* Two-year deal for full episodes of Discovery shows
* Discovery's first major release of long-form Web content
(Adds Netflix comments)
By Paul Thomasch
NEW YORK, Sept 21 Netflix Inc (NFLX.O) and
Discovery Communications Inc (DISCA.O) reached an agreement to
bring episodes of popular TV adventure shows including "Man vs.
Wild" and "River Monsters" to the streaming service, the
companies confirmed on Wednesday.
The deal is the first major move by Discovery to make full
episodes of its TV shows available for instant streaming,
expanding well beyond the short clips that are now available on
video sites such as Google Inc's (GOOG.O) YouTube
The two-year deal -- first reported by Reuters -- covers
only material from prior seasons of the TV shows and is limited
to Netflix subscribers in the United States. Discovery has an
option for a third year.
Financial terms of the agreement could not be learned.
Home to some of the biggest hits on cable TV, Discovery
Communications' networks include Discovery, TLC and Animal
Planet, ID: Investigation Discovery, Science and Military
Channel. But Chief Executive David Zaslav has long shied away
from making full episodes of Discovery's shows available on the
web, saying it failed to make economic sense.
Instead, he has chosen to use the web largely as a
promotional tool to draw new viewers to its programs, while
concentrating on expanding the TV business overseas.
The deal with Netflix, however, allows Discovery to sell a
big chunk of its programming library, rather than just one or
two of its recent hits. None of the content from Oprah
Winfrey's OWN Network -- in which Discovery has a 50 percent
stake -- has been included.
Under the deal, Netflix will also provide a search function
that makes it possible for a customer to simply enter the words
Discovery Communications into a search bar and get a list of
all the available programs from TLC, Animal Planet or the other
The agreement comes during a rough stretch for Netflix,
which needs to add more content to its streaming service to
keep drawing in new customers and fend off competition from the
likes of Amazon.com (AMZN.O), Google Inc (GOOG.O) and Apple Inc
But adding customers is suddenly proving difficult, with
Netflix the subject of heated complaints from customers upset
over a price hike it announced in July. Since then, the stock
has dropped by around 50 percent.
Netflix Chief Financial Officer David Wells said on
Wednesday that the company's "core thesis was intact" despite
the recent customer backlash.
"We are still well-positioned to take advantage" of
opportunities in domestic and international streaming markets,
Wells said at the Goldman Sachs Communacopia Conference. "We
are still the market leader."
Wells said price reductions or short-term discounts were
"in the realm of possibility, but I don't think it's going to
win back the customers that we've lost."
"The biggest thing we can do is continue to add content,
continue to improve" the service, he said.
That could prove costly, with Netflix under pressure from
Hollywood studios and cable programmers to pay much more for
content. Negotiations with Liberty Media's LINTA.O Starz were
recently called off because the two sides could not reach an
agreement on pricing terms.
Earlier this week, Netflix unveiled plans to further
concentrate on its streaming service by splitting off its
DVD-by-mail business, renaming it Qwikster. The decision,
however, set off another round of complaints from customers.
Netflix shares closed down $1.53, or just over 1 percent,
at $128.50. Discovery shares rose 19 cents to $39.93.
(Additional reporting by Lisa Richwine in Los Angeles; Editing
by Bob Burgdorfer, Derek Caney and Carol Bishopric)