Netflix scored an exclusive deal to stream Disney movies, marking the first time a major Hollywood studio has picked a Web upstart over an established pay-TV player like HBO.
The streaming-video service paid big bucks to best Liberty Media’s Starz premium channel, which previously held the rights to show Disney movies in the US.
Netflix’s chief content officer, Ted Sarandos, hailed the pact as “a bold leap forward for Internet television.”
While financial terms weren’t disclosed, Netflix is ponying up an estimated $350 million a year for the rights to stream Disney’s films a few months after they first air in theaters — a distribution window typically reserved for pay-TV channels.
REUTERS
Mickey, Yoda and me: Reed Hastings of Netflix is likely to shake up the pay-TV world by signing a blockbuster exclusive multi-year deal with Disney, which recently purchased “Star Wars” maker Lucasfilm.
The move aims to distinguish Netflix from a crowded field of streaming rivals including Amazon, Hulu Plus and Verizon/Redbox, while also putting premium channels like HBO, Starz, Showtime and Epix on notice.
Netflix will gain access to new Disney, Pixar, Marvel Comics and Lucasfilm movies starting in 2016, when the studio’s current deal with Starz expires.
It will get direct-to-video releases next year, while older animated classics such as “Dumbo,” “Pocahontas” and “Alice in Wonderland” will immediately become available through Netflix.
Netflix’s stock soared 14 percent, rising $10.65 to close at $86.65, on news of the pact even as Wall Street analysts fretted about the price tag.
Tony Wible, an analyst with Janney Montgomery Scott, estimated Netflix is paying north of $350 million a year and said he wouldn’t be surprise if the company “would need to raise capital.”
Netflix, which counts activist investor Carl Icahn as a major shareholder, could also be making a bet that it will be part of a larger, deeper-pocketed entity by 2016.
Netflix is paying considerably more than Starz did for Disney’s content. Barclays analyst Anthony DiClemente said Starz’s Disney deal is around $250 million a year.
Still, the move is a blow to Starz, which is being spun out of Liberty Media. Starz currently owns the rights to distribute both Disney and Sony movies in the so-called pay-TV window. The Starz-Sony deal will expire in 2016 as well.
Netflix has said it will bid on the Sony rights when they come up for grabs.
“This is a big deal for Hollywood and the premium networks,” said Dan Cryan, senior director of digital media at IHS/Electronics and Media.
Netflix lost rights to Disney and Sony movies earlier this year, when it couldn’t agree on a new deal with Starz, which wanted Netflix to create a special tier for its “premium content.”
Netflix was reportedly discussing renewing the Starz deal for between $300 million and $400 million.
Industry observers are also wondering how Disney’s Netflix pact will sit with cable and satellite-TV providers.
The industry, which pays per-subscriber fees to premium channels, leaned on Starz not to do business with Netflix on better terms than they were paying.
catkinson@nypost.com
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