Light Reading

Netflix Swipes Disney Deal From Starz

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

Netflix Inc. (Nasdaq: NFLX) got some longer-term relevance Tuesday by securing the rights to offer Walt Disney Co. (NYSE: DIS) flicks in the coveted pay-TV window starting in 2016.

Netflix will also start to get access to "high-profile" Disney direct-to-video fare starting next year. The pay-TV part of the agreement, which covers titles from Disney Animation, Pixar and Marvel, essentially seizes those rights from long-time Disney premium programming partner Starz Entertainment LLC .

And forgive Netflix execs if they end up gloating a bit. Starz reportedly wouldn't do a new deal with Netflix in 2011, when the streaming giant offered to pay about $300 million but balked at the idea of creating a premium-level subscription tier around Starz content. (See Did Starz Reject $300M Netflix Offer?)

Netflix and Disney didn't disclose financial terms, but Netflix "could ultimately pay more than $300 million," reports The Los Angeles Times.

Why this matters
Netflix, which is getting pressured by Carl Icahn to sell while the getting is good, will need good content to keep its growth engine stoked. The company has been paying the price for a small set of original series, but Disney is as good a horse as any to have in the streaming stable.

The deal will also put pressure on Starz to generate more popular originals and assemble deals with other leading studios when new distribution deals come available. In a statement, Starz points out it has rights to Disney Studio film titles "into 2017," and that "our decision not to extend the agreement" past that date creates room to invest in Starz's own exclusive, original series for its pay-TV partners.

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— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:16:28 PM
re: Netflix Swipes Disney Deal From Starz

Here's the full statement from Starz:

"Starz will continue to be the exclusive home of all Disney movies, including the Lucas Film, Marvel and Pixar releases, and their accompanying digital streaming rights, into 2017.  Our decision not to extend the agreement for Disney output past that time allows us the opportunity to implement our plan to dramatically ramp up our investment in exclusive, premium-quality original series which will best meet the needs of our distributors and subscribers.”



Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:16:25 PM
re: Netflix Swipes Disney Deal From Starz

With the Disney deal and its strategy to develop original content, Netflix is of course trying to turn itself into a premium service along the lines of HBO, Starz and Showtime.  When you decide where your premium  video subscription dollars go to, what's more important to you: access to new studio titles or solid originals? 

For me, it's the latter... newer movies I really care to see that I didn't see at the theater I tend to catch in the first VoD window and pay that relatively small premium. As channels like HBO go, most of my viewing is spent on their top-notch originals. JB

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