ESPN, other Disney channels go dark on Charter in heavy carriage dispute
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Walt Disney (NYSE:DIS) TV channels have gone dark on Charter (NASDAQ:CHTR) cable systems, in a carriage dispute that may stretch beyond the typical price brinksmanship, due to the shifting TV consumption landscape.
On Thursday night, ABC, ESPN, and 24 other Disney channels (including Freeform, FX Networks and National Geographic) went dark on Spectrum cable all of a sudden. Notable for high-ratings purposes, ESPN went dark on Charter just as it began a national broadcast of the Florida Gators-Utah Utes college football game.
Disney (DIS) stock was down 2.1% early Friday, while Charter (CHTR) was down 2.3%.
As usual in these increasingly common disputes, the gap is between the rates Disney is demanding to carry the channels and what Charter is willing to pay.
Charter posted messages and a website saying "We offered Disney a fair deal, yet they are demanding an excessive increase. They also want to limit our ability to provide greater customer choice in programming packages forcing you to take and pay for channels you may not want."
For its part, Disney says "Disney Entertainment has successful deals in place with pay TV providers of all types and sizes across the country, and the rates and terms we are seeking in this renewal are driven by the marketplace."
Such disputes are often resolved quickly as one side or the other concedes amid increasing customer pressure. But Charter is signaling that such shifting factors as ESPN's progress toward a streaming future complicates this dispute, and that it's preparing to do without the Disney networks "permanently."
"We respect the quality video products that The Walt Disney Company produces as well as the experience of its management team," Charter said as it pursued a full-court press with analysts Friday morning. "But the current video ecosystem is broken, and we know there is a better path that will deliver video products with the choice consumers want."
On streaming in particular, Disney also wants to "require customers to pay twice to get content apps with the linear video they have already paid for. This is not a typical carriage dispute," Charter said.
"We believe that renewing a traditional distribution deal in line with The Walt Disney Company's current offer would ignore the realities of today's video business and accelerate its decline. We do not take this decision lightly," Charter said, adding that for 2023 it had expected to pay Disney more than $2.2B just for carriage rights (excluding advertising impact): "But we have reached a precipice and must chart a path to change."
Charter says it would accept Disney's rates proposal in exchange for lower penetration minimums, including ad-supported direct-to-consumer apps within Charter's packaged linear products "so the customer does not have to pay twice"; and Charter's commitment to market DTC products to its broadband-only customers.

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