By Liana B. Baker and Varun Aggarwal
March 4 Dish Network Corp and Walt
Disney Co have reached a long-term programming deal,
allowing the No. 2 satellite TV provider to carry Disney-owned
networks such as ABC and ESPN and deliver the content outside of
a traditional TV subscription.
The deal announced Monday marks the first time that a U.S.
pay-TV operator was given flexibility by a media company to
offer its content over the Web through smartphones, tablets and
Until now, content owners had not granted cable or satellite
TV operators the digital rights to sell their shows outside of a
"The Dish/Disney deal appears to set the stage for a new
wave of broadband-delivered video services," said BTIG analyst
The companies said Dish gets the right to stream "linear and
video on demand content" from channels such as ABC broadcast
stations and cable networks such as Disney Channel and ESPN as
part of an internet-delivered IP-based multichannel offering.
"Disney comes out a winner" because its new college football
network gets national distribution through the deal and it
settled an area of conflict regarding Dish's commercial-skipping
digital video recorder (DVR), MoffettNathanson Research analyst
Michael Nathanson said.
Disney shares rose 3.1 percent to $82.00 leading the Dow
Jones Industrial average.
It was "one of the most complex and comprehensive" deals it
has ever undertaken, said Anne Sweeney, co-chairwoman of Disney
Dish did not provide details on its potential TV
subscription over the Internet, but a big market is likely
waiting for such a product.
North American consumers will spend $6 billion in 2014 on
entertainment from over-the-top services such as Netflix, more
than twice what they spent in 2010, according to PwC's annual
entertainment and media forecast.
Sony Corp has been working on an Internet TV
service that is expected to come out this year. Intel Corp's
efforts to launch one was recently bought by Verizon
Dish chairman Charlie Ergen has talked about the need to
suit viewer's changing habits and acknowledged that a small but
growing number of customers are "cutting the cord" or cancelling
traditional TV and just subscribing to internet service.
Ergen ruffled the feathers of broadcasters by rolling out a
service called AutoHop that lets viewers automatically skip
commercials on recorded programming on its DVRs, but
discontinued the service for ABC programming as part of the
AutoHop sparked a lawsuit between the two companies. Disney
and Dish's programming agreement expired at the end of
September, but they averted a blackout of Disney's top networks
for the satellite provider's 14 million customers.
The deal will result in dismissal of all pending litigation
between the two, including disputes over PrimeTime Anytime and
AutoHop, the companies said in a statement.
The deal includes digital rights for mobile apps such as
Watch ESPN and Watch ABC.
Dish will carry Fusion, a new English-language news channel
aimed at young adults and the SEC Network, a college sports
network from ESPN launching later in 2014.
Dish, like its larger rival DirecTV, does not offer
broadband Internet service like cable companies so it has been
experimenting with ways to adapt.
DirecTV CEO Mike White has said the No. 1 satellite operator
is working on an "over-the-top" video package to suit niche
audiences such as Hispanic or kids programming, but hasn't given
details on that product yet.