Disney to Stop Accepting Ads From Netflix on Entertainment Networks

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Disney CEO Bob Iger

The move comes as media and entertainment companies reevaluate their competitors in the wake of a rapidly changing media environment.

Disney will no longer accept ads from the streaming giant Netflix on its entertainment networks, changing its advertising policy as the company makes a major push into the streaming space.

"The direct-to-consumer business has evolved, with many more entrants looking to advertise in traditional television and across our portfolio of networks," a Disney spokesperson said Friday 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 is not abandoning all ad revenue from Netflix, however. The company will continue to accept ads from the streamer on ESPN. Netflix does not have any live sports, so it may not be seen as a direct competitor to that channel. Disney networks like ABC and Freeform will be impacted by the change, while channels like FX did not accept ads from Netflix even before this.

The Wall Street Journal first reported Disney’s decision.

Disney is set to launch Disney+ in November, a major streaming effort that pits the company in direct competition with Netflix in the commercial-free subscription entertainment streaming space. Disney also controls Hulu, which does have commercials and advertising.

The move comes as media and entertainment companies reevaluate their competitors in the wake of a rapidly changing media environment. For years, broadcast networks have refused to run ads from their network competitors and placed restrictions on ads from cable channels. Most cable channels, meanwhile, would similarly refuse ads from their direct competitors.

Most TV networks, however, had little problem accepting ads from Netflix, even though it was in the business of delivering TV shows and movies to consumers. It was instead viewed as something closer to HBO, a premium product that wasn’t a true competitor.

Now, however, with most companies launching their own streaming services (some with ads, and some ad-free), the lines are blurring.

Entertainment companies also own studios that produce shows for competing networks, complicating the relationships further. Hence why Disney is looking to “reflect the comprehensive business relationships we have with many of these companies.” Similarly, Disney has distribution agreements with Comcast, which owns NBCUniversal.

Netflix has quickly become one of the entertainment industry’s biggest ad buyers, spending $1.8 billion in 2018, and is on pace to top that this year, according to its quarterly financial reports.

It has also been a major advertiser on events like the Super Bowl and the Academy Awards. ABC broadcasts the Oscars, so it may well impact the streamer’s ability to purchase ads on the awards show.