SONY Sony Group Corporation

Walt Disney Co. said it signed a deal with Sony Corp.'s PlayStations Vue streaming video service to carry all of the media powerhouse's channels, including ESPN and ABC, and smaller channels like Fusion and Longhorn Network.

The deal includes an "extensive" on-demand library from Disney and will, for the first time, offer the company's channels over the Internet on a "multi-stream" basis—meaning that more than one person in a household can stream the programming at once. Disney's first Web TV distribution deal, struck with Dish Network Corp.'s Sling TV, only allows for one stream at a time.

The companies did not specify a launch date.

Disney was a longtime holdout to Sony Vue's service, even as other media heavyweights like Comcast Corp.'s NBCUniversal and Time Warner Inc. signed on.

Some executives inside Disney had worried that Sony didn't have a clear vision about which market segments it was targeting. Indeed, when Sony started offering service at prices comparable to what traditional cable TV costs today, it became clear the company was seeking to pick off some of the highest-value customers who are paying for cable already. The Sony Vue's entry-level price is $50 a month, but users must also purchase broadband access to use the service.

Meanwhile media companies like Disney have been more interested in attracting cord-cutters or so-called "cord nevers," the younger generation that has never paid for cable, than simply causing share-shifts from traditional distribution partners to new entrants.

The two sides came to terms as Disney was able to negotiate more favorable packaging of its content to reach a compromise with Sony on price, people familiar with the company's thinking said. ESPN, ESPN 2, Disney Channel, ABC and ABC Family will appear in Sony's basic cable package, and other channels like Disney XD and ESPN U will appear in the package that goes to second-highest penetrated tier of channels among Sony customers.

Disney also was able to negotiate that the channels in the second tier would have to reach a certain percentage of Sony's subscriber base, the person said. In addition, Disney negotiated a minimum guarantee of money, regardless of how many subscribers Sony adds, the people said.

Disney also found the Sony Vue interface appealing, especially since its apps like WatchESPN garner high engagement on gaming consoles, one of the people said.

Disney reports earnings on Thursday after the markets close. In August, the company caught investors by surprise during its quarterly earnings conference call when it lowered profit guidance for its cable unit and said it was experiencing subscriber losses. That stirred fears that pay TV cord-cutting is starting to take a toll on media companies -- even one like Disney whose cable business led by ESPN has, until now, been pretty much invincible.

Investors will be watching Thursday for signs of whether those trends have continued.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com

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(END) Dow Jones Newswires

November 05, 2015 11:55 ET (16:55 GMT)

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