Netflix jumps after inking Disney deal


(Jin Lee/Bloomberg)
December 4, 2012

Netflix shares were climbing fast Tuesday on the news that it will carry first-run Disney movies as part of its subscription.

The companies said Tuesday that they have entered into an exclusive agreement, effective in 2016, that gives subscribers the chance to see Disney films when they would have traditionally been made available to pay-TV services.

The agreement includes Disney direct-to-video releases — which the company often uses for sequel films — and will be available on smartphones, tablets, televisions and computers.

Netflix shares were up 14 percent as of 3:15 p.m. to around $86.60 per share from an opening price of $75.51.

The companies have also reached an agreement, effective immediately, to bring classic films such as “Dumbo,” “Pocahontas” and “Alice in Wonderland” to the video service. They did not disclose the financial terms of either deal.

“Disney and Netflix have shared a long and mutually beneficial relationship and this deal will bring to our subscribers, in the first pay TV window, some of the highest-quality, most imaginative family films being made today,” said Ted Sarandos, the chief content officer at Netflix. “It’s a bold leap forward for Internet television and we are incredibly pleased and proud this iconic family brand is teaming with Netflix to make it happen.”

Dealing directly with a major studio such as Disney may give Netflix much-needed leverage in future content negotiations with distributors in the future. The company beat out the Starz network for the rights, The New York Times reported. Netflix and Starz announced last September they would end their own streaming agreement as of Feb. 28, 2012.

Starz provided Netflix with access to content from Disney and Sony. The loss of Disney films in its catalog, the Times reported, leaves the company with a hole in its lineup. In a statement, the company told the newspaper that it made the decision not to extend its agreement with Disney to invest more heavily in its own, original content.

Hayley Tsukayama covers consumer technology for The Washington Post.
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