With the high-stakes streaming wars looming, Walt Disney Co. is no longer accepting commercial advertisements from Netflix and other streaming rivals on ABC, Freeform, National Geographic and other general entertainment channels.
The policy shift came earlier this summer, as the Burbank entertainment giant plowed ahead with plans to become a streaming giant itself, according to a person familiar with the move who was not authorized to speak publicly. Once business partners, Netflix and Disney now are on different footing as direct competitors. Disney had already pulled its Marvel Entertainment and other programming from the Netflix service, so the ad policy change represents a further hardening of the company's stance.
The move is not a surprise. Disney's policy change on advertisements mirrors a longstanding practice in the television industry: Networks do not accept commercials for shows that run on a competing network. For example, ABC doesn't accept ads for "This Is Us" on NBC or "Empire" on Fox. However, there are limited exceptions. Disney does accept ads from competitors on its annual Oscars telecast. And Disney's sports channels have carried ads from competitor Comcast Corp., which owns NBCUniversal, to trumpet live events like the Olympics.
The policy shift came as Disney prepares to launch its direct-to-consumer service, Disney+, on Nov. 12, hoping to take on Netflix, Amazon.com and other streaming services.
"The direct-to-consumer business has evolved, with many more entrants looking to advertise in traditional television, and across our portfolio of networks,: Disney said Friday morning in a statement. "While the initial decision was strictly advertising based, we reevaluated our strategy to reflect the comprehensive business relationships we have with many of these companies, as direct-to-consumer is one element."
Disney said its ESPN networks would continue to accept Netflix commercials. But networks including ABC, Freeform, National Geographic and FX will no longer run Netflix ads.
The policy is different for Apple Inc. and Amazon.com, because those companies continue to have other partnerships with Disney. In those cases, Disney ad executives will make decisions on a case-by-case basis, said the knowledgeable person. Disney is expected to continue to accept commercials that promote Apple's iPhone, iPad and other products.
The Wall Street Journal first reported that Disney was banning Netflix ads.
Disney's ad revenue won't feel a pinch because Netflix wasn't advertising much on Disney networks, according to a second person familiar with the matter. Last year, Netflix purchased one or two spots during the Oscars on ABC, the person said.
Netflix declined to comment.
(Staff writer Wendy Lee contributed to this report.)
