Sept. 1 (Reuters) – Walt Disney (DIS.N) and Charter Communications (CHTR.O) traded fire over an unresolved distribution agreement after several channels including ESPN were dropped on Thursday for customers of Charter’s Spectrum cable service.
Disney has pulled ESPN, ABC and other cable channels from Spectrum, which serve huge markets including New York and Los Angeles, amid coverage of the US Open tennis tournament as well as other live sporting events including college football.
The charter showed an on-screen message urging viewers to contact Disney. “We have offered Disney a fair deal, but they are asking too much,” the letter read.
“The rising cost of programming is the single biggest factor in rising cable TV prices, and we struggle to maintain the programming price line that companies like Disney charge us.”
The dispute mainly revolves around the sports network ESPN, which does not have a live streaming service and is a big draw for satellite channels despite losing subscribers every year due to disconnections.
Disney said on Friday that it had offered Charter “the best terms on pricing, distribution, packaging, advertising and more.”
“Charter declined to enter into a new agreement with us that reflects market-based terms,” Disney said in its statement.
The media giant added that it is ready to return to the negotiating table to restore access to content.
A screen showing the Walt Disney Company logo and symbol on the floor of the New York Stock Exchange in New York, US, December 14, 2017. REUTERS/Brendan McDiarmid/File Photo Obtain licensing rights
Charter said Friday that ESPN has been the “backbone” of its video business. The company’s shares fell 2%, while Disney shares fell 2.7%. Other media companies including Warner Bros. Discovery (WBD.O) and Paramount Global (PARA.O) lost between 4% and 6%.
“We are extremely disappointed to our fans and viewers across the country that Spectrum and Charter have been unable to resolve their dispute with Disney, resulting in the loss of ESPN’s coverage of Thursday night’s matches,” the USTA said in a statement on Friday. .
“We very much hope that this dispute can be resolved as quickly as possible.”
Rosenblatt Securities said Disney may have “more to lose” than Charter. The institutional brokerage said Disney could lose billions in profits each year from its traditional television business if an agreement is not reached.
“The protracted battle with Charter may accelerate Disney’s DTC (Direct-to-Consumer) plans.” Analysts said Disney was reluctant to quickly roll out the DTC plan to ESPN because it needed money from its profit engine to fund its loss-making streaming service, Disney+.
CEO Bob Iger said in July that Disney wants to find a strategic partner for ESPN to form a joint venture or buy a stake to help take it directly to consumers.
“Charter and Disney are ideal partners to create a hybrid linear TV and direct-to-consumer model,” Richard DiGeronimo, Charter’s president of product and technology, said Friday.
The company, which serves more than 32 million customers in 41 states, pays the entertainment giant about $2.2 billion in annual programming costs.
(Reporting by Xavi Mehta, Jasprit Singh, Zaheer Kachwala and Akanksha Khushi in Bengaluru; Reporting by Mohamed for The Arabic Bulletin) Editing by Nivedita Bhattacharjee, Arun Koyoor and Magu Samuel
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