United Tech to buy Rockwell Collins for $30 billion, combine aerospace operations

FILE PHOTO - Ticker symbol for United Technologies is displayed on a screen on the floor of the New York Stock Exchange
FILE PHOTO – The ticker symbol for United Technologies is displayed on a screen on the floor of the New York Stock Exchange July 20, 2015. REUTERS/Brendan McDermid

September 5, 2017

(Reuters) – Jet-engine maker United Technologies Corp <UTX.N> has agreed to would buy aircraft parts manufacturer Rockwell Collins Inc <COL.N> for $30 billion, including debt, the companies said.

Under the deal, Rockwell shareholders will receive $140 per share in stock and cash, split between $93.33 in cash and $46.67 in United Tech stock, the companies said in a statement.

The offer represents an 18 premium to Rockwell’s closing share price on Aug. 3, the day before media reported that UTC was weighing a bid for Rockwell.

Under the deal, the companies said that Rockwell Collins and UTC’s aerospace systems segment will be combined to create a new business unit named Collins Aerospace Systems.

“This acquisition adds tremendous capabilities to our aerospace businesses and strengthens our complementary offerings of technologically advanced aerospace systems,” UTC’s chairman and chief executive officer, Greg Hayes, said in the statement.

“Together, Rockwell Collins and UTC Aerospace Systems will enhance customer value in a rapidly evolving aerospace industry by making aircraft more intelligent and more connected,” he said.

The deal, which includes $7 billion in Rockwell’s debt, is expected to save more than $500 million by the fourth year after its completion, the companies said.

Morgan Stanley & Co LLC was the financial adviser to United Tech and Wachtell, Lipton, Rosen & Katz was its legal adviser.

J.P. Morgan Securities LLC and Citigroup Global Markets Inc were Rockwell’s financial advisers, while Skadden, Arps, Slate, Meagher & Flom was its legal adviser.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Leslie Adler)

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Shapovalov’s U.S. Open star rises with win over Edmund

Tennis: U.S. Open
Sep 1, 2017; New York, NY, USA; Denis Shapovalov of Canada serves to Kyle Edmund of Great Britain on day five of the U.S. Open tennis tournament at USTA Billie Jean King National Tennis Center. Mandatory Credit: Jerry Lai-USA TODAY Sports

September 1, 2017

By Steve Keating

NEW YORK (Reuters) – Denis Shapovalov’s U.S. Open star continued to rise on Friday as the Canadian teenager moved into the fourth round of the year’s final grand slam when Briton Kyle Edmund retired with injury, trailing 3-6 6-3 6-3 1-0.

The charismatic 18-year-old has had Flushing Meadows buzzing and while his win over the wounded Edmund did not light up Arthur Ashe Stadium, it did provide another glimpse of the talent former world number one Mats Wilander has described as a combination of Roger Federer and Rafa Nadal.

The Canadian becomes the youngest man to make it into the fourth round of the U.S. Open since American Michael Chang in 1989.

“It’s never great to win this way. Hopefully it (Edmund’s injury) is nothing too serious,” Shapovalov said. “It’s very unfortunate but I’m happy to be in the fourth round.”

Shapovalov may not be old enough to drink in New York but is quickly becoming the toast of the Big Apple having grabbed the attention of the tennis world with a dazzling array of skills and on court panache that have produced a number of upsets.

In the run up to the U.S. Open, he collected back-to-back victories in Montreal over former champions Nadal and Juan Martin Del Potro.

Proving Montreal was no fluke, Shapovalov claimed another major scalp on Wednesday taking down eighth-seeded Frenchman Jo-Wilfried Tsonga and will need to produce yet another upset with 12th-seeded Spaniard Pablo Carreno Busta now standing between him and a spot in the quarter-finals.

While the 69th ranked Shapovalov’s victory over the 42nd ranked Edmund would technically be classified as an upset, few would have bet on the Briton to put the breaks on one of hottest players on the ATP Tour.

It was Edmund, however, who grabbed the early break to charge in front 3-0 on his way to taking the opening set.

But, Shapovalov showed initiative in a scrappy second set, breaking to go 3-1 and then leveling the contest.

In the third, Edmund began to show signs of distress, calling on the trainer several times during changeovers to work on his upper back as a ruthless Shapovalov moved in for the kill, breaking him to lead 4-3 and again take the set.

Edmund bravely attempted to continue but after dropping the opening game of the fourth set, waved the white flag by walking to the net and shaking hands.

(Editing by Ed Osmond and Christian Radnedge)

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North Korea’s Kim says missile test was for Guam, Trump warns all options open

A missile is launched during a long and medium-range ballistic rocket launch drill
A missile is launched during a long and medium-range ballistic rocket launch drill in this undated photo released by North Korea’s Korean Central News Agency (KCNA) in Pyongyang on August 30, 2017. KCNA/via REUTERS

August 29, 2017

By Soyoung Kim and Susan Heavey

SEOUL/WASHINGTON (Reuters) – North Korea said on Wednesday it had conducted a test of an intermediate-range ballistic missile (IRBM) to counter U.S. and South Korean military drills and as a first step in military action in the Pacific to “contain” the U.S. territory of Guam.

The North’s leader Kim Jong Un ordered the missile drill to be conducted for the first time from its capital, Pyongyang, and said it was necessary to undertake more exercises with the Pacific as the target, the North’s KCNA news agency said.

“The current ballistic rocket launching drill like a real war is the first step of the military operation of the KPA in the Pacific and a meaningful prelude to containing Guam,” KCNA quoted Kim as saying. The Korean People’s Army or KPA is the North’s military.

Earlier this month, North Korea threatened to fire four missiles into the sea near Guam, home to a major military presence, after U.S. President Donald Trump said the North would face “fire and fury” if it threatened the United States.

Tuesday’s test was of the same Hwasong-12 missile Kim had threatened to use on Guam, but the test flight took it another direction, over northern Japan’s Hokkaido and into the North Pacific Ocean.

Trump, who has vowed not to let North Korea develop nuclear missiles that can hit the mainland United States, said the world had received North Korea’s latest message “loud and clear”.

“Threatening and destabilizing actions only increase the North Korean regime’s isolation in the region and among all nations of the world. All options are on the table,” Trump said in a statement on Tuesday.

LACKING DETAIL

The launch came as U.S. and South Korean forces conducted annual military exercises on the Korean peninsula, angering Pyongyang which sees the war games as a preparation for invasion.

North Korea has conducted dozens of ballistic missile tests under Kim in defiance of U.N. sanctions, but firing a projectile over mainland Japan was a rare and provocative move.

Reports of the launch by North Korean media were lacking the usual boasts of technical advances, indicating the test may not have accomplished its intended technical goals.

The 2,700 km (1,680 miles) the missile flew before splashing down was much shorter and at a lower trajectory than that of an earlier and lofted launch of the same missile. The May launch would have had a range of about 4,800 km on a standard trajectory, an expert on missile technology, David Wright said.

“It is not clear what new North Korea would have learned from this launch that is relevant to a long-range missile,” Wright of the Union of Concerned Scientists said.

The shorter range points to an intended early cutting of the engine thrust or a possible mechanical problem, as the trajectory taken would not have been useful in simulating re-entry or heating of the missile, Wright wrote in a blog post.

UN IN FOCUS

Japan reacted sharply to the missile overflight, warnings residents to take cover as the missile approached and raising protests at the United Nations.

The United States has said before that all options, including military, are on the table, although its preference is for a diplomatic solution.

U.S. Ambassador to the United Nations Nikki Haley said the launch was “absolutely unacceptable and irresponsible” and that the Security Council now needed to take serious action.

The Security Council earlier this month unanimously imposed new sanctions on North Korea after it staged two long-range missile launches in July.

South Korea and the United States had discussed deploying additional “strategic assets” on the Korean peninsula, South Korea’s presidential Blue House said in a statement, without giving more details.

(Additional reporting by Jack Kim; Editing by Lincoln Feast)

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Britain to urge EU to show ‘imagination’ in Brexit talks

EU and British flags fly outside the European Commission building in London
EU and British flags fly outside the European Commission building in London, Britain August 12, 2017. REUTERS/Neil Hall

August 26, 2017

LONDON (Reuters) – Britain will urge the European Union on Monday to show “imagination” in Brexit talks and help focus discussion on future ties rather than on a divorce settlement.

Brexit minister David Davis will call on the EU to be more flexible in its approach at the start of negotiations with the bloc’s chief negotiator Michel Barnier on Monday — the third round of talks which are likely to be largely technical.

A government source said Britain would point to the papers it has published over the past two weeks on both the future relationship and the divorce to show how officials have been working “diligently to inform the negotiations”.

“Now, both sides must be flexible and willing to compromise when it comes to solving areas where we disagree,” the source said. “As the EU itself has said, the clock is ticking so neither side should drag its feet.”

Britain has published papers on everything from future customs arrangements to data, going beyond a brief set by the EU to first make progress on three priority areas — the rights of expatriates, Britain’s border with EU state Ireland and a financial settlement.

British officials say they cannot make headway on those areas without looking at future ties, arguing that what happens at the border with Northern Ireland depends largely on what kind of customs arrangement is agreed with the European Union.

But the EU has stuck to its stance that “sufficient progress” must be made in those areas before moving on to any discussion of the future relationship.

The new series of talks begin as Britain’s economy is starting to show the strain of last year’s vote to leave.

After a prolonged period of relatively benign economic numbers following last year’s there are now signs of a potentially serious slow down — including in household spending and business investment. [nL8N1LA2ZY]

(Reporting by Elizabeth Piper Editing by Jeremy Gaunt.)

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Dutch foil possible attack on tip from Spain; no Barcelona link

People gather at the scene where police are investigating a van with Spanish licence plates containing gas bottles which was found near a concert hall in Rotterdam
People gather at the scene where police are investigating a van (not pictured) with Spanish licence plates containing gas bottles that was found near a concert hall in Rotterdam, in this handout picture obtained by Reuters August 23, 2017. Social Media/Handout via REUTERS

August 23, 2017

By Toby Sterling and Julien Toyer

AMSTERDAM/MADRID (Reuters) – A Spanish man was detained by Dutch police on Wednesday after he was found driving a van with gas canisters near a Rotterdam venue where a rock concert was canceled due to a threat of a possible attack.

Although Spanish police tipped the Dutch to potential danger at the venue known as Maassilo where California band Allah-Las was set to play, a judicial source in Spain told Reuters there was no link to the attacks in Spain last week.

The source said the tip resulted from an investigation by the Spanish Civil Guard that had been under way for some time and had no direct relation to the two vehicle attacks in Barcelona and Cambrils in Catalonia that killed 15 people.

Rotterdam Mayor Ahmed Aboutaleb told a news conference it was also not clear whether the threat tip and the detection of the van were connected. He warned against “swift conclusions” while noting the white van had Spanish license plates and had been flagged for circling near the concert venue.

“It would be wrong at this moment to pile up these facts and conclude … there was a plan to attack with gas bottles, etcetera, because that was the picture last week in Barcelona. I would be careful with that.”

The driver, whose name was not released, was taken into custody for questioning, and a bomb squad was examining the vehicle. Dutch authorities did not specify the number of canisters in the van.

Spanish news agency Europa Press, quoting Spanish anti-terrorist force sources, reported later that the Spaniard arrested in Rotterdam had, in principle, no link to jihadist terrorism. The gas canisters in his vehicle were apparently for domestic use, it said.

Police said the concert was canceled at around 7 p.m., shortly before doors were to be opened for guests.

As concert-goers were sent away from the Maassilo, a former grain silo complex on the Maas River that has been converted into an event hall, the venue was cordoned off.

No injuries, arrests or detentions were reported until the bus driver was detained at around 9:30 p.m.

“The band is unharmed and are very grateful to the Rotterdam Police and other responsible agencies for detecting the potential threat before anyone was hurt,” Allah-Las said in a statement published by Billboard.

The National Coordinator for Security and Counterterrorism’s office said the threat level in the Netherlands was unchanged at “substantial”, where it has been since 2013.

The Guardian newspaper reported earlier this month that the band has received hate mail from people who are offended by its name, which includes the Arabic word for God. The band says it is not intended as an insult.

(Reporting by Toby Sterling and Julien Toyer.; Additional reporting by Bart Meijer, Adrian Croft and Jesus Aguado; Editing by Sandra Maler and Cynthia Osterman)

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Swede Stenson wins by one stroke in Greensboro

PGA: Wyndham Championship - Final Round
Aug 20, 2017; Greensboro, NC, USA; Henrik Stenson poses with the Sam Snead Trophy after winning the Wyndham Championship golf tournament at Sedgefield Country Club. Mandatory Credit: Rob Kinnan-USA TODAY Sports

August 20, 2017

(Reuters) – Henrik Stenson clinched a one-stroke win at the Wyndham Championship on Sunday for his first victory since the British Open last year.

The Swede reeled off three consecutive birdies from the 15th hole to take the lead before parring the demanding last, sinking his winning putt from inside three feet to edge young American Ollie Schniederjans at Sedgefield Country Club.

Stenson carded 64 to finish at 22-under-par 258 for his sixth PGA Tour victory.

Schniederjans also shot 64 for 21-under, while another American, Webb Simpson, finished four shots back in third place.

Davis Love III, at 53 seeking to become the oldest winner in tour history, finished eight shots adrift in a tie for 10th.

(Reporting by Andrew Both in Cary, North Carolina, editing by Pritha Sarkar)

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Every, driving yips cured, leads Stenson by one in Greensboro

PGA: Wyndham Championship - First Round
Aug 17, 2017; Greensboro, NC, USA; Matt Every watches his putt on the eighteenth hole during the first round of the Wyndham Championship golf tournament at Sedgefield Country Club. Mandatory Credit: Rob Kinnan-USA TODAY Sports

August 17, 2017

(Reuters) – Matt Every, on the mend after a case of the driving yips so bad he said it would have driven many to quit, made a perfect start on his way to the first-round lead at the Wyndham Championship on Thursday.

Every holed out from 105 yards for eagle at the first hole and added seven birdies for a career-low, nine-under-par 61 in ideal morning conditions at Sedgefield Country Club.

“The last couple years a lot of people would have quit the game in my position with what has kind of crept into my game,” the American said after earning a one-shot advantage over Swede Henrik Stenson.

Every won the Arnold Palmer Invitational back-to-back in 2015 and 2016 before his driving disintegrated, making it impossible to compete with the game’s best.

As his confidence waned he started flinching, instead of committing to his shot.

“I would just stop (during the swing) … My body just stopped and (the ball) would go either straight right or way left,” he explained.

Every finally solved his swing problems with the help of new coach Scott Hamilton and believes he is ready to compete at the highest level again, though it hurt him not to be eligible for last week’s PGA Championship.

“I watched the PGA at home. That sucked,” he said. “I don’t go to bed at night saying there are 144 guys better than me playing.

“I have a high regard for my talent … So I couldn’t let myself quit.”

With his driving back on track, Every, 33, is brimming with confidence.

“I’m driving it way better, so mentally I’m in a better spot over the ball. I’ve gained a lot of distance with the driver and I’m hitting it straight,” he said. “I’m very excited with where my game is at.”

Stenson, who played in the afternoon, almost caught Every, notching eight birdies with a hot putter.

The world number nine is the highest-ranked player in the field, with most big names having a week off between the PGA and the start of the tour’s FedExCup playoffs next week.

“When I swing well I’m a strong iron player, mid-irons, and you have a lot of six-irons to nine-irons (here),” said Stenson, who is not carrying a driver this week on the short par-70 layout.

Seven players were tied for third on seven-under including 2012 U.S. Open winner Webb Simpson and Australians Cameron Smith and Tim Wilkinson.

(Reporting by Andrew Both in Cary, North Carolina; Editing by Larry Fine)

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Merck CEO resigns from Trump council over Charlottesville

Trump hosts a meeting with manufacturing CEOs at the White House in Washington
Merck & Co. CEO Ken Frazier (R) listens to U.S. President Donald Trump speak during a meeting with manufacturing CEOs at the White House in Washington, DC, U.S. February 23, 2017. REUTERS/Kevin Lamarque

August 14, 2017

By Michael Erman

(Reuters) – Merck & Co Inc Chief Executive Kenneth Frazier resigned from U.S. President Donald Trump’s American Manufacturing Council on Monday, saying he was taking a stand against intolerance and extremism.

Trump denounced neo-Nazis and the Ku Klux Klan as criminals and thugs on Monday, bowing to mounting political pressure after initially saying many sides were to blame after a white-nationalist rally turned deadly in Virginia.

Frazier, who is African-American, is the only CEO so far to leave one of Trump’s advisory councils because of his reaction to the violence in Virginia, although the AFL-CIO said it was considering pulling its representative on the committee. Prominent Democrats and Republicans criticized Trump’s response to the violence over the weekend.

The gathering of hundreds of white nationalists took a deadly turn on Saturday when a car plowed into a group of counter-protesters and killed at least one person.

Trump had said “many sides” were involved, drawing fire from across the political spectrum for not specifically denouncing the far right.

“America’s leaders must honor our fundamental views by clearly rejecting expressions of hatred, bigotry and group supremacy, which run counter to the American ideal that all people are created equal,” Frazier said in a statement announcing his resignation. (http://bit.ly/2fFnITM)

“As CEO of Merck and as a matter of personal conscience, I feel a responsibility to take a stand against intolerance and extremism,” he said.

Trump responded in a tweet, saying now that “Ken Frazier of Merck Pharma has resigned from President’s Manufacturing Council, he will have more time to LOWER RIPOFF DRUG PRICES!”

The son of a janitor, Frazier joined Merck as general counsel of one of the drugmaker’s subsidiaries in 1992, working his way up to CEO of the company in 2011.

He made his name as the company’s top lawyer, steering it through daunting litigation over Vioxx, its widely used painkiller that was withdrawn in 2004 after being linked to heart attacks.

Many observers thought Merck would eventually have to shell out $10 billion or more to thousands of plaintiffs over the drug’s withdrawal. But Frazier’s legal strategy led to a $4.85 billion settlement in 2007, allowing Merck to refocus on its pipeline of experimental medicines.

Merck shares rose 0.5 percent in afternoon trading on the New York Stock Exchange, roughly in line with the wider market.

Frazier frequently made political contributions during the 2016 election, donating to both Republican and Democratic members of Congress but making no donations to a presidential candidate during the year.

The political PAC maintained by Merck and funded through donations from Merck employees made over $1.1 million in candidate contributions during the 2016 campaign – but did not contribute to Trump or his Democratic rival, Hillary Clinton, according to documents filed with the Federal Elections Commission.

The Pharmaceutical Research and Manufacturers of America, which represents the pharmaceutical industry and lobbies on its behalf in Congress, declined to offer a statement of support for Frazier or to comment on Trump’s reaction.

The industry’s silence comes as Trump is finalizing an executive order on drug prices that would relax industry regulation and contains measures that, some say, would protect existing drug prices or even increase them.

Individually, at least one CEO, John Maraganore of Alnylam Pharmaceuticals, tweeted his support, saying he was “proud to stand with leaders like Ken Frazier.”

Other top business leaders also spoke out in response to the violence in Charlottesville.

“I support Ken Frazier’s decision. I’m thankful we have business leaders such as Ken to remind America of its better angels,” said Hewlett Packard Enterprises CEO Meg Whitman, who ran for governor of California as a Republican in 2010.

Goldman Sachs CEO Lloyd Blankfein tweeted: “Lincoln: ‘A house divided against itself cannot stand.’ Isolate those who try to separate us. No equivalence w/ those who bring us together.”

Richard Trumka, president of the largest federation of U.S. labor unions, the AFL-CIO, questioned the council’s effectiveness and said the group was mulling leaving.

“The AFL-CIO has unequivocally denounced the actions of bigoted domestic terrorists in Charlottesville and called on the president to do the same,” Trumka said in a statement.

Several executives from top U.S. companies have previously stepped down from a number of presidential advisory councils in protest to Trump policies.

Tesla Inc CEO Elon Musk and Walt Disney Co CEO Robert Iger left the President’s Strategic and Policy Forum, a business advisory group, in June, after Trump said he would withdraw from the Paris climate accord. Musk also left the manufacturing council.

Former Uber Technologies Inc [UBER.UL] CEO Travis Kalanick quit the business advisory council in February amid pressure from activists and employees who opposed the administration’s immigration policies.

The White House said Sunday that Trump’s remarks condemning violence at a white nationalist rally were meant to include the Ku Klux Klan and neo-Nazi groups.

Democrats and Republicans criticized Trump for waiting too long to address the violence – his first major domestic crisis as president – and for failing when he did speak out to explicitly condemn white-supremacist marchers who ignited the melee.

Trump on Saturday initially denounced what he called “this egregious display of hatred, bigotry and violence on many sides.”

On Sunday, however, the White House added: “The president said very strongly in his statement yesterday that he condemns all forms of violence, bigotry, and hatred, and of course that includes white supremacists, KKK, neo-Nazi, and all extremist groups. He called for national unity and bringing all Americans together.”

(Reporting by Michael Erman; Additional reporting by Toni Clarke and Ginger Gibson in Washington, Sophia Kunthara in New York and Natalie Grover, Rachit Vats, Parikshit Mishra, Narottam Medhora, Yashaswini Swamynathan and Uday Sampath Kumar in Bangalore; editing by Nick Zieminski)

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Trump threatens Venezuela with ‘military option’

Trump speaks to reporters after meeting with Tillerson, Haley and McMaster at Trump's golf estate in Bedminster, New Jersey
U.S. President Donald Trump speaks to reporters after meeting with Secretary of State Rex Tillerson (L), U.S. Ambassador to the United Nations Nikki Haley (2nd R) and National Security Adviser H.R. McMaster (R) at Trump’s golf estate in Bedminster, New Jersey U.S. August 11, 2017. REUTERS/Jonathan Ernst

August 11, 2017

By James Oliphant

BEDMINSTER, N.J. (Reuters) – U.S. President Donald Trump on Friday threatened military intervention in Venezuela, a surprise escalation in Washington’s response to Venezuela’s political crisis.

Venezuela has appeared to slide toward a more volatile stage of unrest in recent days, with anti-government forces looting weapons from a military base after the installation of an all-powerful new legislative body.

“The people are suffering and they are dying. We have many options for Venezuela including a possible military option if necessary,” Trump told reporters.

More than 120 people have been killed in Venezuela and thousands arrested in over four months of unrest. The government in Caracas did not immediately respond to a request for comment on Trump’s threat.

Venezuelan authorities have long said U.S. officials were planning an invasion. A former military general told Reuters earlier this year that some anti-aircraft missiles had been placed along the country’s coast for precisely that eventuality.

In Washington, the Pentagon said it had not received any orders on Venezuela from the White House. Trump, asked if U.S. forces would lead any operation in Venezuela, declined to provide details.

“We don’t talk about it but a military operation – a military option – is certainly something that we could pursue,” Trump said.

The United States sanctioned Venezuelan President Nicolas Maduro and other Venezuelan officials on July 31 after Maduro established a constituent assembly run by his Socialist Party loyalists and cracked down on opposition figures.

Washington has not placed sanctions on the OPEC member’s oil industry, which supplies America with about 740,000 barrels per day of oil.

Venezuela possesses a stockpile of 5,000 Russian-made MANPADS surface-to-air weapons, according to military documents reviewed by Reuters. It is the largest known cache of the weapons in Latin America and a source of concern for U.S. officials amid the country’s mounting turmoil.

The United Nations Security Council was briefed behind closed doors on Venezuela in May at the request of the United States. At the time, U.S. Ambassador Nikki Haley said Washington was just trying to raise awareness of the situation and was not seeking any action by the 15-member Security Council.

(Reporting by James Oliphant; Writing by Jason Lange in Washington; Editing by Toni Reinhold and Andrew Hay)

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Disney to pull movies from Netflix, plans own streaming service

FILE PHOTO: A Mickey Mouse figure and other items are on display during a press preview for the upcoming auction
FILE PHOTO: A Mickey Mouse figure and other items are on display during a press preview for the upcoming auction “Walt Disney’s Disneyland” at Van Eaton Galleries in Sherman Oaks, California, U.S., June 1, 2017. REUTERS/Mario Anzuoni/File Photo

August 8, 2017

By Lisa Richwine and Aishwarya Venugopal

(Reuters) – Walt Disney Co <DIS.N> will stop providing new movies to Netflix Inc <NFLX.O> starting in 2019 and launch its own streaming service as the world’s biggest entertainment company tries to capture digital viewers who are dumping traditional television.

Disney’s defection, announced on Tuesday alongside quarterly results showing continued pressure on sports network ESPN, is a calculated gamble that the company can generate more profit in the long run from its own subscription service rather than renting out its movies to services like Netflix.

In turn, Netflix and rivals such as Amazon.com Inc <AMZN.O> and Time Warner Inc’s <TWX.N> HBO are spending billions of dollars to buy and produce their own content and stream it straight to consumers.

Disney’s entry into a crowded subscription streaming market and the cost of technology to support its own online services could weigh on earnings, Wall Street analysts said.

Disney stock fell 3.8 percent in after-hours trade. Shares of Netflix fell 3 percent.

The new Disney-branded streaming service will follow a similar offering from ESPN that will be available starting in 2018, the company said.

The streaming services will give Disney “much greater control over our own destiny in a rapidly changing market,” Chief Executive Bob Iger told analysts on a conference call after earnings, describing the moves as an “entirely new growth strategy” for the company.

Disney has some experience with the direct-to-consumer model in Britain and could make more money in the long run from its own service, but the move could be “financially less advantageous” in the near term, said Pivotal Research Group analyst Brian Wieser.

The new ESPN service will feature about 10,000 live games and events per year from Major League Baseball, the National Hockey League, Major League Soccer and others, Disney said. It will not offer the marquee live sporting events shown on its cable channels.

STREAMING TECH DEAL

Disney said its new services would be based on technology provided by video-streaming firm BAMTech, and announced it would pay $1.58 billion to buy an additional 42 percent stake in that company, which it took a minority stake in last year.

The BAMTech deal will modestly dent earnings per share for two years, the company said.

Disney is one of the most recognized names on Netflix, but it is not the company first to pull away. Starz Entertainment in 2011 pulled roughly 1,000 films in the Starz catalog on Netflix at the time.

By ending the Netflix movie deal, Disney will keep movies such as “Toy Story 4” and “Frozen 2” for its own offering. The company has not yet decided where it will distribute films from superhero studio Marvel and “Star Wars” producer Lucasfilm after 2018, Iger said.

Netflix said it would continue to do business with Disney globally, including keeping its exclusive shows from Marvel television.

“U.S. Netflix members will have access to Disney films on the service through the end of 2019, including all new films that are shown theatrically through the end of 2018,” the company said in a statement.

The announcement came as Disney reported a near 9 percent fall in quarterly profit, pulled down by higher programming costs and declining subscribers at ESPN, as viewers ditch costly cable packages in favor of cheaper online offerings.

The company’s revenue fell marginally to $14.24 billion in the third quarter ended July 1 from $14.28 billion a year earlier.

Net income attributable to the company fell to $2.37 billion, or $1.51 per share, from $2.6 billion, or $1.59 per share.

(Reporting by Aishwarya Venugopal in Bengaluru; additional reporting by Peter Henderson in San Francisco; Editing by Savio D’Souza and Bill Rigby)

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