Impact on Live Sporting Events
Disney has removed ESPN, ABC, and other cable channels from Spectrum, affecting significant markets such as New York and Los Angeles during the U.S. Open tennis coverage and other live sports events, including college football.
Charter's Response to Disney's Demands
Charter displayed a message on the screen urging viewers to contact Disney, stating, "We offered Disney a fair deal, yet they are demanding an excessive increase." Charter also pointed out that the rising cost of programming contributes to higher cable TV prices and that they are fighting to maintain reasonable programming rates imposed by companies like Disney.
The Role of ESPN in the Dispute
The disagreement primarily revolves around the sports network ESPN, which lacks a streaming service and remains a significant cable attraction despite losing subscribers annually to cord-cutting. Charter stated that ESPN is the "lynchpin" of its video business, leading to a 2% drop in its shares and a 2.7% decline in Disney shares. Other media companies, including Warner Bros Discovery and Paramount Global, experienced losses between 4% and 6%.
Potential Consequences for Disney
Rosenblatt Securities suggested that Disney might incur more significant losses than Charter, potentially losing billions in profits each year from its traditional TV business if no agreement is reached. This extended dispute with Charter might accelerate Disney's direct-to-consumer (DTC) plans.
Disney's Direct-to-Consumer Plans
Analysts have noted that Disney has been hesitant to quickly implement a DTC plan for ESPN, as it requires cash from its profit engine to fund the money-losing streaming service, Disney+. CEO Bob Iger mentioned in July that Disney is looking for a strategic partner for ESPN to form a joint venture or buy a stake to help take it directly to consumers. Richard DiGeronimo, Charter's president for products and technology, stated on Friday that "Charter and Disney are ideal partners to establish a hybrid linear TV and direct-to-consumer model." Charter, serving over 32 million customers in 41 states, has been paying approximately $2.2 billion in annual programming costs to the entertainment giant.
