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Disney, ABC Station Owners Agree to Share Pay-TV Fees

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Feb. 17 (Bloomberg) -- Walt Disney Co., owner of the ABC network, said it reached an agreement with some affiliate stations to collect a share of the retransmission fees they obtain from pay-TV systems.

The agreement, along with accords Disney-owned stations have reached with pay TV operators, covers 64 percent of the U.S., Anne Sweeney, president of the Disney/ABC Television Group, said at an investor meeting today. Stations may pay a license fee to Disney or share fees they collect from cable and satellite TV systems, she said. Other terms weren’t disclosed.

The agreement advances Disney’s effort to receive so-called retransmission fees from pay-TV carriers for signals that are available free over the air. The company announced such an agreement today with Verizon Communications Inc.’s FiOS pay-TV service and has similar accords with Cablevision Systems Corp., the New York-area cable company, and Time Warner Cable Inc.

The Verizon accord is part of a larger deal that gives FiOS subscribers online access to Disney’s ESPN cable programs along with traditional pay TV viewing of the ABC Family, Disney and Disney Junior cable channels, the companies said in a statement. Terms weren’t disclosed.

The agreement with Verizon covering the cable channels and ESPN online was announced in October. Starting today, Verizon’s 3.3 million FiOS customers have access to ESPN, ESPN2, ESPNU and ESPN Buzzer Beater, which provides live clips of college basketball games through personal computers and mobile devices.

Interactive Cuts

Disney, based in Burbank, California, closed unchanged at $43.70 at 4 p.m. in New York Stock Exchange composite trading. The shares have risen 17 percent this year, the second-highest gain among stocks in the Dow Jones Industrial Average. Verizon, based in New York, gained 20 cents to $36.37.

The company also said it plans to cut operating expenses at its money-losing interactive division by 25 percent by 2012.

The reductions are part of a drive to achieve profitability at the division by 2013, John Pleasants and James Pitaro, co-heads of the interactive business, told investors at the meeting in Anaheim, California.

The division, which posted a loss of $234 million for all of fiscal 2010, plans to reduce spending on video games for consoles by 50 percent over the next few years.

In July, the company agreed to buy Playdom Inc. for $563.2 million, acquiring the second-biggest maker of games played on Facebook Inc. and MySpace websites, and completed the purchase of Tapulous Inc., a developer of music-related video games for Apple Inc. products.

To contact the reporter on this story: Ronald Grover in Los Angeles at rgrover5@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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