2... 4... 6... 8... Time to disaggregate -- Motley Fool/Netflix Edition

[second in a thread]

Another example of why I'm uncomfortable with the quality Motley Fool's analyses, this time demonstrating a crude but common statistical misstep (or in some cases, distortion). The analyst here is MF regular Tim Beyers (not familiar enough with MF to say why it's in the third person).

Netflix offers each new Marvel show international distribution to as many as 40 million viewers worldwide. Disney can't achieve that on its own, Tim says, because it controls a limited number of channels for offering live action superhero content and ABC already airs Marvel's Agents of S.H.I.E.L.D.

History also favors the deal. More than 66% of gross receipts for Iron Man 3 came from overseas territories. Thor: The Dark World is also tracking well in foreign territories, much like its predecessor. Settling for U.S.-centric distribution would be aiming too low, Tim says.

If you've been following the Netflix story in any detail, one component of this argument will jump out immediately but anyone who works with data will probably have at least a hunch about where this is going.

The phrase "40 million viewers worldwide" raises the question, how many of those viewers are overseas? The answer is less than ten million. For comparison, here's how HBO breaks down:

As of September 2012, HBO's programming reaches approximately 30 million pay television subscribers in the United States, making it the second largest premium channel in the United States (Encore's programming reaches 35.1 million pay subscribers as of March 2013). In addition to its U.S. subscriber base, HBO also broadcasts in at least 151 countries covering approximately 114 million subscribers worldwide.

What's worse, those overseas Netflix viewers seem to be mostly in Europe, with little apparent presence in the all-important Asian market.

Perhaps there's more going on than we know about. Netflix could be on the verge of a big international expansion. For now though, Netflix is not a major international power compared to companies like Time Warner and while the new Netflix/Disney deal may turn out great for both parties, arguing that it's a good idea because you wouldn't want to be too U.S.-centric probably tells us less about the stock and more about the quality of the analysis.