Netflix takes Liberty with Disney deal

Shares of Netflix soared more than 14 percent on today’s news, adding more than $518 million in market value to the streaming service. Shares of Liberty dropped nearly 5 percent, knocking $598 million off its market cap.

Icahn vs. Netflix: Here we go

Whatever pretense may have held last week that Carl Icahn’s accumulation of a 9.98 percent stake in Netflix was anything other than a hostile raid on the company and its cash flow barely survived the weekend.

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Share of Pandora (P) continued their death-spiral Monday, falling another 4 percent in midday trading. Shares of the internet radio company are down more than 20 percent since last week’s Wall Street Journal report that Apple is in talks with the record companies about launching a rival streaming music service. A news release by Pandora on Monday morning concerning strong listenership numbers for August could not arrest the slide. In a note to clients, however, Wedbush analyst Michael Pachter speculates that what Apple is most likely discussing with the labels is some sort of hybrid service mixing streaming with paid downloads via iTunes, which would be a better fit with Apple’s overall business model than an ad-supported web radio service. If true, it would make the Apple system similar to an on-demand service from a licensing point of view, and more akin to Spotify than to Pandora. In any case, given the record companies’ hard-won wariness of Apple I would next expect deals to be struck quickly.

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Hard times for tech stocks continue on Wall Street. Facebook shares reached new record lows in midday trading as the post-IPO lockup period came to an end today, allowing insiders to sell. Short sellers are now circling the stock, which could presage further downside pressure. Groupon shares, meanwhile, slipped below $5 for a time as their downward march continues unabated. Shares of Angie’s List also plunged this morning as the 90-day lockup period following a secondary offering expired. Zynga’s shares dropped below $3 this morning as the company turns its attention to lobbying for approval of online gambling in the U.S. Tech stocks themselves are looking like the biggest gamble at the moment, however.

Will Netflix get boxed out overseas?

Netflix talked confidently in its second quarter letter to shareholders this week of its ability to compete with Amazon-owned LoveFilm and BSkyB’s recently launched Now TV services in the U.K. But the same earnings report was bracketed by a pair of announcements that could raise that bar higher than Netflix is anticipating.

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The Facebook-Zynga relationship has become deeply unhealthy. Shares of Zynga were falling through the floor in mid-morning trading today after it posted disastrous second-quarter earnings Wednesday. The online game developer was hit hard by tweaks Facebook made to its platform that favor newer games over Zynga’s established brands like FarmVille and CityVille. Now, Zynga is returning the favor by turning into a significant drag on Facebook shares ahead of the social network’s first quarterly earnings report as a public company later today. Time for couples’ therapy?

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Yesterday was a big day for earnings in the connected consumer space, with both Apple and Netflix reporting. Today is a big day for selling their shares. Apple was off nearly 5 percent in midday trading after it reported slower than expected iPhone sales. In this case, Apple seems to be partly a victim of the rumor mill that usually serves it well. With everyone expecting the iPhone 5 later this year, with its dramatically larger screen, the iPhone 4 suddenly looks outdated. As for Netflix, its shares were down a vertiginous 25 percent in midday trading, despite swinging to a larger profit in the second quarter than analysts had projected. Subscriber growth slowed slightly, however, and the company warned that the upcoming Olympics could take a bite of subscriber growth for the third quarter as well. It also reiterated its plans to plow future profits into international expansion, which will keep a lid on GAAP earnings going forward. Lookout below.

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Mogulfest 2012, this year’s edtion of the annual gathering of media and technology chieftains organized by investment bank Allen & Co., opens on Tuesday in Sun Valley, Idaho,  Attendees are not given a formal schedule of the dinners, lunches and panel discussions until after they arrive, but we already know the menu will be heavy on Schadenfreude. Once upon a time, executives from old-line media companies bestrode Sun Valley like giants. But in recent years, upstart technology companies have been showing up and stealing some of the old guard’s deal-making and ego-messaging thunder. This year, however, with Wall Street humbling once high-flying tech companies like Facebook and Zynga, media companies say the natural order of things is returning. “Last year it was ‘holy s–t,’ these guys are geniuses,” one attendee told the New York Post. “This year we are feeling a little less wobbly. They have been humbled.” If I were Mark Zuckerberg I wouldn’t sit too close to Rupert Murdoch around the campfire.

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I’ll be traveling Wednesday, so link posting will be light. On Tuesday, Zynga held its Unleashed event in San Francisco where it unveiled a new cross-platform platform called Zynga With Friends that will allow players to meet and play games across all social networks, Zynga’s first major foray beyond the Facebook platform. It also announced a new API for third-party developers to let them create games that can link into Zynga With Friends, along with a lineup of new and updated Villes of its own. Wall Street wasn’t impressed however. Zynga’s already-beleaguered shares dropped 5 percent after the announcement.

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Just as Facebook’s shares seem to be recovering from their post-IPO plunge, the company has been forced to agree to significant changes in how it manages its Sponsored Stories, one of its most effective and lucrative advertising tools. To settle a lawsuit, Facebook has agreed to allow users to see how their activity on the social network is used to generate ads and to opt out of Sponsored Stories altogether if they want. The changes could have a significant impact on Facebook’s monetization prospects going forward.