Viewers in Limbo as Charter and Disney Clash Over Sports Programming Contract

A contract dispute between cable giant Charter Communications and Disney is causing upheaval in the world of television, leaving millions of viewers without access to major sports events like the U.S. Open, college football, and potentially “Monday Night Football” just days before the NFL season kicks off.

Disney announced on Thursday that ongoing negotiations between the two companies had failed to yield a new agreement. As a result, Charter’s customers lost access to Disney-owned networks, including the popular broadcaster ABC and pay-TV channels such as ESPN and FX. Both Charter and Disney stocks experienced over a 2% decline on Friday.

Charter’s Spectrum TV service, which spans 41 states and boasts approximately 14.7 million customers, is especially prominent in major markets like New York, Los Angeles, Dallas-Fort Worth, and Atlanta.

While contract disputes leading to temporary blackouts are not unusual in the television industry, this particular conflict has a unique twist, given the evolving landscape of streaming services.

Charter CEO Chris Winfrey characterized this dispute as atypical, emphasizing that they sought a revised deal with Disney that would grant Charter cable customers access to Disney’s ad-supported streaming services, including Disney+ and ESPN+, at no extra cost.

The sticking point appeared to be Charter’s request for these additional streaming services, even though they indicated a willingness to accept Disney’s demand for higher fees. Specifics of the negotiations were not disclosed, but Charter remains hopeful of reaching an agreement.

ESPN, in particular, commands high fees, with each subscriber paying $9.42 per month. Other Disney networks like ESPN2, FX, and Disney Channel collect $1.21, $0.93, and $1.25, respectively, according to data from S&P Global Market Intelligence.

Winfrey highlighted the dramatic decline in the pay-TV ecosystem, which has lost nearly 25 million customers (approximately 25% of total industry customers) in the last five years. Cord-cutting, driven by the high costs of traditional bundles and the appeal of more affordable streaming options, continues to accelerate.

Live sports, particularly those featured on ESPN, have historically been the glue holding pay-TV bundles together. However, the rise of streaming services has altered this dynamic.

In 2019, Charter and Disney renewed their contract, which included integrating Disney+, ESPN+, and Hulu into Charter’s set-top boxes for enhanced customer access.

Charter, primarily a broadband and mobile service provider, expressed its commitment to its pay-TV business evolving into a new form while keeping the traditional bundle cost-effective for customers who prefer it.

Disney’s CEO, Bob Iger, has indicated a willingness to reassess the company’s traditional TV business, potentially divesting these assets in a sale. Despite this, Disney remains open to selling a stake in ESPN and exploring direct-to-consumer streaming for its live content.

Disney assured on Thursday that it has successfully reached deals with other pay-TV companies and remains committed to reaching an agreement with Charter.

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