Walt Disney Co. said customers of Charter Communications Inc. can no longer watch its TV networks because of a contract dispute, depriving millions of viewers of access to the sports network ESPN just as football season gets underway.
“We’re committed to reaching a mutually agreed upon resolution with Charter and we urge them to work with us to minimize the disruption to their customers,” Disney said in a statement on Thursday.
Charter is the second-largest cable provider in the US with more than 14 million residential video customers for its Spectrum TV service. Many of them live in large cities such as Los Angeles and New York.
Charter said Disney rejected a proposal that the cable company argued would give its consumers better value amid a years-long decline in video profitability. It pays about $2.2 billion in annual programming costs to Disney, not including the impact of advertising revenue, while about a quarter of its subscribers regularly engage with Disney content, it said in a presentation on its website Friday.
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,” the Charter presentation said. “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 incurring some one-time costs, such as customer credits, Charter said. Longer-term, it said Disney’s decision to pull content will be cash-flow neutral unless there are structural changes.
People in the US still rely on live television, especially when it comes to sports. Disney has the largest assortment of sports rights in the country and its channels will be in high demand with college football season underway and the National Football League season starting next week.
(Updates with details from Charter presentation starting in the fourth paragraph.)
