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.
Netflix will have exclusive U.S. rights to offer the first-run movies through its streaming service during the period normally reserved for premium TV network such as HBO, Starz and Showtime. That period starts about seven months after movies leave theaters. The exclusivity does not extend to DVDs, a service Netflix is trying to phase out.
Investors applauded Netflix’s coup, lifting the company’s stock by $8.86, or nearly 12 percent, to $84.86 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. 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 get the movies instead.