Netflix Renews Pact to Stream Discovery Communications Shows

Netflix Inc. (NFLX), the world’s largest online movie-rental service, renewed and expanded a licensing accord with Discovery Communications Inc. (DISCA), allowing it to stream shows including “Man vs. Wild” to its customers.

Subscribers can watch prior-season series and specials from channels including Discovery, TLC and Animal Planet, Netflix said today in a statement. The non-exclusive agreement runs for two years.

Netflix, based in Los Gatos, California, is securing streaming rights for television shows in an effort to maintain its status as the market leader for renting online video content. Chief Executive Officer Reed Hastings announced he was splitting off and renaming the DVD business on Sept. 18.

Netflix’s disassociation from DVDs, along with a 60 percent price increase for customers who subscribe to both DVDs and streaming content, has led to a drop in the company’s shares. The price increase caused Netflix to cut its subscriber forecast and may lead to a loss of almost 600,000 U.S. customers, according to Barton Crockett, an analyst at Lazard Capital Markets, who rates the shares “neutral.” Netflix ended the second quarter with a record 24.6 million customers worldwide.

Netflix shares have declined 44 percent this month and are down 56 percent since reaching an all-time high on July 13. Earlier this month, the company said it had failed to come to an agreement with Starz LLC, part of John Malone’s Liberty Media Corp., over streaming rights that gave Netflix access to newer movies from Walt Disney Co. and Sony Corp.

The Starz loss could cause Netflix to lose up to 15 percent of its customers, according to Michael Pachter, an analyst with Wedbush Securities in Los Angeles. He rates the shares “underperform.”

Netflix rose $2.84, or 2.2 percent, to $132.87 at 9:45 a.m. New York time on the Nasdaq Stock Market.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net