Comcast, Disney Ink Carriage, On-Demand Pact

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Disney announced that it has signed a new 10-year distribution pact with cable operator Comcast that covers the ABC owned-and-operated stations, as well as Disney's cable networks and on-demand content, and said that it has sold its 39.5% stake in E! Networks, to Comcast for $1.23 billion.

The deal covers the 10 ABC O&O's as well as Disney Channel, ABC Family, Toon Disney, ESPN, ESPN2, ESPN Classic, ESPNEWS, ESPN HD and increased carriage of SOAPnet. Comcast has agreed to launch ESPN Deportes, a stand-alone Spanish-language sports network, and formalized its agreement with Disney over carriage of ESPN2 HD. Comcast is also now the sole owner of E! Networks, which includes E! Entertainment Television and Style Network.

A significant component of the deal, which was first reported in the Wall Street Journal, is on-demand content. For the first time, Comcast will have access to Disney movies for its "On Demand" video-on-demand service, which will cost $3.99 for new releases and $2.99 for library content. Moreover, starting next fall ABC will be making its primetime and news content available for free through Comcast's "On Demand" service. This is the first time the broadcast network has provided its content to cable VOD customers, though ABC has had success selling shows online at 99 cents apiece through Apple's iTunes service.

"This is one of the broadest distribution agreements in the history of our company," said Bob Iger, President and Chief Executive Officer of The Walt Disney Company, in a statement. "Disney's great brands and great content combined with Comcast's leading distribution platforms provide an incredibly compelling consumer experience in sports, family, news and entertainment."

Several ABC primetime series, including "Lost" and "Desperate Housewives" and two new primetime shows, will be offered free by Comcast, the day after their initial broadcast, in ABC-owned television station markets. "Lost" and "Desperate Housewives" will also be available in high-definition to HD VOD-capable subscribers. Also available in the same markets will be "World News with Charles Gibson," "Nightline" and "This Week with George Stephanopoulos."

Under the agreement, Comcast also plans to add certain shows from Disney Channel, SOAPnet, Toon Disney and ESPN libraries to Comcast's VOD lineup in markets where those channels are offered. The two companies will also make promotional material from the Disney-ABC Television Group available on Comcast's Web portal, www.comcast.net.

The ABC shows will initially run with the same commercials as the broadcast version, says Disney spokesperson Katina Arnold, though she says ABC "has the option to experiment with new models for this format." That could theoretically consist of pre-roll or post-roll ads, such as the GMC ads that CBS is placing in its on-demand content for Comcast. Comcast is not yet testing dynamic ad-insertion, which in the future is expected to allow targeted and constantly updated ads to be placed alongside VOD content.

VOD movies that will be available from Walt Disney Pictures, Touchstone and Miramax beginning in 2007 include "Pirates of the Caribbean 2," "The Santa Clause 3," "Invincible" and "The Guardian."

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