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Amazon.com Inc wrote its largest-ever check for a subscription-streaming deal, securing hundreds of mostly childrens' TV programs from Viacom Inc for its Internet video service and ratcheting up pressure on rival Netflix.
Amazon's deal with Viacom gives the world's largest Internet retailer broader access to hit shows including "Dora the Explorer" and "SpongeBob SquarePants." Netflix had previously conceded that losing access to those shows would be a blow.
Amazon agreed to pay more than $200 million to Viacom for the license, its largest subscription-streaming transaction ever, a person familiar with the deal said. A second person familiar said the deal would run more than two years and included a deeper library of content than the prior Netflix agreement.
The Amazon-Viacom pact comes just days after Netflix stopped streaming popular Nickelodeon programming, following the expiration of its deal with the company.
The deal includes about 4,000 TV episodes that will be available to stream for free on Amazon Prime Instant Video. This service is free for subscribers to Amazon's Prime program, which, for $79 a year offers free two-day shipping in the United States for items purchased through Amazon.
Part of the payment went to secure exclusive subscription streaming rights to several shows from Viacom's Nick Jr channel, including the "Dora" franchise, "Go Diego Go!," "Blue's Clues" and "The Backyardigans."
Amazon is spending heavily on video content as it competes with Netflix and Hulu for a piece of the fast-growing market for TV and movies delivered over the Internet. Childrens' shows are among the most-watched on Amazon's service, according to Bill Carr, the company's vice president for digital video and music.
Netflix Chief Executive Reed Hastings, in a CNBC interview last week, said his service still had plenty of content for children but losing the Viacom programming could hurt.
"If you're a parent and your child's looking for 'Blue's Clues,' you know, that is definitely a problem," he said, while noting that Netflix still has programming from the likes of Disney and Cartoon Network.
In early May, Netflix announced a new multiyear license agreement with Walt Disney Co that gave Netflix the exclusive right to stream "Jake and the Never Land Pirates," along with access to other Disney shows including "Handy Manny."
Viacom's shares rose 1 percent to $67.575 in morning trading, while Netflix shares were up 1.4 percent at $225. Amazon gained 44 cents to $267.34.