Charter Ready to Exit Cable Business Following Disney Dispute; Prepares Plan to Send Customers to Fubo, YouTube TV
The good news is that Disney and Spectrum are still talking. That’s according to Sports Business Journal's John Ourand, who says that talks have elevated to the highest level, as Disney CEO Bob Iger and Charter president Chris Winfrey spoke over the phone this past weekend about the carriage dispute that’s erupted between their companies.
The dispute has led 19 Disney-owned networks to be dropped from Spectrum cable plans across the country, including ABC, ESPN, FX, and more. Talks are ongoing, but with the college football season having already started and the NFL kicking off this week, both sides risk fans losing out on must-watch games if a deal can’t be reached soon.
As of now, it appears Spectrum has more leverage than cable providers have had in past carriage disputes. That’s because the pay-TV provider seems ready to make good on the threat to leave cable behind altogether if it doesn’t get what it feels is a reasonable offer from Disney. Ourand reports that Charter held discussions about ditching Spectrum’s cable service four years ago, the last time it negotiated a carriage contract with Disney. Now, with just 14.7 million cable customers left, Charter has more reason than ever to leave pay-TV behind.
The company makes a much higher profit margin from its broadband business these days, which partially explains why it has been steering customers affected by the Disney outage to Fubo. Users who cancel their Spectrum TV service can find a ton of live sports on Fubo, and Charter gets to keep those users as broadband customers, even though it’s recommending people to a competing TV service.
Related: Cutting the Cord After Disney-Spectrum Blackout? Here Are the Best Live TV Services for Watching ESPN, More
That’s why Disney’s strategy of waiting out Spectrum to see how many cable cancelations it can stomach before caving may not be the best way to go this time around. If Disney decides that Charter actually is willing to no longer offer a Spectrum pay-TV service, it will have to agree to a carriage deal that keeps ESPN and its other cable channels on TV until it figures out the future of those channels.
One problem Disney faces is that if it gives more favorable terms to Charter, its contracts with other providers would be affected. There are Most Favored Nations clauses built into carriage deals between the biggest operators and channel owners, and if Disney gives Charter better deal parameters than it has with DIRECTV or Comcast, those companies could automatically apply those terms to their contracts as well.
The carriage dispute could have lasting implications for sports leagues, as well. The days of nine-figure broadcasting rights deals may be over since the failure of the cable TV model will mean less revenue for providers to offer sports leagues. Disney is figuring out the best way to launch a standalone, streaming version of the ESPN group of channels, a model that certainly won’t support the same kind of big-dollar deals that were possible when the channel brought in more money for Disney than any other cable network available.
The Spectrum-Disney dispute will likely be solved without Charter having to carry out its threat to leave cable behind. But these disputes will become more common as pay-TV providers try desperately to stay in business over the next few years, and channel operators who don’t have a plan for the ultimate demise of cable may find it’s too late to start formulating one.
Fubo
Fubo is a live TV streaming service with about 90 top channels that start at $79.99 per month. This plan includes local channels, 19 of the top 35 cable channels, and regional sports networks (RSNs). In total, you should expect to pay about $94.99 per month, after adding in their RSN Fee. Fubo was previously known as “fuboTV.”