fatmanatee
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So much for Disney walking away from guaranteed revenue.
DIS Shareholders and Stock Info ONLY
- Thread starter hhisc16
- Start date
yeah, lol, this seems like they're going to move forward with a worst of all worlds, where direct-to-consumer will look more like "direct-to-consumer through our partner channels"
Jwaire
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HokieRaven5
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That was my takeaway. Gave the list of channels that are actively on the outs for the company.Because they're on the chopping block anyway.
Jwaire
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Nothing is preventing anyone from signing up with Disney+ directly.
Certain AT&T Wireless plans give you Max. Walmart+ gives you Paramount+.
It's been like that for awhile.
My question is are Spectrum customers getting a reduction in their package prices or just losing 8 or so channels for the same price?
irlandaise
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Wow, that got resolved a lot faster than I expected. I even thought the people here who guessed "never" might be right.
It ain't really over, though. This is just a temporary band-aid for the whole OTA/cable/streaming mess.
Elijah Abrams
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They’re hopefully going to sell them.Because they're on the chopping block anyway.
Jwaire
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For peanuts because now they're worth even less.
It actually could be affordable if salaries and production costs were reigned in.
Free TV existed for decades with timeless hits, sports, etc. The difference being every single person involved wasn't trying to hold out for million dollar contracts
PolymerSkywalker
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Bingo!
Jwaire
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Disney Bobby
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Pretty sure you can still get that free tv today, with even more channels. In HD. Premiums have never been free, at least not legally.
wabbott
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IMHO, there never was any such thing as "free" tv. It was paid for by advertising and the cost to viewers was the time you where you were forced to watch the ads during the program.
Again, IMHO only.
wabbott
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https://deadline.com/2023/09/disney...his-is-the-future-of-our-business-1235543225/
Disney Entertainment Co-Chair Dana Walden And ESPN Chairman Jimmy Pitaro On Spectrum Carriage Deal: “This Is The Future Of Our Business”
By Dade Hayes
Business Editor
September 11, 2023 4:33pm PDT
With the ink still drying on a closely tracked carriage renewal with Charter, Disney execs Dana Walden and Jimmy Pitaro told Deadline in an interview that the agreement’s details suit the current streaming/linear hybrid environment.
The companies announced the settlement earlier today, a bit more than 10 days after their initial clash left 27 networks and ABC stations dark for the 14.7 million subscribers to the No. 2 U.S. cable system. The impasse ended just hours before the regular-season kickoff of Monday Night Football, an anticipated matchup between the Buffalo Bills and newly Aaron Rodgers-led New York Jets.
While financial terms were not divulged, the main deal points had various puts and takes for both sides. Charter gains the right to take a wholesale fee in exchange for offering the ad-supported tier of Disney+ to its estimated 9.5 million Select video subscribers. It also will carry only a “curated” selection of networks, with Freeform, FXX and several other established outlets left without distribution on Spectrum, meaning a lower overall bill for programming. Disney, though, is getting Charter’s distribution muscle to help push its entire DTC portfolio on both a bundled and stand-alone basis, as well as the inclusion of ESPN+ with Charter’s Spectrum TV Select Plus package. And it is understood that the nine ESPN networks at the heart of the dispute secured not only rate increases but penetration minimums, both sticking points earlier in the rift.
Overall, the deal is “indicative of the times that we’re in,” summed up Walden, Co-Chair of Disney Entertainment. Asked about what the slimming-down of the Disney linear portfolio on Spectrum means for traditional networks in the future, she said, “We were prepared to be flexible and deliver the best results for our company.”
As far as viewer impact, while the new arrangement could leave a few gaps for fans of specific shows, Walden reasoned, “A lot of the programming on those channels is windowed to their cable channel siblings” as well as Disney+. Securing a boost for ad-supported Disney+, Walden said, was crucial. “This is the future of our business,” she said. The ad tier, which launched last December, had attracted about 3.3 million subscribers through the end of June. CEO Bob Iger has said the company’s ability to derive revenue both from ads and subscriptions — a double-barreled approach reminiscent of pay-TV — will be key to the company hitting its streaming targets.
As to why Hulu didn’t get integrated into the Spectrum subscriber tiers, unlike other Disney streamers, Walden said the deal still preserves “the ability for subscriber to add Hulu – so felt like there was a way for everyone to achieve their objectives.” A pending unified app interface blending Hulu and Disney+ content will also keep Hulu in the mix as Disney looks to finally close a deal to buy out Comcast’s stake in the streamer.
The last public indicator prior to today’s peace accord left plenty of doubt about whether the parties would ever get on the same page. Charter CEO Chris Winfrey indicated last Thursday that little progress had been made in negotiations, reiterating the company’s outlook that it could wind up “moving on” entirely from the video business. Asked about when the sides dug in to reach a compromise, Pitaro, ESPN’s chairman, replied, “Getting this deal done has always been a priority for us. We’ve been all hands on deck with a singular focus of getting a deal done. … I can’t tell you there was a defining moment. It was more of a gradual meeting of the minds.”
Cord-cutting has ravaged the pay-TV business, with Charter estimating it has lost about 25% of its customers in the past five years alone. Streaming, meanwhile, has an economic model that has not yet proven to be as lucrative as that during the heyday of pay-TV. Disney, meanwhile, has an interesting asset in the mix. It had been pointing customers affected by the outage Hulu + Live TV, its pay-TV service, even rolling out a $30-a-month discount in recent days. Asked how the company’s own pay service fits strategically with efforts to forge partnerships with outside distributors, Walden said, “It is definitely a tool in our arsenal” and signaled that “we were coming to market with Charter in a specific way.”
Added Pitaro, “We wanted a deal that would protected that traditional business model and also enabled us to create new pathways.”
Charter declined to make any of its executives available for additional comment to Deadline. The company’s CFO, Jessica Fischer, is scheduled to speak Wednesday at a BofA Securities conference in New York.
Wall Street appeared to view the settlement as a plus for both Disney and Charter shares, with the latter perking up 1% and the latter rising 3% on heavier-than-normal trading volume.
In a note to clients, MoffettNathanson’s Michael Nathanson scored the outcome a split decision, with pluses for each company but plenty of unknowns. In an appearance last Friday on CNBC, the veteran media analyst had predicted it would be “game over” for the Disney-Charter relationship if a compromise couldn’t be worked out before Monday night’s football game.
“While perhaps not the end of the pay-TV world as we know it, we very much can look back at this Disney/Charter deal as an opening salvo of a broader re-bundling and a step in giving customers smaller linear bundles with increased SVOD functionality,” Nathanson wrote in today’s note.
Michael Morris, an analyst with Guggenheim, was more certain that a compromise solution was likely given the near-term financial stakes. (Charter has pegged the annual value of its Disney carriage deal at $2.2 billion.) “We believe that today’s deal reflects a trade-off from linear economics, but positions both Disney and Charter to drive value amid the shift toward streaming in a digital future,” he wrote in a client note.”
Disney Entertainment Co-Chair Dana Walden And ESPN Chairman Jimmy Pitaro On Spectrum Carriage Deal: “This Is The Future Of Our Business”
By Dade Hayes
Business Editor
September 11, 2023 4:33pm PDT
With the ink still drying on a closely tracked carriage renewal with Charter, Disney execs Dana Walden and Jimmy Pitaro told Deadline in an interview that the agreement’s details suit the current streaming/linear hybrid environment.
The companies announced the settlement earlier today, a bit more than 10 days after their initial clash left 27 networks and ABC stations dark for the 14.7 million subscribers to the No. 2 U.S. cable system. The impasse ended just hours before the regular-season kickoff of Monday Night Football, an anticipated matchup between the Buffalo Bills and newly Aaron Rodgers-led New York Jets.
While financial terms were not divulged, the main deal points had various puts and takes for both sides. Charter gains the right to take a wholesale fee in exchange for offering the ad-supported tier of Disney+ to its estimated 9.5 million Select video subscribers. It also will carry only a “curated” selection of networks, with Freeform, FXX and several other established outlets left without distribution on Spectrum, meaning a lower overall bill for programming. Disney, though, is getting Charter’s distribution muscle to help push its entire DTC portfolio on both a bundled and stand-alone basis, as well as the inclusion of ESPN+ with Charter’s Spectrum TV Select Plus package. And it is understood that the nine ESPN networks at the heart of the dispute secured not only rate increases but penetration minimums, both sticking points earlier in the rift.
Overall, the deal is “indicative of the times that we’re in,” summed up Walden, Co-Chair of Disney Entertainment. Asked about what the slimming-down of the Disney linear portfolio on Spectrum means for traditional networks in the future, she said, “We were prepared to be flexible and deliver the best results for our company.”
As far as viewer impact, while the new arrangement could leave a few gaps for fans of specific shows, Walden reasoned, “A lot of the programming on those channels is windowed to their cable channel siblings” as well as Disney+. Securing a boost for ad-supported Disney+, Walden said, was crucial. “This is the future of our business,” she said. The ad tier, which launched last December, had attracted about 3.3 million subscribers through the end of June. CEO Bob Iger has said the company’s ability to derive revenue both from ads and subscriptions — a double-barreled approach reminiscent of pay-TV — will be key to the company hitting its streaming targets.
As to why Hulu didn’t get integrated into the Spectrum subscriber tiers, unlike other Disney streamers, Walden said the deal still preserves “the ability for subscriber to add Hulu – so felt like there was a way for everyone to achieve their objectives.” A pending unified app interface blending Hulu and Disney+ content will also keep Hulu in the mix as Disney looks to finally close a deal to buy out Comcast’s stake in the streamer.
The last public indicator prior to today’s peace accord left plenty of doubt about whether the parties would ever get on the same page. Charter CEO Chris Winfrey indicated last Thursday that little progress had been made in negotiations, reiterating the company’s outlook that it could wind up “moving on” entirely from the video business. Asked about when the sides dug in to reach a compromise, Pitaro, ESPN’s chairman, replied, “Getting this deal done has always been a priority for us. We’ve been all hands on deck with a singular focus of getting a deal done. … I can’t tell you there was a defining moment. It was more of a gradual meeting of the minds.”
Cord-cutting has ravaged the pay-TV business, with Charter estimating it has lost about 25% of its customers in the past five years alone. Streaming, meanwhile, has an economic model that has not yet proven to be as lucrative as that during the heyday of pay-TV. Disney, meanwhile, has an interesting asset in the mix. It had been pointing customers affected by the outage Hulu + Live TV, its pay-TV service, even rolling out a $30-a-month discount in recent days. Asked how the company’s own pay service fits strategically with efforts to forge partnerships with outside distributors, Walden said, “It is definitely a tool in our arsenal” and signaled that “we were coming to market with Charter in a specific way.”
Added Pitaro, “We wanted a deal that would protected that traditional business model and also enabled us to create new pathways.”
Charter declined to make any of its executives available for additional comment to Deadline. The company’s CFO, Jessica Fischer, is scheduled to speak Wednesday at a BofA Securities conference in New York.
Wall Street appeared to view the settlement as a plus for both Disney and Charter shares, with the latter perking up 1% and the latter rising 3% on heavier-than-normal trading volume.
In a note to clients, MoffettNathanson’s Michael Nathanson scored the outcome a split decision, with pluses for each company but plenty of unknowns. In an appearance last Friday on CNBC, the veteran media analyst had predicted it would be “game over” for the Disney-Charter relationship if a compromise couldn’t be worked out before Monday night’s football game.
“While perhaps not the end of the pay-TV world as we know it, we very much can look back at this Disney/Charter deal as an opening salvo of a broader re-bundling and a step in giving customers smaller linear bundles with increased SVOD functionality,” Nathanson wrote in today’s note.
Michael Morris, an analyst with Guggenheim, was more certain that a compromise solution was likely given the near-term financial stakes. (Charter has pegged the annual value of its Disney carriage deal at $2.2 billion.) “We believe that today’s deal reflects a trade-off from linear economics, but positions both Disney and Charter to drive value amid the shift toward streaming in a digital future,” he wrote in a client note.”
Correct and now you are forced to pay for the "premium" tv and watch a lot of ads on top of that. So basically exactly my point. That's not needed without absurd budgets.
wabbott
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If you have unlimited budgets, they'll spend it all, every time.
wabbott
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https://deadline.com/2023/09/disney...reaction-charter-deal-dana-walden-1235543864/https://deadline.com/2023/09/disney...reaction-charter-deal-dana-walden-1235543864/
Disney Top Executives Assure Staff Of Commitment To FXX, Freeform & Other Cable Nets Dropped By Charter
By Nellie Andreeva
Co-Editor-in-Chief, TV
September 11, 2023 6:44pm PDT
Disney CEO Bob Iger’s bombshell July comments that the linear TV business “may not be core” to the company brought a lot of anxiety for those working at any of the Disney’s linear networks.
There was more reason for concern this morning when Disney and Charter announced a new agreement after 10 days of carriage disruption on the Spectrum cable systems. As part of the deal, eight Disney networks, including FXX, FXM, Freeform, Disney Junior, Disney XD and Nat Geo Wild, are being dropped — probably the biggest such exclusion of established cable nets in a carriage negotiation — with Disney getting wide distribution for its ad-supported Disney+ Basic service on Spectrum as well as improved terms for the ESPN suite of networks.
The news raises further questions about the viability of the eight networks, which are losing almost 20% of their distribution overnight amid industry-wide shift from linear to streaming. In an internal memo, Disney Entertainment Co-Chairmen Dana Walden and Alan Bergman and ESPN Chairman Jimmy Pitaro sought to assuage fears by stating their commitment to the affected networks and indicating that the loss of distribution won’t trigger layoffs.
“Our commitment to all our brands and the people who work for them is unchanged,” the trio said in the memo, a copy of which was obtained by Deadline. “We will continue to program these channels and deliver the same high-quality shows to our fans.”
Several of the networks in question run original series, including FXX (It’s Always Sunny In Philadelphia, Archer), Freeform (Good Trouble, Grown-ish), Disney Junior, which just announced a slate of originals, including a Mickey Mouse Clubhouse reboot, and Nat Geo Wild. (Disney Junior’s shows are available on Disney+, which Spectrum Select subscribers will have access to via the new carriage deal.)
With a schedule built on animated reruns and a couple of high-profile originals, FXX has been a solid ratings and financial performer. What’s more, it was the shrewd 2013 deal FXX had made for The Simpsons library, which included digital rights, that allowed Disney to put the hugely popular animated series on its digital platforms and use it to launch Disney+.
“Our customer-first strategy has served The Walt Disney Company well for a century, and as we look to our work ahead, we must be open to a blend of business models as our industry evolves,” Walden, Bergman and Pitaro said.
You can read their memo in full below:
Team,
After a lengthy negotiation process, we have been able to create a transformative, multi-year distribution deal with Charter Communications that continues to support the existing linear ecosystem while also growing our direct-to-consumer business and positioning us well for our future. And, we are pleased that our viewers will once again have access to the majority of our networks and stations, just in time for the kickoff of Monday Night Football tonight on ABC and ESPN. As part of the agreement, Charter will distribute Disney+ Basic to millions of Spectrum Select subscribers, supercharging our ad tier and further expanding our reach and revenue. This is especially valuable as it reinforces our streaming strategy, one of the company’s key priorities.
In every negotiation, especially in times of transition, tradeoffs are necessary. On that front, while Spectrum will continue to carry ABC/ABC’s Owned Television Stations, Disney Channel, FX and the Nat Geo Channel, in addition to the full suite of ESPN networks, some of our networks will no longer be carried by Charter. Those include Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Mundo and Nat Geo Wild. These channels will continue to be carried by our other distribution partners who represent over 80% of the reach for these networks. Our commitment to all our brands and the people who work for them is unchanged. We will continue to program these channels and deliver the same high-quality shows to our fans. And, of course, our viewers will also be able to enjoy specific titles and content from these networks on our streaming services.
Our customer-first strategy has served The Walt Disney Company well for a century, and as we look to our work ahead, we must be open to a blend of business models as our industry evolves. We encourage everyone to continue to embrace innovation and new ideas because it is precisely that creative thinking that opened an avenue to this agreement with Charter and will continue to fuel our future business.
To all our teams at Disney Entertainment and ESPN, thank you for your dedication.
Dana, Alan & Jimmy
Disney Top Executives Assure Staff Of Commitment To FXX, Freeform & Other Cable Nets Dropped By Charter
By Nellie Andreeva
Co-Editor-in-Chief, TV
September 11, 2023 6:44pm PDT
Disney CEO Bob Iger’s bombshell July comments that the linear TV business “may not be core” to the company brought a lot of anxiety for those working at any of the Disney’s linear networks.
There was more reason for concern this morning when Disney and Charter announced a new agreement after 10 days of carriage disruption on the Spectrum cable systems. As part of the deal, eight Disney networks, including FXX, FXM, Freeform, Disney Junior, Disney XD and Nat Geo Wild, are being dropped — probably the biggest such exclusion of established cable nets in a carriage negotiation — with Disney getting wide distribution for its ad-supported Disney+ Basic service on Spectrum as well as improved terms for the ESPN suite of networks.
The news raises further questions about the viability of the eight networks, which are losing almost 20% of their distribution overnight amid industry-wide shift from linear to streaming. In an internal memo, Disney Entertainment Co-Chairmen Dana Walden and Alan Bergman and ESPN Chairman Jimmy Pitaro sought to assuage fears by stating their commitment to the affected networks and indicating that the loss of distribution won’t trigger layoffs.
“Our commitment to all our brands and the people who work for them is unchanged,” the trio said in the memo, a copy of which was obtained by Deadline. “We will continue to program these channels and deliver the same high-quality shows to our fans.”
Several of the networks in question run original series, including FXX (It’s Always Sunny In Philadelphia, Archer), Freeform (Good Trouble, Grown-ish), Disney Junior, which just announced a slate of originals, including a Mickey Mouse Clubhouse reboot, and Nat Geo Wild. (Disney Junior’s shows are available on Disney+, which Spectrum Select subscribers will have access to via the new carriage deal.)
With a schedule built on animated reruns and a couple of high-profile originals, FXX has been a solid ratings and financial performer. What’s more, it was the shrewd 2013 deal FXX had made for The Simpsons library, which included digital rights, that allowed Disney to put the hugely popular animated series on its digital platforms and use it to launch Disney+.
“Our customer-first strategy has served The Walt Disney Company well for a century, and as we look to our work ahead, we must be open to a blend of business models as our industry evolves,” Walden, Bergman and Pitaro said.
You can read their memo in full below:
Team,
After a lengthy negotiation process, we have been able to create a transformative, multi-year distribution deal with Charter Communications that continues to support the existing linear ecosystem while also growing our direct-to-consumer business and positioning us well for our future. And, we are pleased that our viewers will once again have access to the majority of our networks and stations, just in time for the kickoff of Monday Night Football tonight on ABC and ESPN. As part of the agreement, Charter will distribute Disney+ Basic to millions of Spectrum Select subscribers, supercharging our ad tier and further expanding our reach and revenue. This is especially valuable as it reinforces our streaming strategy, one of the company’s key priorities.
In every negotiation, especially in times of transition, tradeoffs are necessary. On that front, while Spectrum will continue to carry ABC/ABC’s Owned Television Stations, Disney Channel, FX and the Nat Geo Channel, in addition to the full suite of ESPN networks, some of our networks will no longer be carried by Charter. Those include Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Mundo and Nat Geo Wild. These channels will continue to be carried by our other distribution partners who represent over 80% of the reach for these networks. Our commitment to all our brands and the people who work for them is unchanged. We will continue to program these channels and deliver the same high-quality shows to our fans. And, of course, our viewers will also be able to enjoy specific titles and content from these networks on our streaming services.
Our customer-first strategy has served The Walt Disney Company well for a century, and as we look to our work ahead, we must be open to a blend of business models as our industry evolves. We encourage everyone to continue to embrace innovation and new ideas because it is precisely that creative thinking that opened an avenue to this agreement with Charter and will continue to fuel our future business.
To all our teams at Disney Entertainment and ESPN, thank you for your dedication.
Dana, Alan & Jimmy
Disney Bobby
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plus a little more, at least.
Last edited:
wabbott
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https://finance.yahoo.com/news/disn...ing-salvo-in-cable-reshuffling-195811747.html
Disney-Charter pact a 'win-win' as deal signals 'opening salvo' in cable reshuffling
Alexandra Canal
·Senior Reporter
Tue, September 12, 2023 at 12:58 PM PDT
Disney (DIS) and Charter (CHTR)'s deal that ended their historic carriage dispute did not break up the traditional cable bundle as some had anticipated. In fact, it was a win for both sides, according to Wall Street analysts.
In late August, Disney had pulled its owned and operated channels including ESPN and ABC off Charter Spectrum cable systems after the two hit a stalemate over whether Disney should give Charter subscribers free access to its ad-supported streaming services as part of the telecom giant's cable packages.
The blackout had impacted a slew of high-profile sporting events including the US Open and arrived on the heels of the NFL's debut — upping the pressure for both sides to make a deal.
A blue screen message on Spectrum TV over the ESPN channel amid a dispute between Disney and Charter Spectrum on Sept. 6, 2023, in Los Angeles, Calif. (Mario Tama/Getty Images)
On Monday, the companies announced they had reached an agreement to end the media blackout. As part of the deal, Charter will offer some Disney streaming services — the ad-supported version of Disney+, ESPN+, and ESPN's yet-to-be launched direct-to-consumer offering — as part of select cable packages at no additional cost to the consumer.
"Disney and Charter finally reached a settlement that looks like a win-win for both," Macquarie's Tim Nollen wrote in a note on Tuesday. "In the end this wasn't as revolutionary a deal as Charter seemed poised to hold out for, but it does move the sticks down the field toward a fully streaming future."
MoffettNathanson analyst Michael Nathanson agreed, writing in a note released late Monday: "While perhaps not the end of the Pay TV world as we know it, we very much can look back at this Disney/Charter deal as an opening salvo of a broader re-bundling and a step in giving customers smaller linear bundles with increased streaming video-on-demand functionality."
Charter has focused on offering more bundles amid the cord-cutting phenomenon, hence its desire to include more streaming plans in packages. On top of that, Disney plans to take ESPN fully over the top as a direct-to-consumer streaming service — another incentive for Charter to lean into streaming.
As part of the deal, the Disney+ Basic ad-supported offering will be provided to Charter customers who purchase the Spectrum TV Select package at no additional cost, "as part of a wholesale arrangement."
Nollen said Disney stands to gain additional revenue of about $400 million to $500 million annually as a result of this arrangement, assuming the addition of roughly 12 million subscribers through Charter.
That's welcome news for Disney as its ad-supported tier has struggled to scale, with only 3.3 million subscribers as of June, according to an estimate from MoffettNathanson.
On top of the Disney+ offering, ESPN+ will be provided to Spectrum TV Select Plus subscribers at no additional cost. The ESPN flagship direct-to-consumer service will also be made available at no extra cost to Spectrum TV Select subscribers when it launches.
"For Charter — this might be the biggest win but at the same time likely something Disney knew was inevitable as part of future affiliate deals," Nathanson wrote.
But Nollen said it's also a win for Disney considering ESPN+ will likewise see a rise in its viewer base — even if that means no subscriber revenue.
"The new ESPN OTT service will have a built-in starting point on subs from Charter when it launches, and Disney can benefit from Charter marketing its DTC offerings to its broadband subscriber base, which totals 28.5 million residential households," he said.
Disney is planning a new ESPN streaming service. (David Kohl/AP Photo, File)
Spectrum will continue to carry the ABC Owned Television Stations, Disney Channel, FX, and the Nat Geo Channel, in addition to the full suite of ESPN networks.
In an interview with The Hollywood Reporter, ESPN Chairman Jimmy Pitaro indicated Disney was able to secure "very strong" rate increases for ESPN — a "critical" element to the deal, according to Nathanson.
"Without any real change to minimums, Disney securing 'very strong' rate increases at ESPN over a multi-year deal is critical to improve the trajectory of the US linear network business," he said.
"Disney needs to see higher rate inflation to offset the acceleration in industry cord-cutting now reaching about 7%, without any real sign of slowing down. Importantly, the extent of the higher ESPN rates will be a big driver in what future sports rights deals ESPN/Disney is able or willing to afford," the analyst continued.
Still, Disney did give up a host of networks in exchange for the strong rates. Networks that will no longer be included in Spectrum TV video packages are Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild, and Nat Geo Mundo.
"Without knowing the specifics of the deal, it is hard to say whether price increases Disney won for its remaining networks will be enough to fully offset this loss, pegging this as a win for Charter," Nathanson noted. "Based on rough estimates of what Charter had been paying for coverage, we believe the removal of these networks will cost Disney in the range of $300 million per year in high margin lost affiliate fees."
"Like much of this deal, we anticipate this setting a precedent for similar surgical culling in all future renegotiations across the industry," he added.
Disney-Charter pact a 'win-win' as deal signals 'opening salvo' in cable reshuffling
Alexandra Canal
·Senior Reporter
Tue, September 12, 2023 at 12:58 PM PDT
Disney (DIS) and Charter (CHTR)'s deal that ended their historic carriage dispute did not break up the traditional cable bundle as some had anticipated. In fact, it was a win for both sides, according to Wall Street analysts.
In late August, Disney had pulled its owned and operated channels including ESPN and ABC off Charter Spectrum cable systems after the two hit a stalemate over whether Disney should give Charter subscribers free access to its ad-supported streaming services as part of the telecom giant's cable packages.
The blackout had impacted a slew of high-profile sporting events including the US Open and arrived on the heels of the NFL's debut — upping the pressure for both sides to make a deal.
A blue screen message on Spectrum TV over the ESPN channel amid a dispute between Disney and Charter Spectrum on Sept. 6, 2023, in Los Angeles, Calif. (Mario Tama/Getty Images)
On Monday, the companies announced they had reached an agreement to end the media blackout. As part of the deal, Charter will offer some Disney streaming services — the ad-supported version of Disney+, ESPN+, and ESPN's yet-to-be launched direct-to-consumer offering — as part of select cable packages at no additional cost to the consumer.
"Disney and Charter finally reached a settlement that looks like a win-win for both," Macquarie's Tim Nollen wrote in a note on Tuesday. "In the end this wasn't as revolutionary a deal as Charter seemed poised to hold out for, but it does move the sticks down the field toward a fully streaming future."
MoffettNathanson analyst Michael Nathanson agreed, writing in a note released late Monday: "While perhaps not the end of the Pay TV world as we know it, we very much can look back at this Disney/Charter deal as an opening salvo of a broader re-bundling and a step in giving customers smaller linear bundles with increased streaming video-on-demand functionality."
Charter has focused on offering more bundles amid the cord-cutting phenomenon, hence its desire to include more streaming plans in packages. On top of that, Disney plans to take ESPN fully over the top as a direct-to-consumer streaming service — another incentive for Charter to lean into streaming.
As part of the deal, the Disney+ Basic ad-supported offering will be provided to Charter customers who purchase the Spectrum TV Select package at no additional cost, "as part of a wholesale arrangement."
Nollen said Disney stands to gain additional revenue of about $400 million to $500 million annually as a result of this arrangement, assuming the addition of roughly 12 million subscribers through Charter.
That's welcome news for Disney as its ad-supported tier has struggled to scale, with only 3.3 million subscribers as of June, according to an estimate from MoffettNathanson.
On top of the Disney+ offering, ESPN+ will be provided to Spectrum TV Select Plus subscribers at no additional cost. The ESPN flagship direct-to-consumer service will also be made available at no extra cost to Spectrum TV Select subscribers when it launches.
"For Charter — this might be the biggest win but at the same time likely something Disney knew was inevitable as part of future affiliate deals," Nathanson wrote.
But Nollen said it's also a win for Disney considering ESPN+ will likewise see a rise in its viewer base — even if that means no subscriber revenue.
"The new ESPN OTT service will have a built-in starting point on subs from Charter when it launches, and Disney can benefit from Charter marketing its DTC offerings to its broadband subscriber base, which totals 28.5 million residential households," he said.
Disney is planning a new ESPN streaming service. (David Kohl/AP Photo, File)
Spectrum will continue to carry the ABC Owned Television Stations, Disney Channel, FX, and the Nat Geo Channel, in addition to the full suite of ESPN networks.
In an interview with The Hollywood Reporter, ESPN Chairman Jimmy Pitaro indicated Disney was able to secure "very strong" rate increases for ESPN — a "critical" element to the deal, according to Nathanson.
"Without any real change to minimums, Disney securing 'very strong' rate increases at ESPN over a multi-year deal is critical to improve the trajectory of the US linear network business," he said.
"Disney needs to see higher rate inflation to offset the acceleration in industry cord-cutting now reaching about 7%, without any real sign of slowing down. Importantly, the extent of the higher ESPN rates will be a big driver in what future sports rights deals ESPN/Disney is able or willing to afford," the analyst continued.
Still, Disney did give up a host of networks in exchange for the strong rates. Networks that will no longer be included in Spectrum TV video packages are Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild, and Nat Geo Mundo.
"Without knowing the specifics of the deal, it is hard to say whether price increases Disney won for its remaining networks will be enough to fully offset this loss, pegging this as a win for Charter," Nathanson noted. "Based on rough estimates of what Charter had been paying for coverage, we believe the removal of these networks will cost Disney in the range of $300 million per year in high margin lost affiliate fees."
"Like much of this deal, we anticipate this setting a precedent for similar surgical culling in all future renegotiations across the industry," he added.
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Mouseketeer
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- Nov 4, 2013
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So Disney picks up 15 million subscribers for Disney+ which appears as 15 million reasons to get a deal done. Disney+ is saved! Hallelujah! Well, we dropped a few channels, but did you hear? We saved Disney!
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