found in his home. tonight, we have the latest. netflix backlash for red hot entertainment millions depend on those little red envelopes but suddenly netflix is hemorrhaging customers and for the first time the embattled ceo tells us how he plans to fix it. masters of junk. their open road pursuit of antiques ecstasy is a huge cable hit so what is the secret to smart rummage selling. we head out with "the american pickers." good evening. i'm bill weir. the mysterious disappearance of a young utah mother seemed even stranger in light of her husband's unusual alibi. he didn't know what happened to her, he said because on the night she'd vanished he had

taken their two young sons on a spontaneous camping trip starting at midnight. then later her father-in-law said the missing woman was very sexual with him. well, now there's one more strange twist in the case and abc's abbie boudreau has it for our series "crime and punishment." >> reporter: for nearly two years authorities have been searching for missing utah mom susan powell. her husband, josh, whose alibi, a midnight winter camping trip with his children, is the only named person of interest by police. but now in a shocking turn, susan's father-in-law steven powell has been arrested following a search of his washington state home. police say thousands of lewd images of women and children as young as 8 were discovered by police on computers and dvds inside steven powell's home. >> there are pictures of girls in showers, on toilets, taking a bath. >> reporter: among that material, police say secretly recorded videos and photos of

susan powell allegedly taken by her own father-in-law. >> we also have pictures of susan powell that she probably doesn't know were taken. >> reporter: he shares the home with josh as well as josh and susan's two young sons. since steven powell's arrest the boys have been removed from the house and are in protective custody. powell pleaded not guilty to 14 counts of voyeurism and one count of possession of child pornography. since the investigation began, the story has become more and more disturbing. when we spoke to steven and josh powell last month, they both claim susan was flirtatious and had a history of being promiscuous. even with her own father-in-law. >> she did it. i did it. i mean we interacted in a lot of sexual ways because susan enjoys doing that. >> reporter: do you think a part of you started falling in love with susan? >> that's pretty likely.

yeah, i would say so and there's no question in my mind that the feelings were mutual. but, again, she was a married woman. i'm single. and we had -- there was a different dynamic for her than there was for mow. >> see the birdie. >> reporter: he says his son josh knew about their unconventional relationship and after a while was okay with it. though he seemed a little uncomfortable talking about it often camera. your dad told us that he had a some -- some sexual encounters with susan and she would initiate and you knew about it. >> well, there was nothing like that. she's a very fir tasflirtatious person but that's just her personality. it's part of her friendliness. >> reporter: but susan's father chuck cox says there was no romantic relationship between the two.

in fact cox says he believes steven powell may have a sick obsession with his daughter. evidenced by the photos police say they found of susan on steven powell's computer. >> i think it's disgusting and i think it very clearly shows that her concerns were justified about steven powell. >> reporter: steven powell told abc news he wrote love songs posted on his website about his daughter-in-law with lyrics like these "i can love you in a secret way i can love you each and every day ♪ >> reporter: there was a creep factor and she said he creeped her out but no one had any idea the extent to which, you know, he was involved in voyeurism. pictures of susan, et cetera. >> i think it's a good thing. we might as well get him off the street and protect people. protect the innocent. >> reporter: powell's estranged daughter jennifer graves says these not surprised by this latest turn of events. >> i think it's despicable.

i've known for a long time my dad had issues. his character was inquestion. >> reporter: as steven powell sits in jail the state of josh and susan's two young sons will be decided later. a hearing will determine whether susan's parents will gain custody of the boys. a possibility josh powell hopes never happens. i'm abbie boudreau for "nightline" in los angeles. >> a curious mystery, indeed, there. just ahead, why netflix customers are seeing red and what the company plans to do about it. li s id li s m ba llral,was id unl m ba

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longer life cycles than some internet start-ups but netflix has always been considered one of the wingers until this summer, that is. suddenly customers are fleeing by the hundreds of thousands, the man on top has gone from a study in success to a business page pariah but for the first time tonight the embattled ceo is talking in burn person about what went wrong and how he plans to fix it. here's abc's john donvan. >> reporter: with that red envelope an actual marketing icon and the business a kind of miracle that got millions of us to watch dvds that came in the mail and creator of it all reed hastings this time last year named business person of the year netflix has been such a success story that the stunner is how quickly so many things seem to have gone wrong at at once like 600,000 subscribers canceling their subscriptions and the starz network unable to reach a deal to continue with them and the company's stock price, dropping by more than

half since early july and finally like hastings himself sending out an e-mail to the 24 million customers who did not cancel beginning with the words "i messed up." followed by a video where he out and out says -- >> i just want to say again how sorry i am. >> reporter: this afternoon at netflix headquarters in silicon valley, you have asked your customers to forgive you. are they forgiving you. >> i think each customer is different. you know, as i said in my letter actions speak louder than words. >> reporter: for those who don't know the story netflix came out of nowhere 14 years ago with the then crazy idea of a business built on sending movies through the mail to consumer who paid a fixed ability. for the millions using it, it became a way of life. hastings became the subject of hundreds of stories including a couple by "nightline" like this one we did nearly three years ago. >> hit that curve with dvds and

rocked up. now we're at 10 million subscribers, dvds in every home in america. >> reporter: then then it doubled and they went towards streaming movies on the internet. last week the surprise announcement, it is splitting into two. one still known to be netflix will continue to stream movies, the other qwikster will take over the dvds by mail business. the way that decision was communicated plus a recent price hike is what he was apologizing for. >> i think we were just moving too fast and sometimes the thing that makes you great, your speed, can trip you up and what we should have said to the customers is, you know, we're really sorry. we know it's a tough economy. this is why we need to this. >> reporter: indeed their own blog was indunn natured by users who felt they were betrayed. these are people reacting. little did i know after years of loyalty you would continually stab me in the back says one. another says, i'm booting you off the couch and you can hang

out with the dog in the backyard. another says, i'm getting tired of this and you. this really sounds like these are people who loved you. netflix. and now they feel betrayed. >> the only way to earn back people's trust is to stay consistent, focus on the customer needs and get back to that. >> reporter: but hastings' bottom line, the communications may have been bad but the decision to split the company in two was the right one. netflix would have survived if you didn't do this split long term. >> yes, i would say we did it because we think it's a better outcome in the long term but i can't say that it would have killed us to stay as was. i this that would be overstating it. >> reporter: it's clear he's always had a clear vision where streaming would go. even in our first conversation in 2009 he made a telling remark about the name of the company he founded. >> eventually in the very long term it's unlikely that we'll be on plastic media, so we've always known that and that's why

we named the company netflix and not dvd by mail. >> reporter: i want to ask you if this is the most dangerous time netflix has ever faced but i know you have faced a lot of dangerous times. >> not by a long shot. most dangerous times 2001 when we had to do a huge layoff and almost ran out of money, 2005 when we had this huge competitive battle with blockbuster. >> reporter: netflix did beat off block buster and walmart when both of those seemed unlikely. now amazon is streaming movies and apple and google and facebook and some speculation netflix is getting ready to sell itself to amazon so i asked. is there anything to that? >> what we are really focused on is how to make a great company and consumer experience and we think this evolution is two brand, the qwikster and netflix brand is the pote vegas. there is no other motivation than that. >> reporter: so there is no amazon deal in the work. >> there is no other motivation for our split than doing these

two brands. >> reporter: okay. that's a nonanswer answer just for the record. all right. thank you. and so we'll see. is it the best of both worlds where netflix streams and qwikster mails that red envelope that was an icon and a success story just not under this new name. i'm john donvan for "nightline" in silicon valley. and dreamworks just announced today a major deal with netflix opting to stream their movies online with that service rather than through a pay cable outlet like hbo. interesting types. our thanks to john donvan. just up, is it a faded husk of painted tin or one-of-a-kind treasure. meet the guys that know the difference. [ male announcer ] got a cold? [ sniffles ] not sure what to take? now click on the robitussin relief finder at robitussin.com. click on your symptoms... ...get the right relief. ♪

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the meaning of life according to the late great george carlin is finding a place to keep your stuff. we love our stuff in this country. we hoard it. some the stuff we set aside because it's sentimental. some of the stuff we squirrel away hoping random guys will show up to buy it so we can buy more stuff and that has two antique aficionados spinning it into tv gold.

the american pickers and lara spencer has them here. >> check this out. >> reporter: mike wolfe wants this 19th century railcar badly. he's discovered it under an old red caboose while shooting a show "american pickers." >> so imagine around the turn of the century, someone traveling across america on the iron rails. >> reporter: he's got a passion for picking. >> what else can you show us? >> reporter: and he's making money at it. it's like all those people who bought and flipped condos during the housing bubble except mike flips junk. >> if i can buy something like this in this condition for $400 and sell it for 750, i'm living the american dream. how much for the mountain lion? >> reporter: mike has taken it to the next level and has two junk shop, a hit show, cult-like following and a nickname, the junk hunk. did you ever imagine junk hunting could become sassy?

>> out on the road and traveling, getting back stories and tough. >> reporter: mike and his partner frank fritts travel the country scouring dilapidated barns searching for anything they can buy low and sell high or even just for a little more. that's how we ended up here from the road this property looks like a rusty gold mine, but not so fast. >> i've been 50 years collecting this. >> 50 years. >> but i do sell things on occasion. >> reporter: very occasionally, in fact, bill's home is so packed with stuff he's glared it a museum of local history. my guess is you have a story about -- >> what i don't know i make up. no one knows the difference. >> reporter: bill loves his menagerie. >> how much is the eagle with the base. >> reporter: he knows in the world of picking it's the little scores that add up. like this vintage roy rogers guitar. bill wants 75 bucks for it. >> out of tune. that price is definitely out of

tune. >> reporter: they settle on $37 and he knows he will turn around and sell it for more than double. does that bother you. >> of course not. everyone has to make a living. >> it sounds like you're having an emotional affair with -- >> reporter: mike know it's usually only a matter of time before the seller breaks down. mike's journey into junk started with a bike he took off a garbage pile. he cleaned it up and sold it for $5 and today he does the same with essentially anything he thinks is interesting. >> one of the first pneumatic tires that held air. >> reporter: videotaped his adventures all along the way and suggested frank start coming along because he had the idea for "american pickers" for years. >> everybody kept telling me no one will watch a show about antiques. it's about the hunt. the great american road trip and the stories behind all of these things. >> reporter: to say their finds

are diamonds in the rough is an understatement. >> here's what i'd do, buy what i like, i buy within my means and i buy what inspires me. >> reporter: as a fellow junk hunter i was thrilled to roll up my sleeves for this assignment. all right. so when we go in here do we divide and conquer? >> usually what frank and i do, he'll go one way and i go the other, and whatever we both find is ours. it's game on once you walk in. >> reporter: all right. then game on. in that dark, dirty basement i score a large glass owl. oh, he's cute. i didn't know how desperately i wanted something like this until that moment but there's something about picking that convinces you i must have this weird giant owl jar right now. >> bill, it's the wide old owl so what we want to do is have you give us a really wise, fair price. >> 50 bucks. right? >> let me back that up -- >> reporter: i get it for 40 bucks. what about that train car?

after an hour and haggling they agree on a price of $2,000 and mike says he'll turn around and flip it for $3,000. >> when you're out here doing what you love, i uncovered it, discovered it. i negotiated on it. >> reporter: you recycled it. >> i met somebody and made that kind of money, it's the american dream. >> reporter: life is good. >> life is good. >> reporter: i'm lara spencer in wells, maine, for "nightline." >> that explains the owl in lara's office. we hope you check in on "good morning america." they are live in italy as american student amanda knox hopes for good news in her murder conviction appeal and we're always online at abcnews.com. see you back here tomorrow. >> dicky: tonight on an all new "jimmy kimmel live". >> jimmy: am i disappointed that no one got hit by a falling satellite this weekend? >> dicky: dana delany. >> exactly.