As the head of Discovery, he kept you paying for a whole bunch of cable channels you didn’t watch because you had to have HGTV and/or Food Network. There once was much more power in the cable bundle, and no one observed its downward trajectory as closely as WBD CEO David Zaslav. felt the need to merge with AT&T’s WarnerMedia to form Warner Bros. The demise of linear television, and cable in particular, is a key reason Discovery, Inc. Matthew Stafford in a 2017 “Monday Night Football” game Getty Images Disney may be first, but it won’t be last. The industry is watching these negotiations very closely. A smaller Charter victory could come in its ability to offer skinnier bundles of Disney’s programming, including an option to opt out of ESPN. Disney and Charter are fighting over penetration minimums - the guarantee that a certain percentage of customers have (read: pay for) a subscription to your channels. “If Charter has success dropping Disney, other operators will follow suit, setting up death spiral risk for Disney’s TV networks,” Crockett wrote.Ī likely outcome here is, of course, compromise. Charter has stated that 25 percent of its subscriber base watches Disney channels, and only half of those are “avid” watchers. Crockett estimates Spectrum could drop about one-third of its base subs and break even on dumping Disney, but that probably wouldn’t be an issue. Not having those Charter subscribers also hurts Disney’s ability to renegotiate future sports rights - and could open the door for an Apple or Amazon to swoop in for the rights to the NBA and other sports.įor Charter, shedding Disney’s high costs could work out fine. Macquarie analyst Tim Nollen calculated that Charter’s blackout impacts about 20 percent of ESPN’s current linear-subscriber base, which will cost Disney $5 billion in revenue. Charter would get a piece of that sale and maintain the broadband account.Ĭharter stated that it pays Disney more than $2.2 billion per year in affiliate fees Crockett estimates that Disney gets more than $1 billion on top of that in the split of advertising revenue. (It’s also generating some goodwill: Disney announced Wednesday it is temporarily slashing prices to $1.99/month for three months of ad-supported Disney+.)Ĭharter is also pushing customers elsewhere it is so chill with losing video customers that it is preparing a QR code that would immediately downgrade its own customers from a Spectrum cable package to a YouTube TV or Fubo subscription. Sun Valley Conference Getty Imagesįor now, Disney is pushing viewers toward its own Hulu + Live TV, as well as to other options like YouTube TV. Meanwhile, according to media analysts at MoffettNathanson, Charter has “nothing to lose,” and Disney is likely to learn that lesson “the hard way.” (All analyst notes in this story were obtained independently by IndieWire.)īarton Crockett, a media analyst at investment bank Rosenblatt Securities, believes Bob Iger will not only blink first, but will end up conceding “to a lot.” Bob Iger at the Allen & Co. That also makes it the most expensive single channel in Charter’s cable-channels package, and passing those costs to the consumer generates more cord cutting.ĭisney stated that Winfrey’s “collaborative” idea “ does not make economic sense.” Time will tell if that is correct or incorrect, but it definitely does not make sense for Disney. This example is particularly relevant for Disney, since sports rights are the most expensive in the entire television industry and Disney’s ESPN is the most expensive sports channel in the world. In 2019, Dish dropped Diamond Sports’ package of regional sports networks later, outlets like YouTube TV and Hulu + Live TV did the same and Diamond Sports never recovered. It’s no longer scared of the cord-cutters the real profit is in broadband internet.Ĭable providers have already demonstrated their willingness to live without content providers who won’t meet their terms. To put it another way: Charter is more than willing to consider a world in which they don’t carry Disney channels - or any other provider that won’t come to terms. “We’re either moving forward with a new collaborative video model or we’re moving on.” “We’re on the edge of a precipice,” said Charter president and CEO Chris Winfrey’s position on a Friday conference call. So why should Charter customers have to pay for the linear channels and the streaming services? The Charter argument comes down to this: Distributors like Disney were so desperate to grow in streaming they deprived linear cable channels of the good stuff and kept for their own pay services. Netflix and Disney’s Film Divisions Are Moving in Different Directions
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