On Friday, a firm representing nearly 15 million cable subscribers and The Walt Disney Co. pointed fingers at each other for a disagreement that has resulted in Disney-owned channels being unavailable to viewers on the brink of a significant sports weekend for U.S. Open tennis and college football enthusiasts.
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The conflict between Disney and Charter Communications Inc. led to ESPN, ABC, FX, National Geographic, and Disney-branded channels suddenly going off air on Thursday night for Charter's Spectrum TV subscribers. ABC-TV was also discontinued in seven markets, including New York, Chicago, and Los Angeles.
Both the cable firm and Disney claimed that the other party declined short-term extensions that would have maintained Spectrum subscribers' network access.
Disagreements leading to such service interruptions are not rare. This one seems larger, both due to the number of networks and customers affected and the way the companies are dealing with a swiftly evolving business landscape.
The service was discontinued on Thursday while ESPN was broadcasting a college football match between Florida and No. 14 Utah, and ESPN2 was airing the U.S. Open, including the second-round game between top-ranked Carlos Alcaraz and Lloyd Harris. Charter Spectrum has 14.7 million cable customers.
Charter Communications CEO Chris Winfrey acknowledged that the timing was not perfect for customers.
"We've nearly always evaded these types of disagreements and disruption to your service," Winfrey stated, addressing customers in a conference call on Friday. "But we had to draw a line in the sand on your behalf."
These disagreements usually concern the amount of money a cable system must pay a company like Disney to carry its channels. ESPN has traditionally charged the highest carriage fees for cable companies. According to S&P Global, Disney receives an average of $2.2 billion annually from being carried on Spectrum under its 2019 carriage agreement.
Charter, citing cord-cutting and the growing popularity of streaming, claims it has lost 25% of its cable customers over the past five years. Therefore, it is seeking a more flexible deal: allowing customers to subscribe to some Disney-owned channels without having to subscribe to all of them, and it wants ad-supported streaming services included so customers don't have to effectively pay for them twice.
However, Disney stated on Friday that its streaming and television products are not identical.
"Although Charter claims to value our direct-to-consumer services, they are demanding these services for free," Disney said in a statement. The company stated that it makes multibillion-dollar investments in exclusive content for those streaming apps.
Other cities where Charter is the primary cable provider include Dallas/Fort Worth; Orlando, Florida; Tampa, Florida; Kansas City, Missouri; St. Louis; Cleveland; Cincinnati; Milwaukee; and Las Vegas.
Disney stated that it was prepared to restart negotiations as soon as possible.