SAN FRANCISCO (AP) -- Netflix’s video subscription service has trumped pay-TV channels and grabbed the rights to show Disney movies shortly after they finish their runs in theaters.
The multiyear licensing agreement announced Tuesday represents a breakthrough for Netflix as it tries to add more recent movies to a popular service that streams video over high-speed Internet connections.
Investors applauded Netflix’s coup, lifting the company’s stock by $7.65, or more than 10 percent, to $83.65 in afternoon trading.
It’s the first time that one of Hollywood’s major studios has sold the coveted rights to Netflix Inc. instead of a premium TV network such as HBO, Starz and Showtime. DreamWorks Animation SKG Inc. licensed the pay-TV rights to its movies to Netflix last year under a deal that begins in 2013, but those movies don’t wield the same box-office appeal as Disney, whose stable includes Pixar Animation and Marvel.
Starz currently holds the rights to The Walt Disney Co.’s movies under a deal that expires in 2015.
Beginning in 2016, Netflix will be able to show Disney movies about seven months after they leave theaters.
In Tuesday’s news release, Netflix didn’t disclose how much it is paying Disney.
The Disney deal gives Netflix a measure of revenge against Starz, which had been demanding a price that Netflix refused to pay when their licensing agreement expired earlier this year.
The stock price of Liberty Media Corp., Starz’ owner, dropped $6.62, or 6 percent, to $104.43 in afternoon trading.