New York September 1 2023: Walt Disney (DIS.N) and Charter Communications (CHTR.O) engaged in a public dispute over their unsettled distribution agreement. This disagreement resulted in the blackout of several channels, including ESPN, for Charter's Spectrum cable service customers on Thursday.
During the U.S. Open tennis coverage and various live sporting events like college football, Disney decided to remove ESPN, ABC, and other cable channels from Spectrum's offerings. Spectrum serves significant markets, including New York and Los Angeles.
Charter displayed a message on the screen, encouraging viewers to get in touch with Disney. The message stated, "We presented Disney with a reasonable offer, but they are requesting an excessive rate hike."
Charter emphasized that the escalating costs of programming were the primary contributor to the increasing cable TV prices, and they were making efforts to resist the programming rate increases imposed by companies such as Disney.
The core of the disagreement primarily revolves around the sports network ESPN, which lacks a streaming service and remains a significant draw for cable viewers, despite experiencing a decline in subscribers each year due to the trend of cord-cutting.
Charter stated on Friday that ESPN played a pivotal role in its video business. In response to this news, Charter's shares declined by 2%, while Disney's shares also saw a decrease of 2.7%. Additionally, other media companies like Warner Bros Discovery (WBD.O) and Paramount Global (PARA.O) experienced losses ranging from 4% to 6%.
Rosenblatt Securities expressed the opinion that Disney might have more at stake than Charter in this dispute. They predicted that Disney could potentially suffer losses amounting to billions of dollars in annual profits from its traditional TV business if an agreement was not reached.