On Thursday, August 31st, Disney pulled its programming from Charter’s Spectrum TV! This comes at a convenient time (for Disney) as Disney-owned ESPN networks (FX and WABC channel 7) are covering major live sporting events such as the U.S. Tennis Open and major college football.
For sports fanatics, this is one of the best times of the year! The NFL and college football are back with the NHL and NBA not far behind. In addition to tennis, ESPN has the contract for Monday Night Football, meaning Charter’s Spectrum TV has 14.7 million subscribers across 41 states who will be “blacked out” from watching the debut of Aaron Rodgers leading the N.Y Jets vs the Buffalo Bills on Monday night, September 11th at 8 pm. Arguably the most anticipated opening day game in Jets franchise history!
This “Corporate Greed” reminds me of February 2012 when the previously unknown Jeremy Lin led the Knicks to a 7-game winning streak. He outscored the great Kobe Bryant while Carmelo Anthony and Amar’e Stoudamire, (the Knick’s two best players) were out hurt. Lin captivated the country, and it was dubbed “Linsanity!” The only problem was, that James Dolan and Time Warner Cable had conveniently “Blacked Out” cable subscribers to MSG and the Knicks, due to TV contract squabbles. I didn’t watch any of those games until 2020 when MSG was looping the “Linsanity” games during the advent of Covid-19.
These types of battles with two cable behemoths are common in the industry; however, in the age of streaming, this is different! Both of their stocks were down over 2% last Friday and Disney stock is near 3-year lows.
Last Friday, Charter executives called the Pay-Tv ecosystem “Broken!” They said they pushed for a revamped deal with Disney that would see Charter cable customers receive access to Disney’s ad-supported streaming services like Disney+ and ESPN+ at no additional cost. This is where the sticking point must be!
Of course, this is ALL about one thing, MONEY! ESPN is said to reap high fees. ESPN receives $9.42 per subscriber per month, while other Disney networks such as ESPN2, FX, and the Disney Channel charge $1.21 each.
In the last five years, the entire Pay-Tv ecosystem has lost a staggering 25 million subscribers or almost 25% of total industry customers. Between the high cost of the traditional bundle and the option to switch to more affordable streaming options, the speed of “cord-cutting” is accelerating!
The two companies renewed their contract in 2019, which also included Charter integrating Disney+ and ESPN+, as well as Hulu, into its set-top boxes. Charter is at a disadvantage as they don’t create content; however, they do provide broadband and mobile services. Charter has seen this coming as earlier this summer they announced an offering of a “sports-lite” package, without regional networks, but with ESPN to customers at a cheaper rate.
You might be asking yourself, what does this all mean? I covered the difference between cable vs streaming in December of 2022. Here are some points and my take on this:
I think the Hollywood Reporter said it best, “This can really only go one of two ways: either Charter and Disney come to an agreement, which will force other streaming companies to link up with cable providers, or Charter exits the industry, likely spelling the end of linear TV!”
For “Financial Wave” readers, “stay tuned” as there are usually money-saving opportunities when technology changes business models, and this could soon be the case!