wabbott
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DIS Shareholders and Stock Info ONLY
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wabbott
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https://finance.yahoo.com/news/disney-yanks-espn-off-charter-010700618.html
Charter Takes on Disney in Fight Over Cable TV’s Future
Lucas Shaw and Scott Moritz
Fri, September 1, 2023 at 12:13 PM PDT
(Bloomberg) -- Charter Communications Inc., the No. 2 US cable TV provider, declared war on Walt Disney Co., saying it can no longer live with rising fees for ESPN and other programming.
Disney, the world’s largest entertainment company, responded by yanking its channels, including ESPN, from Charter’s Spectrum TV service, depriving that company’s 14 million viewers of popular sports shows, including possibly the coming NFL season.
It’s not an overstatement to say the future of the pay-TV business hangs in the balance. Cable and satellite providers have lost 25 million subscribers over the past five years, according to Charter. The cable company, second only to Comcast Corp., wants out of standard industry contracts that require customers to pay for sports and other channels even if they don’t watch them.
Instead, Charter has proposed a different set up, where consumers are given more options to choose the channels they pay for. The company has proposed packaging Disney streaming services, such as Disney+ and ESPN+, with its other products, something it said the company rejected.
“Ultimately Disney gave us a choice, either carry on with the bad path for consumers or to look for completely new video models for our customers,” Charter Chief Executive Officer Chris Winfrey said on a call with investors Friday.
Disney said in a statement Thursday night that it’s committed to reaching a “mutually agreed upon resolution” with Charter. That’s when it announced it was removing channels like ABC and ESPN from Charter systems. Disney urged Charter to work to minimize disruption to customers.
In a separate statement Friday, Disney said Charter is demanding the company’s streaming services for free.
This dispute could be a tipping point for the industry, New Street Research analyst Jonathan Chaplin wrote in a research note Friday. The “crux of the dispute” appears to be ESPN, which Disney has hinted it will ultimately offer direct to consumers online, Chaplin wrote.
Charter “risks the loss of avid sports fans, with football fans being the most avid of all,” he said.
The dispute triggered a broad decline in media stocks. Disney lost as much as 3.8%, while Warner Bros. Discovery Inc. fell as much as 13% and Paramount Global, the parent of CBS, tumbled almost 10%.
Charter was down as much as 4.1% and Comcast retreated 3%.
Charter pays about $2.2 billion in annual programming costs to Disney, not including the impact of advertising revenue, while only about a quarter of its subscribers regularly engage with Disney content, it said in a presentation on its website Friday. The company suggested one option it has considered is exiting the video business entirely.
Many of its customers live in large cities such as Los Angeles and New York.
Media companies such as Disney have fought with pay-TV providers for years over the value of channels like ESPN and Freeform, often leading to contract disputes and temporary blackouts. The rising cost of TV packages and the number of channels included in those packages has prompted tens of millions of people to stop paying for live TV.
“The multichannel video product is too expensive and packages don’t meet consumer needs,” Charter said in its presentation. “Disney – so far – has insisted on a traditional long-term deal with higher rates and limited packaging flexibility.”
The potential short-term impacts include an immediate reduction in programming cost and some one-time costs, such as customer credits, Charter said.
Disney could also see a bump in ESPN+ subscribers, although that service doesn’t offer the same programming as the ESPN cable channels.
(Updates with Disney comment in seventh paragraph, share losses.)
Charter Takes on Disney in Fight Over Cable TV’s Future
Lucas Shaw and Scott Moritz
Fri, September 1, 2023 at 12:13 PM PDT
(Bloomberg) -- Charter Communications Inc., the No. 2 US cable TV provider, declared war on Walt Disney Co., saying it can no longer live with rising fees for ESPN and other programming.
Disney, the world’s largest entertainment company, responded by yanking its channels, including ESPN, from Charter’s Spectrum TV service, depriving that company’s 14 million viewers of popular sports shows, including possibly the coming NFL season.
It’s not an overstatement to say the future of the pay-TV business hangs in the balance. Cable and satellite providers have lost 25 million subscribers over the past five years, according to Charter. The cable company, second only to Comcast Corp., wants out of standard industry contracts that require customers to pay for sports and other channels even if they don’t watch them.
Instead, Charter has proposed a different set up, where consumers are given more options to choose the channels they pay for. The company has proposed packaging Disney streaming services, such as Disney+ and ESPN+, with its other products, something it said the company rejected.
“Ultimately Disney gave us a choice, either carry on with the bad path for consumers or to look for completely new video models for our customers,” Charter Chief Executive Officer Chris Winfrey said on a call with investors Friday.
Disney said in a statement Thursday night that it’s committed to reaching a “mutually agreed upon resolution” with Charter. That’s when it announced it was removing channels like ABC and ESPN from Charter systems. Disney urged Charter to work to minimize disruption to customers.
In a separate statement Friday, Disney said Charter is demanding the company’s streaming services for free.
This dispute could be a tipping point for the industry, New Street Research analyst Jonathan Chaplin wrote in a research note Friday. The “crux of the dispute” appears to be ESPN, which Disney has hinted it will ultimately offer direct to consumers online, Chaplin wrote.
Charter “risks the loss of avid sports fans, with football fans being the most avid of all,” he said.
The dispute triggered a broad decline in media stocks. Disney lost as much as 3.8%, while Warner Bros. Discovery Inc. fell as much as 13% and Paramount Global, the parent of CBS, tumbled almost 10%.
Charter was down as much as 4.1% and Comcast retreated 3%.
Charter pays about $2.2 billion in annual programming costs to Disney, not including the impact of advertising revenue, while only about a quarter of its subscribers regularly engage with Disney content, it said in a presentation on its website Friday. The company suggested one option it has considered is exiting the video business entirely.
Many of its customers live in large cities such as Los Angeles and New York.
Media companies such as Disney have fought with pay-TV providers for years over the value of channels like ESPN and Freeform, often leading to contract disputes and temporary blackouts. The rising cost of TV packages and the number of channels included in those packages has prompted tens of millions of people to stop paying for live TV.
“The multichannel video product is too expensive and packages don’t meet consumer needs,” Charter said in its presentation. “Disney – so far – has insisted on a traditional long-term deal with higher rates and limited packaging flexibility.”
The potential short-term impacts include an immediate reduction in programming cost and some one-time costs, such as customer credits, Charter said.
Disney could also see a bump in ESPN+ subscribers, although that service doesn’t offer the same programming as the ESPN cable channels.
(Updates with Disney comment in seventh paragraph, share losses.)
wabbott
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https://www.nytimes.com/2023/09/01/business/charter-disney-cable-fight.html
One of the Biggest Cable Companies Says Cable TV Isn’t Working
Charter Communications told investors Friday that its fraught negotiation with Walt Disney was a sign of a larger problem with the traditional cable-TV business model.
By Benjamin Mullin
Sept. 1, 2023 - Updated 4:20 p.m. EDT
One of the biggest cable companies in the United States has a message for media companies, its major partners in a decades-old business: The traditional cable-TV model is broken, and it needs to be fixed or abandoned.
Cable TV has become too expensive for consumers and providers, Charter Communications said in an 11-page presentation to investors on Friday, adding that cord-cutters and rising fees are contributing to a “vicious video cycle.”
The presentation comes amid negotiations between Charter and the Walt Disney Company, owner of popular cable channels including ESPN and FX, which will not be available to Charter’s nearly 15 million pay-TV subscribers until both sides agree on how much Charter will pay Disney to carry its channels. Subscribers to Charter’s Spectrum TV service will be without access to the U.S. Open tennis tournament and college football games during a holiday weekend.
These so-called carriage fights are commonplace in the media industry, with channels going dark for days or weeks on cable systems while the two sides — cable providers and content creators — haggle over how much the channels are worth and how to bundle them. But Charter’s suggestion that parts of its own business model are in disrepair adds a new wrinkle to the crisis facing the cable-TV business.
The fight comes at a time of declining subscriptions: More than five million Americans end their cable-TV subscriptions annually, according to research from SVB
Almost every traditional media company is trying to hold on to its cash-rich cable partnerships while building streaming businesses that will eventually replace those alliances. But investors in traditional media companies have also grown impatient with attempts to build new streaming businesses, saying they are not as profitable as cable TV used to be.
The pressure is forcing traditional media companies to wring cash from their businesses in other ways, including teaming up with competitors to bundle their streaming services.
Adding to the challenges, tech companies like Apple and Amazon are willing to pay top dollar to acquire live sports rights, further driving up programming costs. Cable companies, for their part, have weaned themselves off depending wholly on traditional TV revenue, by offering services like wireless internet.
But in trying to negotiate with Disney for a better deal, Charter’s presentation goes a step further, delivering a scathing indictment of the cable television industry, which has generated billions of dollars for companies like itself and Disney for decades. It’s a notable acknowledgment from Charter, one of the companies that propelled much of that growth.
“Customers are leaving the traditional video ecosystem, and losses have accelerated,” according to Charter’s presentation.
“Has the traditional TV ecosystem reached its proverbial tipping point?” said Richard Greenfield, a media analyst for LightShed Partners. “If ESPN is permanently gone from Charter, there will be a massive snowball effect that is catastrophic for traditional TV companies.”
Disney fired back at Charter on Friday, saying that the cable giant had rejected a deal that reflected “market-based terms” and that Disney had proposed creative ways to make its streaming apps available to Charter’s cable subscribers. Disney said its offer to Charter had included its “most favorable terms” on rates, distribution, packaging and advertising.
“Charter’s actions are a disservice to consumers ahead of the kickoff for the college football season on ABC and ESPN’s networks,” Disney said in its statement.
At issue are the rates Charter will pay for Disney’s programming and how those movies and shows will be distributed to Charter’s customers in bundles. Charter has said it does not want to pay a premium for channels its customers do not watch, adding that rate increases are pushing customers to cut the cable cord.
Cord-cutters and rising fees are contributing to a “vicious video cycle,” Charter Communications said in a presentation to investors.
Christopher Winfrey, the chief executive of Charter, said on an investor call Friday that he was “disappointed” with the stalemate with Disney. He said the company had proposed an alternative model that Disney would not accept.
“We’re either moving forward with a new collaborative video model, or we’re moving on,” Mr. Winfrey said.
Charter’s news conference prompted a sell-off of traditional media stocks, affecting the broader entertainment industry. Shares of Disney were down nearly 3 percent on Friday, Paramount declined more than 9 percent, and Warner Bros. Discovery fell 12 percent. Charter shares were down more than 3 percent.
As viewers abandon cable television for streaming services like Netflix, cable providers like Charter and Comcast have grown frustrated with paying a premium for content that fewer people are watching through traditional means.
Content providers like Disney are making adjustments of their own. The media giant has said it plans to offer a streaming version of ESPN, one of its most valuable TV channels, which has long been a linchpin of the traditional cable bundle. Robert Iger, Disney’s chief executive, has said he is exploring options for ESPN, including finding a new
partner for distribution or content.
On Friday, Charter said it had proposed a subscription package that included both traditional television and streaming apps, but Disney rejected its terms, said Rich DiGeronimo, president of product and technology. Charter said it was prepared to walk away from Disney’s channels, instead adopting “alternate video solutions” that included services offered by Apple and Roku.
Charter has explored splitting off some sports programming, including regional sports networks, into a higher-cost package called Spectrum Select Plus. Mr. Winfrey said Friday that it had not pushed Disney to agree to put ESPN into that package.
Benjamin Mullin is a media reporter for The Times, covering the major companies behind news and entertainment. More about Benjamin Mullin
One of the Biggest Cable Companies Says Cable TV Isn’t Working
Charter Communications told investors Friday that its fraught negotiation with Walt Disney was a sign of a larger problem with the traditional cable-TV business model.
By Benjamin Mullin
Sept. 1, 2023 - Updated 4:20 p.m. EDT
One of the biggest cable companies in the United States has a message for media companies, its major partners in a decades-old business: The traditional cable-TV model is broken, and it needs to be fixed or abandoned.
Cable TV has become too expensive for consumers and providers, Charter Communications said in an 11-page presentation to investors on Friday, adding that cord-cutters and rising fees are contributing to a “vicious video cycle.”
The presentation comes amid negotiations between Charter and the Walt Disney Company, owner of popular cable channels including ESPN and FX, which will not be available to Charter’s nearly 15 million pay-TV subscribers until both sides agree on how much Charter will pay Disney to carry its channels. Subscribers to Charter’s Spectrum TV service will be without access to the U.S. Open tennis tournament and college football games during a holiday weekend.
These so-called carriage fights are commonplace in the media industry, with channels going dark for days or weeks on cable systems while the two sides — cable providers and content creators — haggle over how much the channels are worth and how to bundle them. But Charter’s suggestion that parts of its own business model are in disrepair adds a new wrinkle to the crisis facing the cable-TV business.
The fight comes at a time of declining subscriptions: More than five million Americans end their cable-TV subscriptions annually, according to research from SVB
Almost every traditional media company is trying to hold on to its cash-rich cable partnerships while building streaming businesses that will eventually replace those alliances. But investors in traditional media companies have also grown impatient with attempts to build new streaming businesses, saying they are not as profitable as cable TV used to be.
The pressure is forcing traditional media companies to wring cash from their businesses in other ways, including teaming up with competitors to bundle their streaming services.
Adding to the challenges, tech companies like Apple and Amazon are willing to pay top dollar to acquire live sports rights, further driving up programming costs. Cable companies, for their part, have weaned themselves off depending wholly on traditional TV revenue, by offering services like wireless internet.
But in trying to negotiate with Disney for a better deal, Charter’s presentation goes a step further, delivering a scathing indictment of the cable television industry, which has generated billions of dollars for companies like itself and Disney for decades. It’s a notable acknowledgment from Charter, one of the companies that propelled much of that growth.
“Customers are leaving the traditional video ecosystem, and losses have accelerated,” according to Charter’s presentation.
“Has the traditional TV ecosystem reached its proverbial tipping point?” said Richard Greenfield, a media analyst for LightShed Partners. “If ESPN is permanently gone from Charter, there will be a massive snowball effect that is catastrophic for traditional TV companies.”
Disney fired back at Charter on Friday, saying that the cable giant had rejected a deal that reflected “market-based terms” and that Disney had proposed creative ways to make its streaming apps available to Charter’s cable subscribers. Disney said its offer to Charter had included its “most favorable terms” on rates, distribution, packaging and advertising.
“Charter’s actions are a disservice to consumers ahead of the kickoff for the college football season on ABC and ESPN’s networks,” Disney said in its statement.
At issue are the rates Charter will pay for Disney’s programming and how those movies and shows will be distributed to Charter’s customers in bundles. Charter has said it does not want to pay a premium for channels its customers do not watch, adding that rate increases are pushing customers to cut the cable cord.
Cord-cutters and rising fees are contributing to a “vicious video cycle,” Charter Communications said in a presentation to investors.
Christopher Winfrey, the chief executive of Charter, said on an investor call Friday that he was “disappointed” with the stalemate with Disney. He said the company had proposed an alternative model that Disney would not accept.
“We’re either moving forward with a new collaborative video model, or we’re moving on,” Mr. Winfrey said.
Charter’s news conference prompted a sell-off of traditional media stocks, affecting the broader entertainment industry. Shares of Disney were down nearly 3 percent on Friday, Paramount declined more than 9 percent, and Warner Bros. Discovery fell 12 percent. Charter shares were down more than 3 percent.
As viewers abandon cable television for streaming services like Netflix, cable providers like Charter and Comcast have grown frustrated with paying a premium for content that fewer people are watching through traditional means.
Content providers like Disney are making adjustments of their own. The media giant has said it plans to offer a streaming version of ESPN, one of its most valuable TV channels, which has long been a linchpin of the traditional cable bundle. Robert Iger, Disney’s chief executive, has said he is exploring options for ESPN, including finding a new
partner for distribution or content.
On Friday, Charter said it had proposed a subscription package that included both traditional television and streaming apps, but Disney rejected its terms, said Rich DiGeronimo, president of product and technology. Charter said it was prepared to walk away from Disney’s channels, instead adopting “alternate video solutions” that included services offered by Apple and Roku.
Charter has explored splitting off some sports programming, including regional sports networks, into a higher-cost package called Spectrum Select Plus. Mr. Winfrey said Friday that it had not pushed Disney to agree to put ESPN into that package.
Benjamin Mullin is a media reporter for The Times, covering the major companies behind news and entertainment. More about Benjamin Mullin
Jwaire
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Opportunistic, much?
This is the way it's worked for years. You want ESPN, you pay for ESPN and you get Freeform for next to nothing.
"ESPN is said to reap high fees. ESPN receives $9.42 per subscriber a month, while other Disney networks like ESPN2, FX and Disney Channel gets $1.21, $0.93 and $1.25, respectively, according to data from S&P Global Market Intelligence."
https://www.cnbc.com/2023/09/01/disney-charter-battle-over-spectrum-blackout.html
It used to be they wanted to dump the extra networks because of bandwidth issues. They could offer more on demand services using that freed up bandwidth, but I'm not sure that matters with streaming.
This is turning into Bob Iger's Terrible, Horrible, No Good, Very Bad Year.
wabbott
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Such is the history of communications from since writing on cave walls was the first permanent record.
The Shaman of the tribe, or storyteller was one of the most important people in the group, as he had the power to hand down the culture to the next generation.
Then writing on cave walls told the stories.
Along came the first paper - papyrus - which made administration portable and enable Egypt to build an empire. The written word could travel.
All the while, the Man, the Machine, the Borg, Big Government (whatever term you desire) was still all-powerful, since they were the only ones that could afford paper making
Then Gutenberg. Mass production of the written word became enabled.
Next, cheap paper made books affordable to the proletariat.
Film, the phonograph - more means to communicate and spread new ideas and thought.
Broadcast radio, then TV. Still a relatively few people controlled what we read or heard.
The internet shattered it all. Now anyone can publish or can make movies. Anyone can report the news or film what happens and broadcast it to the entire world.
Can you imagine how terrifying such a thing is to statists and control freaks.
PolymerSkywalker
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I liked all of Mando 1-2, not just the Luke parts. Although the Luke part at the end of season 2 was the high water mark.
I liked the force awakens and loved Rogue One.
I will watch Asohka when I get time, but I may wait until I can binge it all at once.
PolymerSkywalker
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You can suggest my point of view is incorrect all you want to, but bottom line is the current slate of Marvel and Star Wars content is not winning in the marketplace. I want Disney to return to what wins, because I want Disney to win.
I also want the Disney Stock price to win again, my current share price stinks!
I also want the Disney Stock price to win again, my current share price stinks!
This almost reads like a ride thru an alternate reality Space Ship Earth. LOL
wabbott
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Actually, Spaceship Earth's story is a decent history of mankind's effort to communicate. What's left out, imo, is the parallel story of how some have always tried to control what's said or printed or broadcast. It's not a new phenomenon and so it will be until Armageddon.
wabbott
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https://www.hollywoodreporter.com/b...ay-tv-bundle-charter-wga-sagaftra-1235580145/
Everyone Blames Studios for Ditching the Pay TV Bundle. Can a New One Be Built Before Disaster Hits?
Whether its the Writers Guild or SAG-AFTRA or Charter executives, all parties point to the decision to chase Netflix as the cause of Hollywood anguish. Who can come up with a new alternative?
By Alex Weprin - September 1, 2023 2:33pm PDT
If the entertainment business could be summed up in one word these days, it could be “misery.”
The Writers Guild of America and SAG-AFTRA strikes drag on, with no end in sight. The major streaming services (sans Netflix) continue to be unprofitable, with most studios still targeting 2025 to break even. The pay TV business continues to decline at a rapid pace, with its lynchpin sports and news channels seeking an exit.
That gloomy context is key to why some powerful players in the entertainment ecosystem — the Hollywood labor guilds and one of its largest pay-TV partners — are seeking a new plan.
On Friday morning, Charter Communications held a conference call with Wall Street analysts where it said it was prepared to abandon its video business if it couldn’t come to a “transformative” deal with The Walt Disney Co. to try and salvage the pay TV bundle. The company is one of the top pay TV providers domestically, with 14.7 million subscribers — just short of leader Comcast’s 14.9 million but above satellite rivals DirecTV (12.3 million) and Dish (6.9 million). Charter, like those other pay TV firms, has also lost video subs, about 200,000, in its latest quarter, per a Leichtman Research tally.
“We’re on the edge of a precipice. We’re either moving forward with a new collaborative video model, or we’re moving on,” Charter CEO Chris Winfrey said on the call. “This is not a typical carriage dispute. It’s significant for Charter, and we think it’s even more significant for programmers and the broader video ecosystem.”
Charter, in a Powerpoint presentation that accompanied the call, wrote that “programmers are caught in a self-imposed dilemma as they have moved content to their DTC products for short-term profit maximization and their management teams are not incentivized to drive business for the long-term,” arguing that studios like Disney and Warner Bros. Discovery chose to wreck their pay TV business (by moving most original shows to subscription video on-demand services, and pushing for higher and higher fees for sports channels) to pursue the streaming riches that Netflix promised.
“As an industry we failed to come together quickly to create that consumer friendly product,” Winfrey said. “Programmers then made high value content available for anyone to access on websites, and soon thereafter through emerging streaming applications such as Hulu, which was initially free. At the same time programmers believed that their content libraries could create so called incremental streaming service revenues by selling this content to Netflix.”
He went on to lambast “programmers constantly chasing the wind to the capital markets. We believe the time for a more coherent strategy is now.”
If that sounds familiar, it’s because its very similar to complaints lodged by the WGA and SAG-AFTRA, angry about the smaller and smaller residuals checks, and the lack of stability in an already-tough business to work in. But those problems come back to a business model in decline.
“You cannot change the business model as much as it has changed and not expect the contract to change too,” SAG-AFTRA president Fran Drescher said in her July 13 speech announcing the strike. “We’re not going to keep doing incremental changes on a contract that no longer honors what is happening right now with this business model that was foisted upon us.”
Adam Conover, a negotiating committee member for the WGA, told Crooked Media’s Offline podcast July 30 that Netflix sparked a “frenzy” in the entertainment industry.
“The entire industry shifts to follow Netflix right? Look at look what happened to what is now Warner Discovery, where you had this company that is made up of what used to be 25 successful, profitable cable channels that they murdered,” Conover said. “They assassinated these channels to put all the content onto this one service.”
“It all worked and they destroyed all of it to chase cord cutting, to chase Netflix, and it was a lie,” Conover added.
There may be quibbles with the value proposition of the pay TV bundle in its waning days, but no one disputes that it was popular among consumers and Hollywood alike, with consumers getting all the entertainment, sports and news they want on one monthly bill, and every corner of the entertainment business getting a piece of the profits.
Now, those key partners of the business, the cable giants and the labor unions, are angry that their piece of the pie has evaporated at the expense of studios chasing streaming. And the profits are nowhere to be found.
And they each have new ideas for what to do about it. No one is proposing to eliminate DTC streaming altogether, but SAG-AFTRA has proposed handing over a portion of the revenues to actors, while both SAG and the WGA want success-based residuals for streaming shows that become hits. It is not clear, however, that they are willing to jettison the buyout model that Netflix pioneered, paying out creatives for global rights.
Charter, meanwhile, is proposing a “vision for the future of video,” one built on “partnership” between the distributor and studio.
“Distributors and programmers need to work together to entice and reward customers to utilize bundled subscription products – most programmers simply will not be able to profit/survive solely on a-la-carte streaming revenue and need a hybrid, customer centric model,” Charter writes in its slide deck.
Charter would “aggregate the ad-supported streaming apps from cable network brands into packaged linear products at an affordable price point, creating the most compelling consumer proposition in the marketplace,” while also helping studios market their DTC offerings.
It’s an effort to recreate the pay TV bundle, in reimagined form. With subscription fees and advertising revenue flowing, it is also something that, presumably, would help bump labor residuals accordingly. As Wells Fargo analyst Steve Cahall noted ominously in Friday report: Charter “has drawn a line in the sand and is either prepared to drop major content sources to protect earnings, or rewrite the linear script.”
Disney, for its part, seems somewhat open to combining its streaming and legacy pay TV offerings. “We have proposed creative ways to make Disney’s direct-to-consumer services available to their Spectrum TV subscribers, including opportunities for new and flexible packages where those services become a focal point of what the consumer might choose,” it said Friday afternoon in response to Charter. But the specific terms clearly aren’t close yet.
And while the current dispute is about Disney vs. Charter and the WGA and SAG vs. the AMPTP, there will be repercussions whenever an agreement is cut. A deal between Disney and Charter could reshape the TV landscape, as would any deal with SAG or the WGA and the AMPTP. But the economic stakes appear to be higher in the carriage dispute, with trickle-down effects impacting the entire business.
“If Charter further shifts strategic focus away from its video product, we see increased and sustained risk for not only Disney but for video economics across our media coverage,” wrote Guggenheim’s Michael Morris in a report Friday.
Or as MoffettNathanson analysts Craig Moffett and Michael Nathanson wrote in their own report Friday: “The collateral damage could be wide-ranging from sports leagues with rights coming up from renewal, local TV station affiliates seeking material step-ups and creative talent tied to the programming investments made by linear networks.”
Everyone Blames Studios for Ditching the Pay TV Bundle. Can a New One Be Built Before Disaster Hits?
Whether its the Writers Guild or SAG-AFTRA or Charter executives, all parties point to the decision to chase Netflix as the cause of Hollywood anguish. Who can come up with a new alternative?
By Alex Weprin - September 1, 2023 2:33pm PDT
If the entertainment business could be summed up in one word these days, it could be “misery.”
The Writers Guild of America and SAG-AFTRA strikes drag on, with no end in sight. The major streaming services (sans Netflix) continue to be unprofitable, with most studios still targeting 2025 to break even. The pay TV business continues to decline at a rapid pace, with its lynchpin sports and news channels seeking an exit.
That gloomy context is key to why some powerful players in the entertainment ecosystem — the Hollywood labor guilds and one of its largest pay-TV partners — are seeking a new plan.
On Friday morning, Charter Communications held a conference call with Wall Street analysts where it said it was prepared to abandon its video business if it couldn’t come to a “transformative” deal with The Walt Disney Co. to try and salvage the pay TV bundle. The company is one of the top pay TV providers domestically, with 14.7 million subscribers — just short of leader Comcast’s 14.9 million but above satellite rivals DirecTV (12.3 million) and Dish (6.9 million). Charter, like those other pay TV firms, has also lost video subs, about 200,000, in its latest quarter, per a Leichtman Research tally.
“We’re on the edge of a precipice. We’re either moving forward with a new collaborative video model, or we’re moving on,” Charter CEO Chris Winfrey said on the call. “This is not a typical carriage dispute. It’s significant for Charter, and we think it’s even more significant for programmers and the broader video ecosystem.”
Charter, in a Powerpoint presentation that accompanied the call, wrote that “programmers are caught in a self-imposed dilemma as they have moved content to their DTC products for short-term profit maximization and their management teams are not incentivized to drive business for the long-term,” arguing that studios like Disney and Warner Bros. Discovery chose to wreck their pay TV business (by moving most original shows to subscription video on-demand services, and pushing for higher and higher fees for sports channels) to pursue the streaming riches that Netflix promised.
“As an industry we failed to come together quickly to create that consumer friendly product,” Winfrey said. “Programmers then made high value content available for anyone to access on websites, and soon thereafter through emerging streaming applications such as Hulu, which was initially free. At the same time programmers believed that their content libraries could create so called incremental streaming service revenues by selling this content to Netflix.”
He went on to lambast “programmers constantly chasing the wind to the capital markets. We believe the time for a more coherent strategy is now.”
If that sounds familiar, it’s because its very similar to complaints lodged by the WGA and SAG-AFTRA, angry about the smaller and smaller residuals checks, and the lack of stability in an already-tough business to work in. But those problems come back to a business model in decline.
“You cannot change the business model as much as it has changed and not expect the contract to change too,” SAG-AFTRA president Fran Drescher said in her July 13 speech announcing the strike. “We’re not going to keep doing incremental changes on a contract that no longer honors what is happening right now with this business model that was foisted upon us.”
Adam Conover, a negotiating committee member for the WGA, told Crooked Media’s Offline podcast July 30 that Netflix sparked a “frenzy” in the entertainment industry.
“The entire industry shifts to follow Netflix right? Look at look what happened to what is now Warner Discovery, where you had this company that is made up of what used to be 25 successful, profitable cable channels that they murdered,” Conover said. “They assassinated these channels to put all the content onto this one service.”
“It all worked and they destroyed all of it to chase cord cutting, to chase Netflix, and it was a lie,” Conover added.
There may be quibbles with the value proposition of the pay TV bundle in its waning days, but no one disputes that it was popular among consumers and Hollywood alike, with consumers getting all the entertainment, sports and news they want on one monthly bill, and every corner of the entertainment business getting a piece of the profits.
Now, those key partners of the business, the cable giants and the labor unions, are angry that their piece of the pie has evaporated at the expense of studios chasing streaming. And the profits are nowhere to be found.
And they each have new ideas for what to do about it. No one is proposing to eliminate DTC streaming altogether, but SAG-AFTRA has proposed handing over a portion of the revenues to actors, while both SAG and the WGA want success-based residuals for streaming shows that become hits. It is not clear, however, that they are willing to jettison the buyout model that Netflix pioneered, paying out creatives for global rights.
Charter, meanwhile, is proposing a “vision for the future of video,” one built on “partnership” between the distributor and studio.
“Distributors and programmers need to work together to entice and reward customers to utilize bundled subscription products – most programmers simply will not be able to profit/survive solely on a-la-carte streaming revenue and need a hybrid, customer centric model,” Charter writes in its slide deck.
Charter would “aggregate the ad-supported streaming apps from cable network brands into packaged linear products at an affordable price point, creating the most compelling consumer proposition in the marketplace,” while also helping studios market their DTC offerings.
It’s an effort to recreate the pay TV bundle, in reimagined form. With subscription fees and advertising revenue flowing, it is also something that, presumably, would help bump labor residuals accordingly. As Wells Fargo analyst Steve Cahall noted ominously in Friday report: Charter “has drawn a line in the sand and is either prepared to drop major content sources to protect earnings, or rewrite the linear script.”
Disney, for its part, seems somewhat open to combining its streaming and legacy pay TV offerings. “We have proposed creative ways to make Disney’s direct-to-consumer services available to their Spectrum TV subscribers, including opportunities for new and flexible packages where those services become a focal point of what the consumer might choose,” it said Friday afternoon in response to Charter. But the specific terms clearly aren’t close yet.
And while the current dispute is about Disney vs. Charter and the WGA and SAG vs. the AMPTP, there will be repercussions whenever an agreement is cut. A deal between Disney and Charter could reshape the TV landscape, as would any deal with SAG or the WGA and the AMPTP. But the economic stakes appear to be higher in the carriage dispute, with trickle-down effects impacting the entire business.
“If Charter further shifts strategic focus away from its video product, we see increased and sustained risk for not only Disney but for video economics across our media coverage,” wrote Guggenheim’s Michael Morris in a report Friday.
Or as MoffettNathanson analysts Craig Moffett and Michael Nathanson wrote in their own report Friday: “The collateral damage could be wide-ranging from sports leagues with rights coming up from renewal, local TV station affiliates seeking material step-ups and creative talent tied to the programming investments made by linear networks.”
Elijah Abrams
DIS Veteran
- Joined
- Feb 6, 2020
- Messages
- 610
Iger continues to ruin Disney.
irlandaise
DIS Veteran
- Joined
- Sep 27, 2022
- Messages
- 2,064
Unfortunately, it's also been a case of "You don't want ESPN, you pay for ESPN anyway." As your quoted text indicates, ESPN has accounted for a huge percentage of cable TV fees. That's why it's always the first channel mentioned when there's a discussion of the fees that cable companies pay to programming providers—and that in turn, we subscribers end up paying for.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
- Messages
- 6,456
It is something to witness. And no one really knows how it will all end up. 25 years ago, it looked like AOL would control the World Wide Web. Didn't happen.
Then Yahoo! was the Bigfoot. Not so much now.
What's to prevent a bunch of folks with cellphone cameras sitting in the stands broadcasting sporting events live via YouTube?
Who needs ESPN then?
At least if your a shareholder at least you got a little somethin' on the other end - boatloads of cash-flow until the cord cutters arrived anyway.
And don't forget Go.com was going to put every other .com out of business at one time...Mr. Eisner...paging Mr Eisner...
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
- Messages
- 6,456
I remember that very well. Do you recall how much Eisner paid for Infoseek?
TheDailyMoo
DIS Veteran
- Joined
- Jun 9, 2021
- Messages
- 2,143
Disney resorting to some desperate tactics to bring in more money and bolster their own streaming numbers. Desperation can be smelled a mile away and things like this give the ones calling Disney in a "death spiral" a lot of credence. They better get their act together fast before an outside activist steps in to do what Iger and the board can't. This is all getting old very quickly.
Jwaire
DIS Veteran
- Joined
- Sep 17, 2020
- Messages
- 1,285
Should have bought a telecom or cable company instead and we wouldn’t be in this mess.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
- Messages
- 6,456
The ABC buy was supposed to guarantee DIS' dominance in content distribution. Then along comes the internet. Kinda like buying a VHS tape factory just before DVDs are invented. And as wifi multiplies, bandwith becomes ever cheaper, leading to yet more content.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
- Messages
- 6,456
https://www.latimes.com/entertainme...abc-espn-from-charter-spectrum-in-fee-dispute
Disney pulls ABC, ESPN and other channels from Charter Spectrum service. ‘This is not a typical blackout’
By Meg JamesSenior Entertainment Writer
Published Aug. 31, 2023 Updated Sept. 1, 2023 4:40 PM PDT
Walt Disney Co. has pulled its channels, including ESPN and ABC stations, from Charter Communications’ Spectrum pay-TV service that reaches nearly 15 million subscriber homes nationwide in a festering fee dispute that could portend major changes for consumers.
Thursday night’s blackout on Spectrum came minutes before the kickoff of a highly anticipated college football game between the Utah Utes and Florida Gators on ESPN and during Spanish phenomenon Carlos Alcaraz’s tennis match at the U.S. Open in New York on ESPN2.
Sports fans around the country were furious. Local Spectrum subscribers who watch ABC broadcasts of “Jeopardy!” and “Wheel of Fortune” and KABC-TV Channel 7’s “Eyewitness News” also were out of luck. The channels went dark shortly before the start of the NFL regular season, consistently the most watched programming on TV. Other channels that are part of the outage include FX, Freeform, Disney Channel and National Geographic.
“We’ve been in ongoing negotiations with Charter Communications for some time and have not yet agreed to a new market-based agreement,” Disney said in a statement. “As a result, their Spectrum TV subscribers no longer have access to our unrivaled portfolio of live sporting events and news coverage plus kids, family and general entertainment programming.”
Charter Spectrum is the largest pay-TV provider in the Los Angeles region. The service has more than 5 million customers in California — a third of its nationwide total.
It was unclear Friday how quickly the two sides might iron out the dispute over carriage fees and terms — if they find a resolution at all. Charter Chief Executive Christopher Winfrey told analysts during a morning conference call that a deal must be hammered out soon, and the Burbank entertainment giant must give Charter greater leeway in how it offers Disney’s channels on Spectrum.
Otherwise, Winfrey said, Charter is prepared to live without Disney’s channels — including ESPN — even if it means losing subscribers, and thus hastening the rapid cord-cutting that has already upended the television business model.
“We’re either moving forward with a new collaborative video model, or we’re moving on,” Winfrey said. “We’re on the edge of a precipice... The video ecosystem is broken.”
The Charter dispute represents the latest significant challenge facing Disney and its chief executive, Bob Iger, who returned to the company last November and has since grappled with herculean headaches, including twin labor strikes that have all but shut down production of movies and scripted TV shows.
Earlier this summer, Iger said he would consider exiting the pay-TV business, including selling ABC and other networks, as viewers rapidly shift to direct-to-consumer streaming services. He said he is also open to taking on a minority strategic partner for ESPN that can help the sports giant’s transition to a direct-to-consumer model.
But as Iger tries to ease Disney into the streaming era, the older cable and satellite business continues to pay the bills.
The financial foundation of traditional entertainment companies, including Disney, is the revenue from monthly programming fees that Charter and other distributors pay to carry their channels. Charter said Friday it had planned to pay Disney $2.2 billion for its programming this year.
Disney has long used the power of its ESPN networks to secure premium rates from pay-TV providers. ESPN networks are considered “must-have” channels, so providers have grudgingly agreed to pay top dollar — an estimated $9 a month per subscriber home for the ESPN channels — to continue to carry them. Rates for most entertainment channels are less than $1 a month per home.
Advertisement
But not all cable customers watch sports.
Under the existing model, subscribers still have to pay for ESPN and other pricey sports channels, leading to rampant cord-cutting as millions of customers flee to less expensive streaming services.
Over the last five years, 25 million U.S. subscribers have ditched cable — representing nearly a quarter of all subscribers, Charter said.
“It’s staggering,” Winfrey said, noting the company was motivated to hold the line because it wants the flexibility to offer “slimmer,” cheaper packages without ESPN in an effort to appeal to customers who don’t watch sports. Charter also wants to offer comprehensive packages with sports.
On Friday, Disney pushed back against Charter’s claims, saying the Stamford, Conn.-based cable provider has “refused to enter into a new agreement with us that reflects market-based terms.”
“Contrary to their claims, we have offered Charter the most favorable terms on rates, distribution, packaging, advertising and more,” Disney said. “We have proposed creative ways to make Disney’s direct-to-consumer services available to their Spectrum TV subscribers, including opportunities for new and flexible packages where those services become a focal point of what the consumer might choose.”
Charter executives said they agreed to Disney’s financial terms but wanted to provide ad-supported versions of Disney+ and ESPN+ to its cable subscribers at no additional charge. In recent years, many of Disney’s biggest hits have gone to its streaming services — and Spectrum customers have helped subsidize those efforts, Winfrey said.
“It is clear at this point that this is not a typical blackout,” prominent cable analyst Craig Moffett wrote in a research report. “Charter seems genuinely willing to walk away from
Disney, and even the entire linear video model, if necessary.”
Wall Street recognized the potential ramifications of the dispute. Disney’s stock was down 2.4% to $81.64 a share. Charter’s also fell 3.6% to $422.32.
In recent years, channel outages have become more frequent as cable companies struggle to hold the line on expenses. Cable and satellite TV operators fear that big price hikes would only encourage additional subscribers to switch to streaming.
The Charter Spectrum outage isn’t the only ongoing cable fee dispute. Since early July, DirecTV customers have been without Nexstar TV stations, including KTLA-TV Channel 5 in Los Angeles. Shares of Texas-based Nexstar Media Group tumbled 13% to $141.50.
Programmers are seeking more revenue to pay the escalating TV rights fees demanded by sports leagues to broadcast their games. In the NFL’s most recent agreements with broadcasters, which kick in this month, the league will garner nearly double the revenue it collects from broadcasters, who are looking to pass along those costs.
Hefty fee increases by programmers are the reason subscribers are fleeing, said Rob Thun, DirecTV’s chief content officer.
“We have a symbiotic relationship where we both should benefit,” Thun said. “But they are killing the host.”
For Spectrum viewers, the next few weeks could be frustrating.
The NFL season begins next Thursday and Aaron Rodgers is scheduled to make his regular-season debut as a New York Jet on ESPN’s “Monday Night Football” Sept. 11. Charter has millions of subscribers in New York. Meanwhile, ESPN and ABC are scheduled to air at least 10 college football games featuring Top 25 teams Thursday through Monday, during the first full weekend of the season. The U.S. Open championships wrap up Sept. 10.
Instead of the normal programming, Spectrum subscribers nationwide were greeted by a blue screen with text. “We apologize for the inconvenience and are continuing to negotiate in good faith in order to reach a fair agreement,” the cabler’s message said, directing subscribers to a website titled DisneyESPNFairDeal.com.
Spectrum subscribers attempting to watch Disney-owned channels, including ABC and ESPN, were instead greeted with a message about negotiations.
Disney signaled Friday that it’s not ready to give up one of its most lucrative partners.
“We value our relationship with Charter and we are ready to get back to the negotiation table to restore access to our unrivaled content to their customers as quickly as possible,” the company said in a statement, adding that it was “committed to reaching a mutually agreed upon resolution with Charter.”
Times staff writers Stephen Battaglio and Iliana Limón Romero contributed to this report.
Meg James is a senior entertainment industry writer for the Los Angeles Times.
Disney pulls ABC, ESPN and other channels from Charter Spectrum service. ‘This is not a typical blackout’
By Meg JamesSenior Entertainment Writer
Published Aug. 31, 2023 Updated Sept. 1, 2023 4:40 PM PDT
Walt Disney Co. has pulled its channels, including ESPN and ABC stations, from Charter Communications’ Spectrum pay-TV service that reaches nearly 15 million subscriber homes nationwide in a festering fee dispute that could portend major changes for consumers.
Thursday night’s blackout on Spectrum came minutes before the kickoff of a highly anticipated college football game between the Utah Utes and Florida Gators on ESPN and during Spanish phenomenon Carlos Alcaraz’s tennis match at the U.S. Open in New York on ESPN2.
Sports fans around the country were furious. Local Spectrum subscribers who watch ABC broadcasts of “Jeopardy!” and “Wheel of Fortune” and KABC-TV Channel 7’s “Eyewitness News” also were out of luck. The channels went dark shortly before the start of the NFL regular season, consistently the most watched programming on TV. Other channels that are part of the outage include FX, Freeform, Disney Channel and National Geographic.
“We’ve been in ongoing negotiations with Charter Communications for some time and have not yet agreed to a new market-based agreement,” Disney said in a statement. “As a result, their Spectrum TV subscribers no longer have access to our unrivaled portfolio of live sporting events and news coverage plus kids, family and general entertainment programming.”
Charter Spectrum is the largest pay-TV provider in the Los Angeles region. The service has more than 5 million customers in California — a third of its nationwide total.
It was unclear Friday how quickly the two sides might iron out the dispute over carriage fees and terms — if they find a resolution at all. Charter Chief Executive Christopher Winfrey told analysts during a morning conference call that a deal must be hammered out soon, and the Burbank entertainment giant must give Charter greater leeway in how it offers Disney’s channels on Spectrum.
Otherwise, Winfrey said, Charter is prepared to live without Disney’s channels — including ESPN — even if it means losing subscribers, and thus hastening the rapid cord-cutting that has already upended the television business model.
“We’re either moving forward with a new collaborative video model, or we’re moving on,” Winfrey said. “We’re on the edge of a precipice... The video ecosystem is broken.”
The Charter dispute represents the latest significant challenge facing Disney and its chief executive, Bob Iger, who returned to the company last November and has since grappled with herculean headaches, including twin labor strikes that have all but shut down production of movies and scripted TV shows.
Earlier this summer, Iger said he would consider exiting the pay-TV business, including selling ABC and other networks, as viewers rapidly shift to direct-to-consumer streaming services. He said he is also open to taking on a minority strategic partner for ESPN that can help the sports giant’s transition to a direct-to-consumer model.
But as Iger tries to ease Disney into the streaming era, the older cable and satellite business continues to pay the bills.
The financial foundation of traditional entertainment companies, including Disney, is the revenue from monthly programming fees that Charter and other distributors pay to carry their channels. Charter said Friday it had planned to pay Disney $2.2 billion for its programming this year.
Disney has long used the power of its ESPN networks to secure premium rates from pay-TV providers. ESPN networks are considered “must-have” channels, so providers have grudgingly agreed to pay top dollar — an estimated $9 a month per subscriber home for the ESPN channels — to continue to carry them. Rates for most entertainment channels are less than $1 a month per home.
Advertisement
But not all cable customers watch sports.
Under the existing model, subscribers still have to pay for ESPN and other pricey sports channels, leading to rampant cord-cutting as millions of customers flee to less expensive streaming services.
Over the last five years, 25 million U.S. subscribers have ditched cable — representing nearly a quarter of all subscribers, Charter said.
“It’s staggering,” Winfrey said, noting the company was motivated to hold the line because it wants the flexibility to offer “slimmer,” cheaper packages without ESPN in an effort to appeal to customers who don’t watch sports. Charter also wants to offer comprehensive packages with sports.
On Friday, Disney pushed back against Charter’s claims, saying the Stamford, Conn.-based cable provider has “refused to enter into a new agreement with us that reflects market-based terms.”
“Contrary to their claims, we have offered Charter the most favorable terms on rates, distribution, packaging, advertising and more,” Disney said. “We have proposed creative ways to make Disney’s direct-to-consumer services available to their Spectrum TV subscribers, including opportunities for new and flexible packages where those services become a focal point of what the consumer might choose.”
Charter executives said they agreed to Disney’s financial terms but wanted to provide ad-supported versions of Disney+ and ESPN+ to its cable subscribers at no additional charge. In recent years, many of Disney’s biggest hits have gone to its streaming services — and Spectrum customers have helped subsidize those efforts, Winfrey said.
“It is clear at this point that this is not a typical blackout,” prominent cable analyst Craig Moffett wrote in a research report. “Charter seems genuinely willing to walk away from
Disney, and even the entire linear video model, if necessary.”
Wall Street recognized the potential ramifications of the dispute. Disney’s stock was down 2.4% to $81.64 a share. Charter’s also fell 3.6% to $422.32.
In recent years, channel outages have become more frequent as cable companies struggle to hold the line on expenses. Cable and satellite TV operators fear that big price hikes would only encourage additional subscribers to switch to streaming.
The Charter Spectrum outage isn’t the only ongoing cable fee dispute. Since early July, DirecTV customers have been without Nexstar TV stations, including KTLA-TV Channel 5 in Los Angeles. Shares of Texas-based Nexstar Media Group tumbled 13% to $141.50.
Programmers are seeking more revenue to pay the escalating TV rights fees demanded by sports leagues to broadcast their games. In the NFL’s most recent agreements with broadcasters, which kick in this month, the league will garner nearly double the revenue it collects from broadcasters, who are looking to pass along those costs.
Hefty fee increases by programmers are the reason subscribers are fleeing, said Rob Thun, DirecTV’s chief content officer.
“We have a symbiotic relationship where we both should benefit,” Thun said. “But they are killing the host.”
For Spectrum viewers, the next few weeks could be frustrating.
The NFL season begins next Thursday and Aaron Rodgers is scheduled to make his regular-season debut as a New York Jet on ESPN’s “Monday Night Football” Sept. 11. Charter has millions of subscribers in New York. Meanwhile, ESPN and ABC are scheduled to air at least 10 college football games featuring Top 25 teams Thursday through Monday, during the first full weekend of the season. The U.S. Open championships wrap up Sept. 10.
Instead of the normal programming, Spectrum subscribers nationwide were greeted by a blue screen with text. “We apologize for the inconvenience and are continuing to negotiate in good faith in order to reach a fair agreement,” the cabler’s message said, directing subscribers to a website titled DisneyESPNFairDeal.com.
Spectrum subscribers attempting to watch Disney-owned channels, including ABC and ESPN, were instead greeted with a message about negotiations.
Disney signaled Friday that it’s not ready to give up one of its most lucrative partners.
“We value our relationship with Charter and we are ready to get back to the negotiation table to restore access to our unrivaled content to their customers as quickly as possible,” the company said in a statement, adding that it was “committed to reaching a mutually agreed upon resolution with Charter.”
Times staff writers Stephen Battaglio and Iliana Limón Romero contributed to this report.
Meg James is a senior entertainment industry writer for the Los Angeles Times.
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