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Walt Disney and Charter Communications have reached an agreement to resolve a fees and terms dispute, bringing an end to a 10-day impasse that left millions of customers without premium live sports as the autumn season began.
As part of this deal, Disney will allow pay-television provider Charter to offer some of its ad-supported streaming offerings, including Disney+ and ESPN+, to its customers through a “wholesale” arrangement.
The agreement restored full TV programming to approximately 14 million viewers, marking a crucial test for Disney and the declining cable TV industry, which has been impacted by years of “cord-cutting”.
Charter’s CEO, Chris Winfrey, openly discussed the possibility of focusing on its larger broadband market and abandoning the cable TV business, deeming it “broken” due to the rise of streaming.
The agreement was reached just hours before the first Monday Night Football broadcast of the 2023 season, a key component of Disney’s ESPN line-up. The companies described the deal as “transformative”.
Under this agreement, Charter subscribers will have access to a curated selection of Disney networks, including the full suite of ESPN sports channels, FX, and Nat Geo, among others. However, they will lose access to certain Disney networks such as Disney Junior, Freeform, Nat Geo Wild, and Nat Geo Mundo.
The financial terms of the deal were not disclosed, but Disney stated that Charter will pay “market-based rates”. Previously, Charter expressed its willingness to pay Disney over $2.2 billion in 2023 for its programming.
Disney CEO Bob Iger has discussed launching a streaming version of ESPN that offers live sports and other programming currently only available through cable. This represents a potential threat to providers like Charter and its Spectrum service, given ESPN’s significance to the cable TV industry. However, in this agreement, the companies have confirmed that Spectrum customers will have access to this streaming version of ESPN upon its launch.
The blackout of Disney programming began on the evening of August 31 and left nearly 15 million US cable subscribers without access during the US Open tennis tournament and the start of the US college football season. State authorities, including New York Governor Kathy Hochul, urged both companies to compensate Spectrum television subscribers for this period, although it remains unclear if refunds will be provided.
During the dispute, both companies offered updates on the nature of their disagreement and provided offers to customers. Disney promoted subscriptions to its direct-to-consumer streaming service, Hulu, in which it holds a majority stake alongside Comcast.
Other streaming television services like Sling and Fubo have also offered promotions to affected Spectrum customers in recent days.
Analysts viewed this dispute as a potential turning point in the cable TV industry. In previous “carriage disputes”, media groups such as Disney had the upper hand due to the demand for their programming.
However, as streaming continues to grow, Charter has become more reliant on revenue from broadband and mobile services rather than cable TV packages, as noted by Alan Wolk, co-founder and lead analyst at TVRev, a research firm.
While Charter seemed more credible in its threat to abandon the cable TV business altogether, Disney still relies on profits from its cable TV networks to support its streaming investments.
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