Disney has pulled more than half of its TV box sets from Sky’s streaming service, including popular series such as Grey’s Anatomy, Scandal and the Marvel shows, as the entertainment giant prepares to launch its Netflix rival in the UK next year.
The world’s largest entertainment company, which owns crown jewels from the Star Wars and Marvel franchises to Toy Story-maker Pixar and family favourites such as Frozen 2, is building a content arsenal to make sure its new Disney+ venture is a hit when it launches in the UK on 31 March 2020.
The content clawback has already begun with the number of seasons of TV shows made by Disney-owned ABC available on the Sky Now streaming service slashed from 99 to 45 between April and October, according to research conducted by Ampere.
Disney’s strategy, which will accelerate over the next 18 months as its Hollywood film and TV deals with Sky come up for renewal, threatens to break the pay-TV giant’s decades-long stranglehold on top US content.
The exclusive deals Sky has struck in the past with the “big six” Hollywood film and TV studios – Disney, Warner Bros, Paramount, 20th Century Fox, Sony Pictures and Universal Studios – have created an entertainment monopoly which alongside Premier League football has underpinned the pay-TV giant’s dominance over the last three decades.
Disney, which expanded its already immense content library by completing a $71bn (£60bn) deal to buy 21st Century Fox earlier this year, is seeking to re-invent its business model for the streaming age by investing billions in making Disney+ the global home of most of its content.
Disney’s content makes it a key partner for Sky. It accounted for almost 30% of the premium movies aired on Sky’s main pay-TV service in the third quarter, according to Ampere. Disney and Fox account for about 8% of all Sky’s premium TV shows on Sky Now, with hits such as Modern Family, and almost a quarter of its library of more than 620 shows that appeal to families and children.
Sky recently managed to bolster its position and see off what would have been a crippling content exodus by securing the early renewal of a deal with WarnerMedia, which owns the Warner Bros studio behind films including Harry Potter and Game of Thrones-maker HBO, which was due to expire next year. WarnerMedia chiefs decided against pulling content in order to plough it into the streaming service HBO Max, which will now not launch in the UK as a result, instead sticking with Sky for at least the next five years.
“Sky would certainly have had to pay up to keep the premium content offered through the HBO deal, but it is now a bit less vulnerable going into negotiations with Disney,” said Sarah Simon, an analyst at investment bank Berenberg. “But given the ambition of Disney+ it will be very hard to renew that deal. There is an ongoing erosion of the pay-TV proposition and if Disney and Fox go it would certainly be significant, although I wouldn’t quite say it would be a hammer blow for Sky.”
Sky is an immensely profitable partner for Disney and it is expected that even if the US entertainment group does pull its prime movies and TV shows, it will continue to have a deal in place for its TV channels – such as Disney Junior and Disney XD – to continue to be broadcast to Sky’s 24 million pay-TV customers across Europe. “Our customers love Disney content and we have a long standing relationship with Disney that we expect to continue,” said a spokesman for Sky.
With a £7bn annual war chest to strike deals to keep prime content on pay-TV, Sky is expected to pull out all the stops to try to keep Disney on-board in some way.
“Sky can’t afford to lose so much content and they will be trying to retain access somehow given Disney also needs its crown jewels to make Disney+ work,” said Richard Broughton, an analyst at Ampere.
