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Exclusive: DirecTV in talks with Disney on deal for Internet rights

A Direct TV dish is seen outside a home in the Queens borough of New York July 29, 2013. REUTERS/Shannon Stapleton
A Direct TV dish is seen outside a home in the Queens borough of New York July 29, 2013. REUTERS/Shannon Stapleton

By Ronald Grover and Liana B. Baker

(Reuters) - DirecTV is in talks with Walt Disney Co to license the rights to offer Disney's broadcast and cable channels as part of an Internet-based product, DirecTV said on Wednesday.

The deal would mirror a first-of-its kind agreement that Disney and satellite rival Dish Network Corp announced earlier this week.

The Internet rights being discussed are part of a large-scale programming agreement that would replace a deal between the companies that expires in late December. Disney and DirectTV are in negotiations but the timing of the new deal could be not be learned.

"The deal and terms are not unexpected as the Dish contract was the most recent in the Disney timeline to expire," DirecTV spokesman Darris Gringeri said on Wednesday. "The DirecTV contract is up next and we're in the process of working with Disney on a similar long-term agreement of our own."

A Disney spokesman declined to comment.

A new pact could give both Disney and DirecTV, the No. 1 satellite operator, an additional revenue source as consumers gravitate toward online video services such as Netflix Inc and watch more television online.

The agreement between Dish and Disney marked the first time that a U.S. pay TV operator has been given the flexibility to offer its content over the Web through smartphones, tablets and computers outside of a pay TV subscription.

In that agreement, Disney allows for Dish to stream linear and on-demand content from ABC broadcast stations as well as cable channels, ABC Family, Disney Channel, ESPN and ESPN2. Dish has not revealed plans for its streaming service.

DirecTV, which has 20.3 million subscribers, is expected to secure better rates on programming than Dish, which has 14.1 million subscribers, because of its size. Both companies have complained about the rising cost of programming and have been involved in high-profile blackouts over the past few years.

DirecTV Chief Executive Mike White has previously said the company is working on an "over-the-top" video package to suit niche audiences featuring Hispanic or kids programming, but has not yet given details on that offering.

(Reporting by Ronald Grover in Los Angeles and Liana B. Baker in New York; Editing by Matthew Lewis, Lisa Shumaker and Richard Chang)

(This story corrects in third paragraph to say DirecTV, not Dish)

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