Disney, Charter agree ‘transformative’ deal after fiery carriage dispute
Media giants Disney and Charter Communications resolved their carriage dispute yesterday after striking a “transformative agreement” just hours ahead of the season premiere of ESPN’s Monday Night Football in the US.
The dispute exploded into public view on August 31 and saw Disney-owned channels including sports network ESPN and broadcaster ABC as well as Disney Channel, FX and Nat Geo go dark on Charter’s Spectrum service, which serves almost 15 million subscribers in markets including LA and New York.
Under the newly minted deal, the ad-supported version of Disney+ will be made available to subscribers of the Spectrum TV Select package in the coming months. In addition, sports streamer ESPN+ will be provided to Spectrum TV Select subscribers, while Disney said its upcoming direct-to-consumer ESPN product would be made available to Spectrum subscribers when it launches.
While carriage disputes between programmers and distributors are commonplace in the lead-up to the start of the NFL season, this particular negotiation drew close attention as Charter insisted it was willing to walk away from the linear video model altogether, saying it had “already reached the point of economic indifference with the current model.”
According to Charter, under its previous deal it paid around US$2.2bn in annual programming costs to Disney (excluding the impact of advertising revenue for both parties) to carry its suite of channels. However, it argued that the rate increases Disney was proposing didn’t make sense given that cable viewership is declining, and only 25% of its video subscribers “regularly engage” with Disney content.
Disney rivals including Warner Bros Discovery, Paramount Global and NBCUniversal also negotiate deals with cable providers for the carriage of their services, and news of the dispute dragged their stock price down earlier this month.
With the resolution of the dispute, Disney and Charter have put an intense two weeks of back-and-forth negotiations behind them. However, the dispute has raised questions about the long-term viability of the cable package in a world where media companies are funnelling the majority of their content investments into their direct-to-consumer streaming services.
“Our collective goal has always been to build an innovative model for the future,” said Disney CEO Bob Iger and Charter Communications CEO Chris Winfrey in a joint statement.
“This deal recognises both the continued value of linear television and the growing popularity of streaming services while addressing the evolving needs of our consumers. We also want to thank our mutual customers for their patience this past week and are pleased that Spectrum viewers once again have access to Disney’s high-quality sports, news and entertainment programming, in time for Monday Night Football.”
