Reuters: Hot Stocks: UPDATE 3-Netflix to get Disney films in TV distribution deal

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UPDATE 3-Netflix to get Disney films in TV distribution deal Dec 4th 2012, 23:31 Tue Dec 4, 2012 4:52pm EST (Updates with analyst and company comments in paragraphs 4-8) By Ronald Grover and Sue Zeidler Dec 4 (Reuters) - Walt Disney Co agreed to give Netflix exclusive TV distribution rights to its movies, becoming the first major studio to stream its movies to TV viewers via Netflix instead of distributing them to HBO, Showtime or other premium TV channels. The agreement begins in 2016, after Disney's current deal with Liberty Media's pay-TV channel Starz expires. The deal gives Netflix streaming rights to movies from Disney's live action and animation studios, including those from Pixar, Marvel, and the recently acquired Lucasfilms. On Oct. 30, Disney announced a $4 billion deal to purchase the famed studio founded by George Lucas and responsible for the "Star Wars" franchise. Neflix's stock jumped after the deal was announced. It finished Nasdaq trading at $86.6491, up $10.6491, or 14 percent, the biggest daily gain in percentage terms since January. "An exclusive deal with Disney differentiates the Netflix content from Hulu Plus and Amazon Instant Video," said Anthony DiClemente, an analyst with Barclays Capital. To get the deal, Netflix paid a "significant premium" to the $250 million annual payment he estimates that Starz was paying, he said. He called the jump in Netflix's price "overdone." Analysts have been concerned that Netflix has paid large sums to studios in a bid to lock up premium content. "This deal brings to our subscribers some of the highest quality, most imaginative family films being made today," said Ted Sarandos, Netflix's chief content officer, in a statement. "It's a leap forward for Internet television." Movies from Steven Spielberg's DreamWorks Studios are not included in the deal, as that studio distributes its movies through CBS's Showtime on TV. Disney recently signed a deal to distribute DreamWorks' films theatrically after the studio's deal with Viacom's Paramount Pictures expired. Under the deal's terms, Netflix can stream Disney movies beginning seven to nine months after they appear in theaters, as Starz had done in Disney's prior agreement. The deal does not cover DVD rentals of Disney movies. The agreement follows similar deals Netflix has inked with smaller studios, including Relativity Media, The Weinstein company and DreamWorks Animation. Losing Disney's movies means Starz is left with only Sony Pictures for film content. The pay-TV channel cast the ending of its agreement with Disney as its decision, saying it preferred to use the money for original programming creation. In a statement, Starz said it now has an "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." (Reporting By Ronald Grover; Editing by Peter Lauria, Tim Dobbyn and David Gregorio) Link this Share this Digg this Email Reprints

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