Comcast Corp, the largest US cable operator, and Walt Disney Co on Wednesday said they had reached a comprehensive 10-year programming carriage deal for TV, Web and mobile devices.
The agreement covers Disney's various networks including ABC and ESPN, and will allow Comcast's Xfinity TV customers to watch those networks live or on-demand on multiple devices both in and outside of their homes.
It gives a big boost to the cable TV industry's push for programmers and distributors to reach agreements that will enable paying subscribers to watch their favorite shows whenever they choose, and possibly wherever they are in the continental United States.
This push is an attempt by the traditional cable business to make its services more attractive to subscribers who may cut the cord and flee to more flexible and cheaper new video services from companies like Netflix Inc, Google Inc and Amazon.com Inc among others.
However, cable and satellite TV distributors have pushed back in programming fee negotiations over whether they should pay significantly more so their subscribers can watch the shows online or on other devices outside the home.
"There is incentive for the content companies and cable operators to be in all the screens," said Miller Tabak analyst David Joyce. "And ESPN in particular has the content that lends itself to multiple screens quite well - as well as monetizing it through various forms of advertising."
Also included in the Comcast/Disney deal is a broadcast retransmission agreement for ABC's seven broadcast stations and Comcast will launch Disney Junior - a new 24-hour basic channel for preschool-age children. Comcast will also provide its Xfinity customers with access to live Disney networks. In all, the agreement covers more than 70 services.
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Comcast, which took control of NBC Universal a year ago, has more than 22.5 million subscribers. It has avoided many of the worst programming fee disputes which other cable operators have faced as they battle against rising programming fees. Analysts said being the largest US distributor puts it in a powerful negotiating position with programmers probably avoiding conflicts and annual threats of blackouts.
Time Warner Cable Inc, the second largest cable operator, reached a programming deal with Disney in September, 2010 that also included some digital rights for some networks and the launch of Disney Junior, but was not as comprehensive as this latest Comcast deal.
Comcast and Disney did not disclose financial terms of the agreement.
Analysts speculated it is likely Comcast would pay more for the programming given the additional digital rights.
"Now that they're able to get these digital deals done I expect they will want to get as many digital rights as possible, the question is how much will it cost them," said Thomas Eagan, an analyst at Collins Stewart.
"I think you're going to see higher costs for other distributors like DirecTV as they all push for digital rights," he added.
Shares of Comcast ended up one per cent at $24.73 on Nasdaq, while shares of Disney rose 1.4 per cent to $38.85 on the New York Stock Exchange.