Disney and Charter have come to a settlement, according to sources, which they hope will conclude their dispute over cable blackouts. This announcement was made only a few hours prior to the scheduled broadcast of “Monday Night Football” on Disney’s ESPN.
Charter Communications and Disney reached a deal Monday, just hours ahead of the Monday Night Football broadcast on ESPN, allowing millions of Charter cable customers to view the game. CNBC's David Faber reported that the understanding included a discounted wholesale price for customers of Disney streaming services, and an increase in marketplace fees to Disney. The official announcement announced the Disney+ basic ad-supported service for Spectrum TV Select package customers, ESPN+ access to Spectrum TV Select Plus subscribers, and eventual availability of the ESPN streaming service to Spectrum TV Select customers. The dispute, which had ceased negotiations in late August, had left millions of customers with a lack of Disney-based television channels including ESPN, FX and the Disney Channel. The incident before the start of the US Open and the college football season led to an increase in sign-ups for Hulu + Live TV that were over 60% higher than expected. As a result of the agreement, fans will not be affected by the dispute, which is common for carriage and blackouts. Charter had mentioned that the pay-TV model was broken in response to the blackout. Shortly after, Charter executives spoke in an investor call to offer free access to Disney streaming apps such as Disney+, ESPN+, and Hulu to Spectrum pay-TV customers.
This point of contention was especially evident in negotiations between Disney and Charter. Disney argued that its streaming and TV networks couldn't be treated equally because of the exclusive content that airs on its live TV networks and the billions of dollars it has invested in exclusive streaming content. This public disagreement has brought to light the challenges that the media industry is currently facing. People are rapidly switching to streaming services, and the fees from pay-TV providers, which used to make up a significant portion of media companies' income and profitability, are slowly diminishing due to customers dropping their cable subscriptions. Disney is still working to make streaming a profitable business, but Charter's broadband services have now become its primary source of income and profitability. Following the blackout, Chris Winfrey, Charter's CEO, stated that the company had already begun discussing similar terms with other media content companies and that the pay-TV model was at a critical point.
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