Netflix, Discovery in TV streaming deal

Netflix Inc. (NFLX-Q132.222.862.21%) and Discovery Communications Inc. 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 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-per-cent 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 networks.

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, Google Inc and Apple Inc.

At the same time, Netflix has been under pressure from Hollywood studios and cable programmers to pay much more for content. Negotiations with Liberty Media’s Starz were recently called off because the two sides could not reach an agreement on pricing terms.

Earlier this week, Chief Executive Reed Hastings announced new content would be coming soon, without naming possible partners.

Mr. Hastings also 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 already upset at price increases announced over the summer.

Netflix shares were up $1.77 (U.S.), or about 1.3 per cent at $132 on Wednesday, but are down about 35 per cent over the last month. Discovery shares, up about 10 per cent over the last month, were up another 63 cents, or 1.6 percent, at $40.37.

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Netflix scoops DreamWorks Animation streaming deal from HBO

Netflix, the DVD and online video subscription service, will this week try to bounce back from a torrid few months in which its shares have halved in value as it unveils a new streaming deal with DreamWorks Animation, the company behind the Shrek films.

The deal could be announced as early as Monday, according to people familiar with the situation. DreamWorks Animation is under contract with HBO, the Time Warner-owned cable channel, until the end of 2013 but has struck an agreement with Netflix that will allow the company’s streaming service to show some of its films before that time. Netflix will replace HBO as the company’s output partner when the HBO deal expires.

Netflix is keen to bolster its content library before February, when its contract ends with Starz, the cable channel that owns rights to stream movies by Walt Disney and Sony Pictures. Negotiations between Netflix and Starz broke down recently when the two sides could not agree a new price.

Netflix is aggressively pursuing other licensing agreements and is also in discussion with Warner Brothers about putting its television programming on the streaming service, according to people briefed on the situation.

Warner Bros, which is part of Time Warner, is the largest producer of TV programming in the US. The talks with Netflix cover teen-oriented shows such as Gossip Girl and Vampire Diaries, people familiar with the situation said. Warner Bros declined to comment.

Netflix last week struck a deal with Discovery Communications which gives it older programming from Animal Planet and the Discovery Channel. More deals are expected in the next few months as it seeks to restock its service before the Starz deal ends in February.

Netflix shares have tumbled since July, when it announced a 60 per cent price increase. The move angered many of its customers who began to cancel their subscriptions in higher numbers than Netflix had anticipated.

Investors were further spooked when Netflix adjusted its third-quarter guidance, saying it had underestimated by 1m the number of subscribers it expected to quit the service.

The anger intensified again last week when Netflix unveiled plans to split its business into two distinct entities, each with a separate management team. It has renamed its DVD business “Qwikster” and will operate it as a standalone business. Customers that want both the DVD and the streaming service will require two separate accounts.

Analysts have suggested that the separation could presage a sale of the DVD business but the company is adamant that it intends to keep it. However, its new investment in content is aimed at the streaming business, in a sign of the company’s confidence in its potential in the US and in international markets.

Netflix recently unveiled plans to launch the streaming service in 43 countries across Latin America and the Caribbean and plans eventually to take it to Europe.

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