Big Cable and Hollywood Clash as Charter Customers Lose Access to Disney-Owned Channels
In what many are calling a “watershed moment,” a battle between Big Cable and Hollywood has erupted, leading to Charter Communications Inc.’s 14.7 million TV subscribers losing access to Disney-owned channels, including ABC and ESPN. The dispute arose after Charter and Disney failed to reach a new programming contract, resulting in a midnight blackout. The tensions highlight the growing rebellion from consumers against skyrocketing pay-TV rates.
Charter Chief Executive Officer Chris Winfrey warned seven years ago about the increasing dissatisfaction among consumers due to high-priced sports coverage that many do not watch. Monthly cable bills currently average around $126, which has resulted in a significant decline in cable TV subscribers over the past few years. With the industry now down to approximately 70 million customers from its peak of over 100 million, major media companies like Disney are considering alternative outlets, including direct-to-consumer streaming services.
Disney’s commitment to traditional cable and broadcast programming has been reevaluated by CEO Bob Iger, who emphasized the exploration of options to sell ESPN directly to consumers. He also raised the possibility of selling ABC and other non-sports cable channels, as the company invests heavily in its own streaming services such as Disney+, ESPN+, and Hulu.
While financial disputes between media companies and cable providers are not uncommon, the Charter-Disney clash appears to be more significant. Analysts believe that the stakes are high for the broader media and pay TV industry. The blackout has led to a decline in entertainment and cable stocks, with Disney down 2.4% and Warner Bros. Discovery and Paramount Global, the parent company of CBS, experiencing significant drops.
Charter is asking Disney to lower the minimum number of subscribers that it has to pay for, giving it the ability to offer more packages without sports. Additionally, Charter is seeking to offer Disney’s streaming services to its premium cable customers for free and under a revenue-sharing agreement for internet-only customers.
As the battle continues, analysts warn that there may be no turning back, as both sides hold firm in their positions. The disruption in service not only affects Charter customers’ ability to watch popular channels like ABC and ESPN but also jeopardizes coverage of football games as college and NFL seasons begin. Both sides are feeling the pressure, with Disney grappling with a halt in film and TV production due to the ongoing strike by Hollywood actors and writers.
The outcome of this clash between Big Cable and Hollywood could reshape the future of pay TV, further accelerating the decline in cable TV subscribers and encouraging the growth of direct-to-consumer streaming services.