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UPDATE 2: Netflix shares spike on news of Disney pact
2:42p ET December 4, 2012 (MarketWatch)
UPDATE 2: Netflix shares spike on news of Disney pact

By David B. Wilkerson, MarketWatch

CHICAGO (MarketWatch) -- Netflix Inc. shares were up 9.6% Tuesday on news that the company will be the exclusive U.S. subscription TV service for first-run live-action and animated feature films from Walt Disney Co.'s Disney studios.

Financial terms were not disclosed.

Starting in 2016, Netflix (NFLX) members will be able to watch movies from Disney, Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios and Disneynature as soon as they are made available for pay TV.

The deal includes television, tablets, computers and mobile phones. Under a multiyear pact, Netflix will also gain access to classic films from the Disney (DIS) library, such as "Dumbo" and "Alice In Wonderland."

Tuesday's news comes almost 10 months after Netflix lost Disney content when its pact with the Starz premium cable networks expired. From the time Starz walked away from the negotiation table in September 2011, observers were concerned that the Disney films, so convenient for parents because children watch them repeatedly, would remove a significant amount of incentive for some Netflix customers.

B. Riley & Co. analyst Eric Wold said Tuesday's stock move for Netflix is rather puzzling, since Netflix Chief Executive Reed Hastings worked hard earlier this year to downplay the significance of losing Disney movies and TV shows.

"The fact that this is an exclusive deal between the two parties somewhat goes against management's recent comments that they do not believe exclusivity is all that important (as only 20% of their content is currently exclusive)," Wold said in an email.

"However, this does mean that they likely paid more than they would have had the deal been nonexclusive. So why would NFLX management look to sign an exclusive deal for Disney content if they have previously stated that exclusivity is irrelevant and Disney content was not a major driver?"
-David B. Wilkerson; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires
December 04, 2012 14:42 ET (19:42 GMT)


Starz to look for buyers after spinoff
11:46a ET December 5, 2012 (MarketWatch)
Starz to look for buyers after spinoff

The Starz cable movie channel will start talking to potential buyers right after it is spun off Liberty Media Corp. (LMCA) next month, the Wall Street Journal reported Wednesday, citing unnamed sources. The news follows word Tuesday that Starz will not extend a current contract with Walt Disney (DIS) that applies to movies hitting theaters through 2015. Netflix (NFLX) will get those rights instead. The deal gives Starz the rights to a dozen movies a year for which it pays about $200 million, the newspaper noted.
-William Spain; 415-439-6400; AskNewswires@dowjones.com

(END) Dow Jones Newswires
December 05, 2012 11:46 ET (16:46 GMT)


etflix, Disney Sign Exclusive Deal - Analyst Blog
8:40a ET December 5, 2012 (Zacks.com)

Netflix Inc. (NFLX) has entered into a multi-year licensing agreement with Walt Disney Company (DIS) for the exclusive right to stream the latter's content to its U.S. subscribers. The financial terms of the deal were not disclosed.

According to the terms, starting 2016, Netflix would be able to stream movies from the Disney Studio and its associated studios instantly after release. Moreover, Netflix would gain access to Disney's direct-to-video releases starting 2013.

The current deal is a big positive for Netflix and has come at a crucial time. The company lost streaming rights of Disney movies as the Starz deal expired in February 2012. Back in mid 2011, the license renewal talks between Netflix and Starz Entertainment LLC fell through due to non agreement related to financial matters. We believe that the deal would be incrementally beneficial for the company in attracting new subscribers as well as retaining the old ones.

We believe that the partnership agreements with Hollywood studios and the overall improvement in content make its streaming services distinguishable from other service providers such as HBO and Amazon's (AMZN) Prime Instant Video. Apart from recent movies and documentaries, Netflix is also boosting its original content portfolio to entice new subscribers in the U.S. and International markets. Backed by these factors, Netflix's subscriber base increased from 25.3 million subscribers in the year-ago period to 31.8 million unique subscribers in the third quarter.

Moreover, with its own content delivery network, Open Connect, Netflix's video library will be directly connected to Internet service providers, ensuring smooth and fast data transfer that would eventually enrich the customer experience.

However, the company continues to see cost escalation due to higher license and renewal fees. Netflix needs to pay $5.0 billion for streaming content obligations, out of which $2.1 billion is to be paid within the next 12 months. Coming to the current deal, industry experts expect Netflix to pay between $200 million and $350 million annually to Disney. Going forward, these huge payment obligations would weigh on the stock.

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