Netflix Facebook Post Prompts SEC Probe: Hot Trends
NEW YORK (TheStreet) -- Popular searches on the Internet include Netflix(NFLX) after a Facebook post by CEO Reed Hastings prompted an investigation by the Securities and Exchange Commission.
Netflix announced on Thursday via Facebook post, SEC filing and news release that Hastings and Netflix received a Wells Notice from the SEC pertaining to a post Hastings made on July 5. In that post, Hastings said Netflix customers were viewing more than 1 billion hours of video content per month. The posting was widely covered in the media and Netflix stock climbed 13% the same day.
Although that same information had been included in the company's blog the month before, Netflix never issued a formal press release or made a filing with the SEC disclosing it.
The Wells Notice received by Netflix said the agency will recommend regulators issue a cease-and-desist proceeding and/or bring a civil injunctive action for violation of its fair disclosure rules. Hastings, however, defended his actions. Hastings, who has 245,000 Facebook subscribers said, "We think posting to over 200,000 people is very public, especially because my subscribers are reporters and bloggers."
Hastings added, "We think the fact of one billion hours of viewing in June was not 'material' to investors." He also attributed the rise in Netflix's share price that day as driven by a positive Citigroup research report which had been released the evening before.
Cablevision(CVC) is trending as the cable operator said it would raise Internet prices by $5 in January.
Cablevision said all customers who have Internet service as part of their video or phone package will be subject to the higher price. The higher price represents an average hike of 3.2% for customers' monthly bills.
The company said prices for video and phone services as well as promotional packages will not be affected.
Cablevision said it has invested $140 million in improving its Internet services by adding hotspots and putting no caps on consumer usage. The company also said it has not raised its Internet prices in a decade.
Hurricane Sandy recently shuttered service for half of Cablevision's customers. The company said costs from the storm would be substantially higher than the $16 million it incurred from Hurricane Irene in 2011.