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Disney is better off than its peers because its market-leading pay TV channel ESPN gets three quarters of its revenue from distributors, and just a quarter from advertisers, according to Benjamin Swinburne, an analyst with Morgan Stanley. A 10-year deal Disney cut with cable TV distributor Comcast Corp. in January set a benchmark for healthy rate increases. Half of its renewals with distributors will be negotiated over the next two years, Swinburne says. That cycle of new deals will help Disney because smaller distributors with less leverage than Comcast and will likely pay "as much if not more" per subscriber, he says. While a similar argument holds true for many of its peers, Disney's channels have a more loyal following than others. A recent survey by Lazard and Clear Voice Research asked cable subscribers to identify which channels were essential for them to continue their service. More than a third said ABC, CBS, ESPN, NBC or Fox were make-or-break channels. Disney owns two of the top five. That kind of loyalty has given Disney big leverage at the bargaining table. Disney has taken the Lion King's share of the $32 billion estimated to be doled out in TV fees by distributors this year with $8.4 billion for its channels alone, more than double its nearest rival. TV watching has held steady, and could even go up if people hunker down in a weaker economy. That gives the house of Mickey Mouse considerable resilience in a downturn.
[Associated
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