Dis­ney to of­fer stream­ing ser­vices, end deal with Net­flix

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM -

CHRISTOPHER PALMERI

Walt Dis­ney Co., once again shak­ing up the me­dia in­dus­try, an­nounced it will stop sell­ing movies to Net­flix Inc. and be­gin of­fer­ing fam­ily films and ESPN sports pro­gram­ming di­rectly to con­sumers over two new stream­ing ser­vices.

Start­ing next year, an ESPN-branded ser­vice will fea­ture 10,000 live events a year, in­clud­ing Ma­jor League Base­ball, hockey, soc­cer and ten­nis, as well as col­lege sports, Dis­ney said Tues­day in a state­ment. In­di­vid­ual sports pack­ages will also be avail­able.

The abil­ity to stream some of Dis­ney’s most valu­able sport­ing events and shows without a ca­ble TV sub­scrip­tion un­der­scores how rapidly the busi­ness is chang­ing in the wake of on­line ser­vices from Net­flix Inc. and Ama­zon.com Inc. — and how se­ri­ously Chief Ex­ec­u­tive Of­fi­cer Bob Iger views the threat.

“Our di­rect-to-con­sumer ser­vices mark an en­tirely new growth strat­egy for the com­pany, one that takes ad­van­tage of the in­cred­i­ble op­por­tu­nity that chang­ing tech­nol­ogy pro­vides us to lever­age the strength of our great brands,” he said in the state­ment.

In 2019, the com­pany will in­tro­duce an on­line ser­vice fea­tur­ing newly re­leased Dis­ney films, as well as new pro­grams and con­tent from the com­pany’s li­brary of Dis­ney Chan­nel and other con­tent. Its cur­rent deal to stream newly re­leased movies with Net­flix will end.

Dis­ney shares fell as much as 2.6 per­cent in ex­tended trad­ing af­ter the an­nounce­ments. Net­flix shares fell 3.5 per­cent. Net­flix said in an email that its re­la­tion­ship with Marvel tele­vi­sion, which is owned by Dis­ney, would con­tinue.

To jump­start the ser­vices, Dis­ney is buy­ing con­trol of BamTech, the stream­ing arm of Ma­jor League Base­ball, of which it pre­vi­ously held a onethird stake. The com­pany is pay­ing $1.58 bil­lion to raise its stake to 75 per­cent.

“The me­dia land­scape is in­creas­ingly de­fined by di­rect re­la­tion­ships be­tween con­tent cre­ators and con­sumers,” Iger said in the state­ment. “This ac­qui­si­tion

and the launch of our di­rect-to-con­sumer ser­vices mark an en­tirely new growth strat­egy for the com­pany.”

As if to un­der­score the grow­ing threat to its me­dia busi­ness, Dis­ney on Tues­day re­ported fis­cal third-quar­ter sales that missed an­a­lysts’ es­ti­mates be­cause of shrink­ing ad sales at ESPN and lower results from its film di­vi­sion.

Sales were lit­tle changed at $14.2 bil­lion in the pe­riod that ended July 1, Dis­ney said, and trailed an­a­lysts’ es­ti­mates of $14.4 bil­lion. Profits fell to $1.58

a share, beat­ing the $1.55 av­er­age of an­a­lysts’ pro­jec­tions.

Profits at the com­pany’s ca­ble net­works di­vi­sion fell 23 per­cent to $1.46 bil­lion, at­trib­uted to higher pro­gram­ming costs and lower ad rev­enue.

Dis­ney warned last year that fis­cal 2017 would be dif­fi­cult, hurt by ris­ing costs to tele­vise Na­tional Bas­ket­ball As­so­ci­a­tion games and be­cause fewer films were be­ing re­leased by its stu­dio. In­for­ma­tion for this ar­ti­cle was contributed by Brooks Barnes of The New York Times.

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