Netflix signs new Disney-ABC deal, shows up doubters

At a time when some in Hollywood are wondering whether Netflix is a threat, Disney hands over TV content to Web's top video rental service. Is Hulu the big loser in this?

Disney apparently doesn't think Netflix is a threat. The company has struck a deal to offer content via Netflix's streaming service.

Netflix has signed a new licensing agreement with one of the biggest Hollywood studios, allowing the Web's top video-rental store to begin streaming TV shows from the Disney Channel and ABC TV, the company announced today. The deal calls for Netflix to acquire episodes from some shows 15 days after their original broadcast date.

Talk about good timing. News of the deal comes a day after Netflix bashing in the entertainment sector reached a crescendo and after Netflix announced the departure of Barry McCarthy , the company's chief financial officer.

As execs from the cable industry and Hollywood--including HDNet CEO Mark Cuban and Slingbox's founder Blake Krikorian--at the UBS Investor conference in New York this week were predicting that the flow of content to Netflix would begin to slow soon, CEO Reed Hastings pulled this deal out of his hat. Time Warner CEO Jeff Bewkes called the money that Netflix is offering to pay to license episodes of in-season TV shows "measly."

All the bad news even had some on Wall Street wringing their hands. In morning trading, Netflix's stock was at $184.43, down $5, or 2 percent.

Netflix will soon get prior-season episodes from ABC's most successful serials such as "Grey's Anatomy," "Desperate Housewives," and "Brothers & Sisters." From the Disney Channel will come past episodes from "Phineas and Ferb" and "Good Luck Charlie."

The real loser in this Netflix-Disney relationship may be Hulu, which is backed by News Corp., NBC Universal, and Disney. It would seem that the company's own backers are willing to arm its main adversary with content and thereby stripping it of some the service's competitive advantage. NBC Universal also licenses older episodes from hit shows to Netflix, including "30 Rock" and newer episodes from "Saturday Night Live."

 

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