Charter says Disney’s cable bundle is too expensive, and has taken it off its system, just as football season has begun. But Walt Disney could lose as much...
“We’re committed to being the best,” a chipper voice used to say every two minutes or so while I waited on hold years ago with my local cable monopoly. You’re committed to being the only, I recall thinking. Today that company is owned by Charter Communications, America’s No. 2 cable distributor, which is striking a different tone. Cable television is “too expensive and packages don’t meet customer needs,” Charter wrote in the first line of a recent slide deck for investors.
Programmers make money by charging MVPDs carriage fees to include their channels in bundles, and by selling advertising on those channels. MVPDs charge viewers for the bundles and get a modest share of the ad slots, which is why commercial breaks are often a mix of national pitches for big brands, local ones for car dealers and furniture stores, and ones for the cable service itself.
This time around, customers of Charter’s Spectrum cable service have been without Disney channels, including ESPN, since the start of September. That means they’ve missed out on tennis’ U.S. Open and some college football. Starting Sept. 11, they’ll miss the pros playing Monday Night Football. If Charter doesn’t seem particularly bothered, it might be because this is no longer the early days of cord-cutting: 25 million subscribers have canceled over the past five years.
What Charter would like isn’t so much a freeze on fees as flexibility—the right to sell more skinny bundles that lack sports. It also wants Disney to throw its ad-supported streaming services into the cable mix. What Disney would like is to preserve what’s left of its diminished free cash flow until profitability picks up for streaming. It plans to launch a full ESPN streaming service as soon as 2025.
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