Comcast, Disney join on Internet content deal

Seems The Walt Disney's desire for any potential profits derived from the Internet overrides holding a grudge against cable telecommunications company Comcast. Less than three months after a failed takeover bid by Comcast, the two companies have signed an agreement to offer news and children's entertainment programming from Disney through Comcast's high-speed Internet service.

Comcast, the largest cable company in the U.S, will offer the programming to its 21 million cable subscribers and its 5.7 million broadband subscribers, the companies said in a statement Wednesday.

Representatives from Comcast, based in Philadelphia, and Disney, could not immediately be reached for comment. The companies did not disclose financial terms of the deal, though sources said the agreement is for five years.

Comcast's Internet News Channel as of Wednesday is using content from Disney's ABC News, including ABC News Live, which was launched Wednesday and provides live breaking news events, hourly news briefs and reports from ABC News correspondents specifically designed for broadband customers.

ABC News already has deals with other DSL (Digital Subscriber Line) providers in the U.S., including America Online and the SBC Yahoo DSL service from Yahoo and SBC Communications, and reaches about 35 million dial-up and broadband Internet users, according to Julie Summersgill, an ABC News spokeswoman. ABC News will not provide any exclusive content to Comcast, said Summersgill, who also confirmed that the deal announced Wednesday is a "multiyear" agreement.

Later in the year, Comcast plans to launch an online Kids Channel, which will provide Disney Connection, comprising broadband content aimed at children between the ages of 3 and 11. Disney content will include children's games, activities and video shorts for the broadband service.

When Comcast originally attempted to buy Disney in February, it pointed to its desire for content as one of the primary reasons behind the acquisition move. Comcast has been facing stiff competition from companies offering DSL service and sees content as one of the best ways to woo customers to its cable broadband services.

Before Disney's board of directors rejected Comcast's unsolicited acquisition bid, Brian Roberts, Comcast president and chief executive officer, said in a speech that he saw Disney's brands, particularly its ESPN sports network, as ripe for extensive marketing and cross-promotion with existing Comcast networks and other properties.

Though no agreement between Comcast and Disney regarding ESPN was announced on Wednesday, Comcast is dipping its finger in other content pies. It announced a deal with Liberty Media, that would give Comcast access to Liberty content, and resolve pending issues of litigation between the two companies.

As part of that agreement, Comcast will acquire the stock rights to Liberty Media subsidiary Encore ICCP in exchange for Liberty Media redeeming 120.3 million shares of its common stock held by Comcast.

Comcast would gain International Channel Networks; Encore ICCP's 10 percent ownership interest in E! Entertainment Television (of which Comcast is already the majority owner); Liberty Media's rights under a TCI Music contribution agreement, and approximately US$545 (AU$764.9) million in cash, the companies said in a separate statement.

The deal, which requires standard regulatory and board approvals, would also end litigation pending between Comcast and Liberty Media regarding the TCI Music contribution agreement, which Comcast inherited as part of its acquisition of AT&T Broadband in November 2002, the companies said.

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Laura Rohde

IDG News Service
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