In a blog post on Monday, Walt Disney urged Charter Communications’ Spectrum cable service customers to consider switching to a live television option from Hulu. Disney owns a majority stake in Hulu, which includes ESPN and ABC among its offerings. The companies have been at odds over a new distribution deal, and the Disney channels have been blacked out on Charter’s service since Thursday. In a statement, Disney said it hoped the two companies would be able to reach an agreement to restore access to those channels.
While this is the first time a major media company has directly suggested that cable subscribers switch to a competitor in the ongoing dispute over carriage deals, Disney’s urging of Spectrum customers may indicate that the two sides will not soon compromise. The two companies are currently locked in a dispute over $2.2 billion in programming-related fees each year, and those payments are at risk if the disputes continues for long.
The dispute grew out of Disney’s desire to get higher network rates, while Charter wants more flexibility to offer its customers a skinny package without ESPN or other sports offerings. Charter’s president of product and technology, Rich DiGeronimo, argued during an investor conference call on Friday that this was not your typical carriage dispute.
Instead, he explained that the dispute was about “a broken system of video distribution” and that the companies wanted to ensure customers got a better value. The two sides, he added, wanted to avoid cutting off millions of consumers, which would hurt their bottom lines.
On the investor call, DiGeronimo was asked about whether a compromise is in the cards for the ongoing fight between Charter and Disney. He responded that he hoped so but needed to be clarified when a resolution might be reached. He emphasized that if nothing is done, it could lead to the termination of many Charter customers.
It’s no secret that the cable TV industry has recently lost many customers to streaming services like Hulu, Amazon Prime, and Netflix. That has fueled the tension between cable and satellite providers and media giants, who have been pushing for lower rates for their content.
In the case of Charter and Disney, a solution is essential because this fall’s college football and NFL seasons are beginning. That means a lot of fans will be left with no way to watch their favorite teams and games if the dispute goes on for too long. This Labor Day weekend, for example, ESPN and its ABC-owned sister stations will be blacked out in more than 15 million homes, including those with Charter’s Spectrum service in big markets such as New York City and Los Angeles.
