SAN FRANCISCO (Reuters) - Amazon.com Inc has licensed thousands of television shows from CBS Corp to help the largest Internet retailer compete with DVD rental and video streaming company Netflix Inc.
The non-exclusive deal adds TV series that include "Frasier" and "Cheers," along with the "Star Trek" franchise, to Amazon's video streaming service.
Terms were not disclosed, but Barclays Capital analyst Anthony DiClemente said the deal was worth more than $100 million.
CBS previously struck a deal with Netflix that was worth roughly $200 million over two years.
The Amazon deal has built-in "escalators" that will benefit CBS if many more customers stream its content, DiClemente said.
"We believe Netflix may be more vulnerable now given its recent pricing changes," DiClemente wrote on Wednesday in a note to investors.
Netflix shares fell 2 percent to close at $281.40 on the Nasdaq stock market, while Amazon fell 1.2 percent to $215.55. CBS shares rose 2.8 percent to close at $28.74 on the New York Stock Exchange.
CBS shows will mainly be available to Amazon Prime customers, who get free shipping and access to video streaming for a $79 annual membership.
The deal increases the number of Prime instant videos to more than 8,000 from about 6,000, Amazon said.
Later this summer, dozens of CBS shows will be available on Amazon's main Instant Video service, which offers more than 90,000 movies and TV shows to buy or rent.
For CBS, the deal is another way to make more money from existing content, Chief Executive Officer Leslie Moonves said in a statement.
Barclays Capital said it would add 5 to 7 cents a share to CBS's earnings, based on a 70 percent profit margin.
The deal gives Amazon more digital content to sell. The company is a leader in digital books through its Kindle device and online bookstore. But it is branching out into more digital content, including apps and games, as well as video.
These moves increase competition with other digital content providers, including Apple Inc, Hulu and Netflix.
Netflix, the top movie rental service with 23 million subscribers, offers more than 20,000 titles through its streaming service. The company could have more than 30 million subscribers by the end of 2011, according to Barclays Capital analysts.
Amazon ended the first quarter with 137 million active users. Prime members account for less than 10 percent of those customers, according to Barclays Capital estimates.
Editing by Andre Grenon, Lisa Von Ahn and Robert MacMillan