Disney's ABC reaches $200 million streaming deal with Netflix [Updated]

The Walt Disney Co. has reached an agreement with Netflix Inc. that allows the rapidly growing subscription service to stream television shows from the ABC network, Disney Channel and ABC Family, signaling Netflix's growing clout as a distributor of programming over the Internet.

The deal is worth an estimated $200 million, according to one person with familiar with the matter.[Update, 3:25 p.m.: The deal is for one year and will be worth between $150 million and $200 million, the person added. It includes an option to extend the license.]

The Disney licensing arrangement would significantly broaden the entertainment options available to Netflix subscribers, allowing them for the first time to watch previous seasons of a number of ABC shows including "Grey's Anatomy," "Brothers & Sisters," and "Ugly Betty." In addition, Netflix will add the final season of "Lost," for which it previously streamed the first six seasons.

The video service will also have shows from the ABC Family and Disney Channel networks, including some shows that initially aired as recently as 15 days prior.

“Television content is continuing to grow for us and is now equally popular with our customers in terms of hours watched as movies,” said Ted Sarandos, Netflix’s chief content officer.

The ABC/Disney deal comes after prior deals for television content struck by Netflix this year with NBC Universal and Warner Bros.

The agreement would appear to heighten the rivalry between Netflix and Hulu, the online streaming service in which Disney is a part owner.  Both services are vying for subscribers who want the flexibility to watch television shows and movies on a variety of devices, whenever the mood strikes them.

Netflix is increasingly looking like a mainstream cable network willing to pay syndication fees for rights to distribute content. It paid $50,000 to $150,000 per episode to distribute ABC and cable television shows, the person familiar with the situation said.

The deal is bound to increase anxiety among cable, satellite and telecommunications companies, which pay a premium for ABC and cable shows. These traditional TV distributors are privately worried about the threat of so-called "over-the-top" services, which allow viewers to pay nominal sums to watch mainstream programming. 

Netflix, once best known for distributing DVDs by mail in its trademark red envelopes, is attracting a growing number of paying customers to its online streaming service. These subscribers pay as little as $7.99 a month for unlimited access to movies and TV shows. It currently has 16 million customers.

-- Dawn C. Chmielewski and Ben Fritz

[Updated at 11:16 a.m. to include information on what shows will be available and when via Netflix and to add Sarandos' quote. A previous version of this post incorrectly said that new "Grey's Anatomy" episodes would stream on Netflix within 15 days of airing.]

Comments

[Bob's Your Uncle]

What about Disney movies like Tron? The original 1982 Tron movie isn't even available on Netflix as a DVD or streaming. Interesting that Netflix lists this movie, but it can only be added to the "saved" queue.

[Jack Meoph]

Disney isn't allowing the original TRON to be released before the new TRON comes out, and maybe even until after it is released on DVD. They think the movie was garbage and when compared to todays cg it is. But, it was awesome in the day. Netflix will own you!!! I've been a fan of Netflix (and subscriber) forever, wish I would have bought stock, but I'm poor and can't buy anyone's stock. :p I quit subscribing to cable/sat/etc. over 10 years ago, and haven't missed it. When I'm forced to pay for content that I don't want or use, I'm not interested. I'd rather do without than be bullied into buying trash.

[Spank05]

Bob's Your Uncle,

Disney doesn't want anyone to see the OG Tron before the sequel because they're scared the horrifically dated graphics will turn people off to the new product.

There's been several stories about this online and Disney has put pressure on stores like Best Buy to not have the OG Tron on their shelves till after the new release in theaters.

[David]

Paying $80 to some lame cable company is soon to be a thing of the past. 300 channels while you really only watch about 10, lol. Say goodnight to corporate monstrosities like Verizon and Comcast with horrible overseas customer service. I paid $6 for rabbit ears at Radio Shack and I get all major networks, plus my $8 for streaming film and TV from Netflix. Awesome.

[CornerJ]

Personally, I have near-zero interest in already broadcast television shows. I have a DVR for that and I use it to record those series or individual shows that interest me.

What Netflix really needs (and I'm a subscriber) is more, current, mainstream movies. The offerings it has now for instant (streamed) viewing are mostly years old, or foreign, or from minor, original cablecast movies. Frankly, it's very slim pickings.

This deal doesn't excite me one bit (and it would if it included recent Disney movies rather than TV shows).

[Randy]

@Bob,

Learn to read an article, the deal is with Disney's TV studio, not the movie studio.

[Jeff Merrill]

I rarely endorse any product or service, but, I must say that after being a customer of Netflix for years, I think they offer a super combination of services. I receive DVDs by mail and use their streaming feature regularly. I think the real value is the fact that they have all the old, foregin and obscure stuff. Most of that content would be really hard to come by any where else!

[sophie]

I agree with CornerJ. Apple should pressure for more streaming films from Netflix because of its new Apple TV. Just got one.

[Marv]

oh Randy, meow!

[Bill]

Don't see the point of this. If I wanted to watch these shows, I would watch TV, not Netflix. I subscribe to Netflix because the entertainment available on TV is so dismal.

[jupiterjenny]

I Love Netflix - I am DONE paying the CRAZY prices the cable companies want for their crappy services. I watch most of the TV shows I want to see online or on my xbox via Netflix. I am done with loud and annoying commercials and tons of channels airing only old repeats.

I do think Netflix's streaming selection is a bit lame- but I am hopeful more deals such as this will broaden their selections available!

And for those folks on here whining they just use their DVR's...have you even noticed how much you're paying for that!!??? I don't spend that much a month on food/clothing and such for myself- why would I spend it on a TV that is off most of the day?
10$ a month on netflix is just right. Down with cable!!!