Comcast, Disney in 10-year content deal

Saying it was unprecedented for its breadth and duration, Comcast Corp. on Wednesday reached a 10-year distribution agreement with the Walt Disney Co. that guarantees Xfinity subscribers - with no threat of contract disruptions - will see ESPN, ABC, and other Disney programming on their TVs.

The comprehensive deal also allows Comcast to stream Disney-owned content to tablets, laptops, and smartphones.

Financial details were not released, though it's likely worth well more than $10 billion to Disney over the contract term, according to industry estimates.

"The new agreement enhances the multichannel business model and supports the companies' mutual goal to deliver the best video content to customers across multiple platforms," the companies said in a statement.

Distribution contracts are typically about five years, and Disney has previously signed separate distribution deals with Comcast for its ABC, Disney, and ESPN units.

One analyst estimated that given its scope and access to Disney products, Comcast could face programming cost increases of 7 percent to 8 percent a year. Comcast subscribers ultimately pay those higher costs through their monthly cable bills. Comcast did not announce a cable-bill rate increase related to the Disney deal.

The Philadelphia cable company currently pays more than $1 billion a year to Disney for ESPN programming, according to industry estimates. The two companies had a distribution contract for ESPN that was to expire in late 2012, while a separate contract for non-sports Disney programming expired at the end of 2011. The companies used that expiration to wrap all Disney distribution into one deal.

Neil Smit, cable division president, declined to comment on financial details in an interview Wednesday. He said Comcast attempted to "strike a balance" between subscriber access to Disney content and cost in the negotiations.

With the new deal, Comcast Xfinity TV customers could stream ESPN and other Disney content directly onto smartphones or other handheld devices, a first for the industry, Smit said. Comcast believed this was important because "customers want to consume content where they are and whenever they want to," he said.

Comcast also agreed to pay retransmission fees for distributing seven Disney-owned ABC TV stations to its cable subscribers. Those stations are WABC-TV New York, WLS-TV Chicago, WPVI-TV Philadelphia, KGO-TV San Francisco, KTRK-TV Houston, KTVD-TV Raleigh-Durham, and KFSN-TV Fresno.

Historically, cable companies have distributed local TV stations without paying the stations for the content. TV stations now say the economics of the network TV business require them to be paid. In separate negotiations, Comcast has agreed to pay retransmission fees to NBC and CBS stations.

Disney also secured a big help with a new channel. Comcast agreed to launch Disney Junior, a new 24-hour general-interest channel for preschool-age children, parents, and caregivers that could become a valuable new property for the California media giant.

Disney Junior will debut in 2012 with animated and live programming that blends Disney's storytelling with educational programming that would teach math, language skills, healthy eating, and social skills.

The new Disney channel will get a boost with a launch on the nation's largest cable operator serving about 23 million subscribers. As part of the contract, Disney will feed programming to Comcast's growing On Demand platform.

David Joyce, stock analyst with Miller Tabak + Co. L.L.C., said the deal seemed "good for both companies" because "it creates long-term visibility and is pretty much all-encompassing."

Anne Sweeney, president of the Disney/ABC Television Group, said, "This landmark deal is a great example of what can be achieved when programmers and distributors collaborate and innovate together."