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How Netflix Wins Despite Underperforming at the Oscars

Illustration by Elias Stein

Investors apparently don’t care about the weak performance by Netflix at the Academy Awards. Netflix got 24 Oscar nominations, which we previewed a few weeks ago, but just two wins. Laura Dern won Best Supporting Actress for her divorce lawyer role in Marriage Story. American Factory, a documentary backed by the Obamas’ Higher Ground Productions, won Best Documentary Feature. But Martin Scorsese’s The Irishman was shut out, as was The Two Popes, and the streaming service’s two Animated Feature nominees, which lost to Disney’s Toy Story 4.

Humiliating, right? Maybe not. Netflix stock traded higher on Monday. While The Irishman didn’t win any awards, the film was discussed throughout the telecast, and Scorsese received a standing ovation when Best Director winner Bong Joon Ho paid tribute to him during his acceptance speech. And Netflix got lots of shout-outs, particularly for the awards it did win.

Traditionally, film studios look for award-winning films to get a box-office bounce. That isn’t really a factor for Netflix, which is driven by subscribers searching for new content. Needham analyst Laura Martin told Barron’s that the primary economic benefit of winning awards is their consumer marketing value, noting that Netflix and other companies spend millions of dollars lobbying Oscar voters. When they win, she says, it’s a third-party endorsement of the content and the brand. But the extensive discussion of The Irishman in the media, she says, has provided the company with hugely beneficial attention. Bottom line, you could do worse than win two Oscars.

Finding Higher Ground

Stocks rose to new highs as indexes approached Dow 30,000, only to get hit by a surge in Chinese coronavirus cases. Still, the week ended in the black, with the Dow Industrial Average rising 1%, to 29,398.08; the S&P 500 climbing 1.6%, to 3380.16; and the Nasdaq Composite gaining 2.2%, to 9731.18.

Coronavirus: Not Done Yet

The virus continued to spread, particularly in China, which, after a tenfold spike of 14,840 cases in Hubei Province on Wednesday, has over 64,000 confirmed cases and 1,400 deaths. Meanwhile, the cruise ship Diamond Princess, docked in Yokohama, Japan, placed over 2,500 passengers and 1,000 crew members under quarantine—with 200 and counting testing positive, including at least 10 crew members and one quarantine official.

The World According to Powell

In generally upbeat testimony before Congress, Federal Reserve Chairman Jerome Powell warned of trillion-dollar deficits and said the central bank was “closely monitoring” the coronavirus outbreak, but didn’t suggest cutting interest rates in a “resilient” economy. Powell also urged greater investment to get more people to work and to boost labor force productivity.

A Wish-List Budget

The White House proposed a $4.8 trillion federal budget for fiscal 2021. It would raise outlays for defense, homeland security, and the Space Force; add $2 billion for the border wall; and make cuts to Medicaid, student loans, and environmental protection. The administration claimed that budget deficits would shrink by half as a share of the economy by 2024 and half again by 2029. Experts questioned the spending blueprint’s growth projections—about 3% annually through 2022, with no recession in sight—and said the budget didn’t consider future tax cuts or measures unlikely to get through Congress.

T-Mobile, Nearly There

Judge Victor Marrero approved the $26 billion merger of T-Mobile US and Sprint, turning back a lawsuit filed by 13 states and the District of Columbia, which argued that the merger would reduce competition. Still, the long-running M&A soap opera continues, with T-Mobile’s German parent, Deutsche Telekom, reportedly seeking new terms from floundering Sprint, owned by Japan’s SoftBank Group.

Trump on Offense

President Trump tweeted an attack on prosecutors’ sentencing memo of his longtime associate Roger Stone, convicted of perjury and witness tampering. The Justice Department then sought leniency, and four prosecutors quit the case in protest. Attorney General Bill Barr denied consulting with the White House on the case and said that Trump’s tweets made doing his job “impossible.” The president also attacked the judge and a juror in tweets. Separately, the DOJ hit Huawei Technologies with racketeering charges.

Write to Eric Savitz at eric.savitz@dowjones.com

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