Los Angeles Business Journal

Disney, Netflix Sign Distribution Deal

By Deborah Crowe Tuesday, December 4, 2012

Walt Disney Co. and Netflix Inc. on Tuesday announced a multiyear licensing agreement that starting in 2016 will make the Northern California media rental service the exclusive U.S. subscription television service for Walt Disney Studios’ first-run feature films.

The deal is considered the first time that a major Hollywood studio has sold subscription TV rights – which generally kick in several months after a movie hits theaters – to a company that was not a traditional premium TV network such as HBO or Showtime. Burbank-based Disney’s current subscription deal with Starz expires in 2015.

Los Gatos-based Netflix, which pioneered the subscription DVD-by-mail rental market, will be able to provide roughly 30 million subscribers of its Internet streaming service theatrically released live-action and animated movies from Disney Studios, and subsidiaries Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios and Disneynature.

Not announced is whether the deal also will include "Star Wars" titles from Lucasfilm, which Disney is acquiring.

Netflix subscribers will be able to watch the films on multiple platforms, including television, computers, tablets and mobile phones. While access to first-run, theatrically released films won’t begin for more than three years, subscribers will have access to new direct-to-video releases from Disney starting next year. Disney and Netflix signed a separate catalog deal that gives U.S. Netflix subscribers streaming access to classic Disney movies.

Financial terms of the deals were not disclosed.

The announcement comes less than two weeks after Disney announced that it was shuttering its little-used Disney Movies Online site, which allowed people to buy and rent movies from the Disney and Pixar libraries. The company plans to launch a new service called Disney Movies Anywhere but has not disclosed details.

Netflix shares closed up $10.65, or 14 percent, to $86.65. Disney shares closed up 1 cent, or less than 1 percent, to $49.30 on the New York Stock Exchange.