It looks like Disney (NYSE:DIS) will be supplying its content to Verizon's (NYSE:VZ) FiOS TV, a platform that delivers digital TV content via fiber-optic technology. The long-term programming agreement calls for a dozen Disney channels to be distributed on Verizon's platform. About half will be flavors of ESPN, which makes sense because that brand is an undeniable jewel in Disney's cable portfolio. (Subscribers can look forward to ESPN Classic and ESPNU in addition to regular old ESPN.) Retransmission rights to owned and operated ABC stations will also be part of the package.
FiOS TV is expected to open today in Keller, Texas. The asset comprises an important element of diversification from which Verizon hopes to reap value-enhancing benefits down the road. FiOS TV has been blessed not only by Disney but also by General Electric's (NYSE:GE) NBC Universal properties, Time Warner (NYSE:TWX), and Viacom (NYSE:VIA). What about News Corp. (NYSE:NWS), you ask? Don't worry: Rupert Murdoch has no intention of being left in the dust. It's been reported that he is very close to signing a distribution deal with Verizon for Fox's offerings.
All of these media companies really have no choice but to bless FiOS TV. When you think about it, the chance of a new platform becoming huge is not something that can be approached nonchalantly, nor is the chance to create incremental revenue streams from your franchises. It's important for content providers to strike deals early on to ensure that their branded forms of entertainment and information are available to as many subscribers as possible.
Whether the FiOS TV distribution system catches on or not is anybody's guess, but early positioning is vital. And signing up a powerhouse like Disney certainly is a win-win situation. It's also a positive sign that the subject of digital thievery was discussed upfront, because it is such a devastating scourge to shareholder value for the media conglomerates. I think consumers will welcome a new pipeline option for their homes. And with good content and a decent price, FiOS TV should create a lot of buzz.
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Check out the Disney and Verizon discussion boards and feel free to post your thoughts.
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Fool contributor Steven Mallas owns shares of Disney and General Electric. The Fool has a disclosure policy.
