Netflix says it won't raise prices after Disney deal

Wed Dec 5, 2012 4:59pm EST
 
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By Lisa Richwine

NEW YORK (Reuters) - Netflix Inc doesn't plan to pass along the cost of the rights to Walt Disney Co movies to subscribers, a senior executive at the video streaming company said on Wednesday.

Netflix, which analysts estimate paid more than $350 million for the exclusive rights to stream Disney movies to TV beginning in 2016, is not considering a price increase to help finance the deal, said Ted Sarandos, the company's chief content officer, at the UBS Global Media and Communications Conference.

"We are not contemplating" raising the $8-a-month subscription fee for unlimited online viewing, Sarandos said during an interview with filmmaker Harvey Weinstein.

The deal gives Netflix streaming rights to movies from Disney's live-action and animation studios, including those from Pixar, Marvel, and "Star Wars" producer Lucasfilm.

Netflix suffered from a consumer backlash and stock plunge after it announced an unpopular price increase in July 2011.

But Netflix's rising content costs have raised worries on Wall Street, with some analysts concerned that Netflix paid too much to get Disney's movies. Tony Wible, an analyst with Janney Montgomery Scott, estimated in a report that Netflix paid more than $350 million a year to secure the deal.

Sarandos called the arrangement with Disney a "game changer" that for the first time will bring new movies from a major Hollywood studio to an Internet-streaming service rather than a cable channel such as HBO or Showtime. Calling Disney a "near-perfect" media company, he said the two began discussing a deal before Disney acquired Lucasfilm and announced plans for new "Star Wars" movies.

Disney talked with other outlets before deciding Netflix was the best platform for its first-run movies, Disney Chief Financial Officer Jay Rasulo said. "This was the highest value deal for us to do. We are thrilled to do it with them," Rasulo said, also speaking at the UBS conference.   Continued...

 
A part of the signage at the main gate of The Walt Disney Co. is pictured in Burbank, California, May 7, 2012. REUTERS/Fred Prouser (