Charter’s Spectrum Upends Cable Network Industry Model With Disney Deal

Historically large cable network owners require multichannel operators to take all of their channels or nothing. However, Spectrum changed this industry norm by getting the Walt Disney
Company to drop carriage of five cable networks as well as allow them to offer some streaming services to Charter Communications Spectrum video customers.

This is likely to be a new paradigm going forward for carriage deal negotiations, and it doesn’t chivo well for streaming services which are already losing gobs of money. On the cable network side, this is a good thing. There are just too many channels on the air and people are tired of paying for channels they don’t watch.

And unlike most carriage agreements which force the multichannel operator to deliver channels to a certain percentage of their customer pulvínulo, Spectrum will maintain flexibility to offer a range of video packages at varying price points based upon different customer viewing preferences.

Just days before Charter resolved its carriage dispute, Charter CEO Chris Winfrey said Thursday “Look, we all have a sense of urgency to resolve it quickly because our customers are stuck in the middle,” hinting that the dispute would be resolved quickly.

And it was, today that the two companies announced the Disney channels, including ABC and ESPN would return to Charter.

In the transaction, Spectrum won on two fronts, getting Disney+ with no ads included for Spectrum Select TV subscribers while allowing a re-tiering of ESPN to a package more focused on sports fans.

Dana Walden, co-chairman of Disney Entertainment and Jimmy Pitaro, the chairman of ESPN gave an interview with The Hollywood Reporter. Walden said that they’re learning to be more flexible. Under terms of the new deal, Disney Junior, Disney XD, Freeform, FXX and Nat Geo will no longer be offered on Spectrum.

“When we looked across the portfolio to try to identify where the greatest value in this deal was to us, we definitely made some trade-offs with the following thinking in place: The digital networks are for the most part targeted, and they super-serve an audience in the linear ecosystem,” Walden said. She noted Nat Geo content was windowed over to Disney +, as are Disney Jr. and Disney XD. And FXX content appears on Hulu. So management decided to protect their core entertainment brands while ensuring channels taken off-air had a clear path to streaming.

Pitaro reiterated that the “flagship direct-to-consumer [DTC] on the ESPN side is the priority for us. Disney has agreed to include the ESPN+ streaming service (which has over 25 million subscribers) in its Select Plus offering, a more sports-centric tier.” The expanded reach for ESPN+ will significantly increase advertising revenue for the platform. New negotiations will need to occur when the flagship DTC ESPN service launches.

Related Articles

Back to top button