Netflix could gain from mail loss
SAN FRANCISCO (AP) -- Netflix won't miss Saturday mail delivery, even though the weekend service helped keep its DVD-by-mail subscribers happy.
The U.S. Postal Service's planned shift to five days of home delivery a week instead of six may even make Netflix Inc. slightly more profitable by lowering the costs for sending out its familiar red envelopes with DVDs. That's because subscribers may be able to watch fewer DVDs for the same monthly price.
That's why investors reacted positively to Wednesday's announcement that the U.S. Postal Service intends to stop Saturday home delivery beginning Aug. 10. Netflix's stock gained $10.02, or nearly 6 percent, to close Wednesday at $184.41. Earlier in the session, the stock hit a new 16-month high of $185.14.
Under the plan, mail would be delivered to homes and businesses only from Monday through Friday, but it would still be delivered to post office boxes on Saturdays. The plan, designed to save about $2 billion a year, could face a challenge from Congress.
Investors' reaction might have been different if Saturday mail service had been eliminated three years ago, when the idea was first broached.
Back then, mailing DVDs was still Netflix's main business. It was so important that Netflix grew into the postal service's biggest customer.