Jan. 4 (Bloomberg) -- Walt Disney Co. reached a long-term agreement with Comcast Corp. that provides cable TV subscribers with programs on TVs, computers and mobile devices.
The agreement comes a year before existing accords expire and will run for a decade, according to a person with knowledge of the situation who wasn’t authorized to speak publicly.
Disney may receive $22 billion to $25 billion for ESPN programming alone over the 10 years, said Derek Baine, an analyst at SNL Kagan. The accord with Comcast, the largest U.S. pay-TV company, averts fee disputes that can interrupt cable service. For the first time, Comcast customers will be able to watch ESPN, Disney and ABC shows live or on demand on multiple screens, the companies said in a statement today.
“The consumer ultimately gets more utility,” said David Bank, an analyst at RBC Capital Markets in New York. “I think it generally helps justify higher affiliate fees.”
The agreement will deliver 70 separate services from Disney, ABC and ESPN to customers of Philadelphia-based Comcast and includes new technologies that may arise over the period, the companies said in the statement. Financial terms of the arrangement weren’t disclosed.
Analyst Baine estimates ESPN program fees will rise 6 percent to 8 percent annually. Payments for Disney channels, mobile applications and other services will add to the total, he estimated.
The accord includes Disney cable channels and ABC broadcast stations owned by the Burbank, California-based company, according to the statement. Comcast will introduce Disney Junior, a new 24-hour basic cable channel for preschoolers, the companies said.
“We see this deal as a template for other deals we’re negotiating, although there aren’t many that have the breadth and scope that Disney brings,” Neil Smit, president of Comcast Cable, said in an interview.
The agreement marks the first time Disney cable channels will stream content to authenticated pay-TV customers using mobile devices and computers. ESPN already had such agreements with 40 million pay-TV homes, George Bodenheimer, executive chairman of the sports network, said in an interview.
“We’re working on more of them,” Bodenheimer said
Disney, the theme-park and media company, rose 1.4 percent to $38.85 at the close in New York. The shares were little changed last year. Comcast, which had 20.3 million video subscribers at the close of the third quarter, gained 1 percent to $24.73 after rising 8 percent in 2011.
In August 2010, Comcast signed a 10-year accord with CBS Corp. for access to the company’s Showtime premium cable network and its TV stations.
“We have similar deals in structure that we will be pursuing,” Anne Sweeney, co-chairman of Disney Media Networks, said in an interview. “We think that this is the future of how viewers will be watching their TV and consuming content.”
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