Cable giant Charter Communications and Disney are in a battle over contract fees that has left hundreds of thousands of individuals without access to U.S. Open, college football and potentially “Monday Night Football,” with the NFL’s season starting in only days.
On Thursday, Disney said that the 2 corporations have been in ongoing negotiations but yet to conform to a recent deal. That resulted in Charter’s customers losing access to its networks, including broadcaster ABC and pay-TV channels similar to ESPN and FX. Charter and Disney’s stocks were each down greater than 2% on Friday.
Charter’s Spectrum TV service has roughly 14.7 million customers across 41 states, with a few of its top TV markets being Recent York, Los Angeles, Dallas-Fort Price and Atlanta.
These forms of battles, which might result in so-called blackouts for pay-TV customers, are common within the industry. But, within the age of streaming, this one is different.
“This shouldn’t be a typical carriage dispute,” Charter CEO Chris Winfrey said Friday on a call with investors.
Early Friday, Charter executives called the pay-TV ecosystem “broken.” They said they pushed for a revamped take care of Disney that may see Charter cable customers receive access to Disney’s ad-supported streaming services like Disney+ and ESPN+ at no additional cost.
This gave the impression to be the sticking point as Charter said it accepted Disney’s request for higher fees, although Charter executives didn’t provide specifics on the negotiations as they continue to be hopeful to get a deal done.
Disney shot back in a press release Friday that Charter refused to enter right into a deal after it offered favorable terms and proposed “creative ways” to make Disney streaming services available to Spectrum customers, including “opportunities for brand new and versatile packages where those services grow to be a point of interest.” The corporate didn’t elaborate on specifics.
ESPN is alleged to reap high fees. ESPN receives $9.42 per subscriber a month, while other Disney networks like ESPN2, FX and Disney Channel gets $1.21, $0.93 and $1.25, respectively, in response to data from S&P Global Market Intelligence. A Disney representative didn’t immediately comment on the fees. The media giant has greater than 20 networks.
Winfrey noted that within the last five years all the pay-TV ecosystem has lost nearly 25 million customers, or almost 25% of total industry customers. “It’s staggering,” he said.
Between the high cost of the normal bundle and the choice to modify to cheaper streaming options – most of that are provided by the identical corporations behind the networks on pay-TV – the speed at which cord-cutting is simply accelerating.
Disney’s traditional TV channels and streaming services “aren’t one and the identical, per Charter’s assertions, but fairly complementary products,” the corporate said Friday, adding it has exclusive content on each platform, and Charter is “demanding these services at no cost” without anything in exchange.
Disney said in its Friday statement that Charter rejected their offer to increase the contract amid the U.S. Open, and called it a disservice to customers also ahead of school football season on ABC and ESPN.
In response, a Charter spokesperson said Friday, “Disney knows this shouldn’t be the case. But we’ll leave it at that so we will get back to more productive conversations for the good thing about our mutual customers.”
Live sports, particularly those shown on ESPN, have long been considered the glue holding the pay-TV bundle together, especially as customers flee for streaming services.
The 2 corporations renewed their contract in 2019, which also included Charter integrating Disney+ and ESPN+, in addition to Hulu, into its set-top boxes to provide customers more seamless access to those apps, CNBC previously reported.
Charter, which also provides broadband and mobile services but shouldn’t be within the content business, has said it values its pay-TV business and desires to see it thrive, even when it takes on a special form than the past.
The corporate took a step toward that earlier this summer when it announced it is going to offer a sports-lite package – without regional sports networks, but would still include ESPN – to customers at a less expensive rate.
Winfrey said on Friday that was not an option it presented to Disney, although he “would love that,” but believed it was “a stretch too far” for Disney.
As an alternative, Winfrey said the corporate sees the choice it presented to Disney as a “glidepath” forward to a recent business model that keeps the fee of the normal bundle down for purchasers who still want it, and puts more eyeballs on Disney’s ad-supported streaming services.
Disney CEO Bob Iger recently said on CNBC that assessing its traditional TV business is at the highest of his list, and opened the door to potentially unloading these assets in a sale. The CEO, who returned to the helm late last yr, said he realized the corporate is facing numerous challenges, a lot of that are “self-inflicted.”
Iger did note that ESPN is in a special bucket and Disney was as a substitute open to selling a stake within the network while also moving toward a direct-to-consumer streaming service of its live feed.
Still, ESPN Chairman Jimmy Pitaro said at a CNBC event this summer that while that is the longer term for ESPN, it would not be in a way that may leave pay-TV distributors behind and nix the normal pay-TV model that has supported the business for therefore long.
“The [traditional TV] model has been superb to Disney,” Pitaro said at CNBC x Boardroom’s inaugural Game Plan sports business summit.
Despite the general public feud, Disney said in a press release on Friday it was “able to get back to the negotiation table to revive access to our unrivaled content to their customers as quickly as possible.”