms shot with a single camera and without a studio audience have rarely performed well.

But millennial-aged Netflix viewers connected with the show’s depiction of workplace life — and also likely recognized its stars Steve Carell and John Krasinski through their feature film work. They gravitated to “The Office” and stuck with it.

The program’s popularity is driven by a relatively narrow slice of devoted subscribers who watch most of its 201 episodes, people involved in the program said.

Using library content to build a new TV platform isn’t new. When cable channels proliferated in the 1980s and ’90s, old broadcast network series were their lifeblood.

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“The Andy Griffith Show,” the biggest hit sitcom of the 1960s, was among the most popular shows on TBS. Repeats of NBC’s addictive procedural crime drama “Law & Order” turned A&E into a viewer destination.

Streaming was an immediate boon to serialized dramas that had little value in syndication after their initial network runs. But for sitcoms, it adds to an already massive pot of money generated by sales to cable networks and TV stations.

“Friends” generates a reported $1 billion a year in syndication revenue. “Seinfeld” had taken in $3.1 billion in syndication revenue from 1995 through 2014 and is still a strong TV ratings performer for TBS and local stations.

“The Office” demonstrated Netflix’s ability to introduce viewers to shows they missed on traditional TV. AMC’s “Breaking Bad” had low ratings and was nearly dropped by its network before a legion of fans found it on Netflix.

More recently, a second-season renewal for the current CW series “All American” was uncertain until the network’s executives saw how well episodes performed on the service.

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