Pedestrians are reflected in a logo of Sony Corp outside its showroom in Tokyo July 16.© Yuya Shino / Reuters
Walt Disney Co. and 21st Century Fox Inc. are in discussions to supply Sony Corp.. with programming for its planned Internet-based TV service, according to people familiar with the conversations.
Disney and Fox would join Viacom Inc., which said Wednesday it will provide 22 networks, the first time the media company, headed by Chairman Sumner Redstone, has made its shows available for a Web-based service. The deal covers live and on-demand programming, Viacom and Sony said in a statement.
Sony's service will debut with "major programmers," according to Wednesday's statement. The company wouldn't specify when, or identify potential partners. No deal with Disney or Fox is imminent, said the people, who asked not to be named because the talks are private. Sony shares rose.
"Sony is clearly beefing up content offerings for its growth plans for its Entertainment Network division, recently merged with its gaming unit," Amir Anvarzadeh, a manager of Japanese equity sales at BGC Partners Inc. in Singapore, said by e-mail.
Television, telephone and technology companies are exploring cable-like packages streamed over the Internet to reach younger viewers who aren't signing up for traditional cable and satellite TV. Progress has been slow. Intel Corp. abandoned a planned Web-TV service this year. Dish Network Corp. secured rights to carry Disney channels like ESPN in an online package separate from its satellite-TV business.
Verizon Plans
Verizon Communications Inc. is planning an Internet-based offering by mid-2015 after acquiring the supporting technology from Intel Corp. earlier this year, Chief Executive Officer Lowell McAdam said Thursday at a Goldman Sachs conference in New York. Verizon's mobile-video-streaming technology could let it offer live video from major broadcasters along with on-demand programming, he said.
The Viacom deal with Sony took a more than a year to complete after a preliminary accord.
"It'll benefit every party in the ecosystem we have all enjoyed," Viacom CEO Philippe Dauman said Wednesday at the Goldman Sachs conference.
Dauman praised the "elegant consumer interface" of Sony's service and said the Tokyo-based company was a natural partner given the popularity of its gaming devices among the young viewers who watch Viacom's cable channels.
Discovery Communications Inc., Time Warner Inc. and Starz are also among the companies discussing offering their programs through Sony, the New York Times reported earlier.
Numerous Partners
"The service will launch with numerous major network partners, but we aren't providing specifics at this time including who we are speaking to," Sean Yoneda, a spokesman for Sony in the U.S., said in an e-mail.
Chris LaPlaca, a spokesman for Disney's ESPN, declined to say whether the network was speaking to Sony.
"We remain platform agnostic and are always looking for new and innovative ways to serve our fans, consistent with the approach we are taking with our current distribution partners," LaPlaca said in an e-mail.
Nathaniel Brown, a spokesman for Fox, declined to comment.
The partnership announced Wednesday unites more than 75 million Internet-enabled Sony devices in U.S. homes with Viacom's programming, Sony said. Viewers can watch shows such as "SpongeBob SquarePants" and "Teen Wolf" on TVs, game consoles and Blu-ray players.
Boosting Investment
Sony CEO Kazuo Hirai has boosted investment in content production and TV networks as he pushes his "One Sony" vision to unite products, including mobile devices and TVs, with games, music and films as it competes against Samsung Electronics Co., the world's biggest maker of phones and televisions.
Sony shares rose 2.7 per cent to 2,105 yen at the close in Tokyo. The company's American depositary receipts climbed 1.2 per cent to $19.74 at 10:14 a.m. ET in New York. Viacom shares were little changed at $79.86.
"A good lineup is important for this service because users will choose a service with a lot of content," said Hideki Yasuda, a Tokyo-based analyst at Ace Research Institute. "It's also a way for Sony to differentiate itself from Samsung."
Viacom owns and operates the largest basic-cable portfolio in the U.S. by audience share, said Sony, citing Nielsen data. The cloud-based TV service will stream Comedy Central, VH1 and Spike, among others, as well as Viacom's full video-on-demand package.
The deal earlier this year with Burbank, California-based Disney gave Dish, Charlie Ergen's satellite-TV company, rights to carry the Disney Channel, ABC and ESPN. That put Dish ahead of Sony in the race to become the first to offer a service known as over-the-top, or OTT, because it runs over an Internet connection.
OTT Stalled
Negotiations for the right to stream popular TV channels have slowed the development of every planned OTT service, because distributors need a minimum number of channels to offer a product robust enough to compete with traditional pay-TV. Every major TV programmer has explored such deals.
"What they are trying to do is figure out a way to get younger consumers and some cohorts that are not obviously going to subscribe to big packages and bundles of channels, and give them really an on-ramp to starting in the experience of subscribing and getting something that fits them," Time Warner CEO Jeff Bewkes said at the Goldman conference.
"It's a very worthy thing to try to figure this out."