Disney, Comcast wrap up deal for ABC on demand

Wed, 11/22/2006 - 9:37am

Copyright 2006 Gannett Company, Inc.
All Rights Reserved
November 22, 2006 Wednesday
By David Lieberman
From Lexis Nexis

NEW YORK -- Disney has finally added cable to the venues where its ABC will offer video-on-demand versions of hit shows.

In a wide-ranging deal Tuesday, Disney said it will provide "Desperate Housewives," "Lost" and other ABC shows, as well as fare from cable networks including ESPN and Toon Disney, to Comcast's free VOD service beginning in fall 2007. The ABC shows will have ads and will be offered only in markets where Disney owns the local ABC station.
Disney movies also will appear on VOD, for $3.99 each.

ABC already streams some shows online, with ads included, and sells episodes on iTunes. But unlike CBS, NBC and Fox, it has not offered shows via cable VOD.

The deal also secures carriage for Disney's cable channels on Comcast systems. The companies would only say that the agreement will last "into the next decade."

And Comcast will take complete control of E! Networks after paying $1.23 billion for Disney's 39.5% stake.

Comcast CEO Brian Roberts, in a statement, called this a "watershed event."

Ben Pyne, president of Disney and ESPN Networks Affiliate Sales, says that "absolutely we'll use it as a template" in similar discussions with Time Warner.

The agreement seems to resolve some prickly disputes. Cable operators have tried to limit ESPN's high and fast-rising license fee of about $2.90 per basic cable subscriber per month, up 12% from 2005, according to Kagan Research. ESPN says its fees reflect rising sports rights costs.

The companies would not say how much ESPN's fees will rise in the new deal.

Comcast has been angling with studios to provide movies to cable VOD. Operators say it could become a big business, and one their satellite rivals can't easily duplicate.

"Comcast needs Disney and Disney needs Comcast," says Sanford C. Bernstein's Michael Nathanson. "The question we don't know is price."


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