Dispute With Disney Leaves Millions of Cable Subscribers In The Dark
A company representing nearly 15 million cable subscribers and The Walt Disney Co. blamed each other Friday for a dispute that has cut off Disney-owned stations to viewers on the eve of a big sports weekend for U.S. Open tennis and college football fans.
The dispute between Disney and Charter Communications Inc. resulted in ESPN, ABC, FX, National Geographic and Disney-branded stations going abruptly dark on Thursday night for Charter's Spectrum TV subscribers. ABC-TV was also cut in seven markets, including New York, Chicago and Los Angeles.
Both the cable company and Disney said the other side rejected short-term extensions that would have kept Spectrum subscribers' access to the networks.
Disputes that result in such service disruptions are not uncommon. This one feels bigger, both because of the number of networks and customers involved and how the companies are grappling with a rapidly changing business environment.
The plug was pulled Thursday while ESPN was carrying a college football game between Florida and No. 14 Utah, and ESPN2 was showing the U.S. Open, including the second-round match between top-ranked Carlos Alcaraz and Lloyd Harris. Charter Spectrum has 14.7 million cable customers.
Chris Winfrey, CEO of Charter Communications, said he recognized the timing was not ideal for customers.
“We've almost always avoided these kinds of disputes and disruption to your service,” Winfrey said, addressing customers in a conference call Friday. “But we had to draw a line in the sand in your behalf.”
These disputes typically involve how much money a cable system is required to pay a company like Disney for carrying its stations. ESPN traditionally has had the highest carriage fees for cable companies. According to S&P Global, Disney gets an average of $2.2 billion per year from being carried on Spectrum under its 2019 carriage deal.
Between cord-cutting and the increased popularity of streaming, Charter says it has lost 25% of its cable customers over the past five years. So it is seeking a deal with more flexibility: allowing customers to order some Disney-owned stations without being forced to take all of them, and it wants ad-supported streaming services included so customers don't have to essentially pay for them twice.
But Disney said Friday that its streaming and television products are not the same.
“Although Charter claims to value our direct-to-consumer services, they are demanding these services for free,” Disney said in a statement. The company said it makes multibillion-dollar investments in exclusive content for those streaming apps.
Other cities where Charter is the major cable carrier include Dallas/Fort Worth; Orlando, Florida; Tampa, Florida; Kansas City, Missouri; St. Louis; Cleveland; Cincinnati; Milwaukee; and Las Vegas.
Disney said it was ready to resume negotiations as quickly as possible.