Disney, ESPN Executives Speak of Need to Be ‘Flexible’ After Reaching Deal With Spectrum on Carriage Dispute
As is usually true in negotiations of this magnitude, Disney had to give a little to get a little. The company agreed to a new carriage deal with Spectrum on Monday of this week, just hours ahead of the first “Monday Night Football” broadcast of the 2023 NFL season.
The deal included some fascinating details, including access to Disney+ Basic for Spectrum Select TV customers at no additional charge and the creation of a new, sports-focused Spectrum plan that will give its subscribers login credentials for ESPN+ free.
Co-chairman of Disney Entertainment Dana Walden and ESPN chairman Jimmy Pitaro both spoke with The Hollywood Reporter about the deal this week. Walden spoke to Disney’s clear philosophy that it’s time to start moving away from linear TV channels, but also made clear that customers wouldn’t have to worry about the whiplash of an immediate pivot to only offering television via streaming.
“I think if we’re learning anything in this moment, it is that we need to remain flexible, that these models are changing rapidly, that keeping up with technology and the consumer means we have to stay flexible and agile,” she said.
That flexibility means giving into Spectrum’s demand that Disney offer its subscribers login credentials to its streaming platforms in the next carriage deal. It also meant dropping some channels from the Spectrum lineup, in order to ensure that it got the carriage fee increases it wanted for channels like ESPN. Because so much of the content from channels like Disney XD and FXX ends up streaming on Disney+ and Hulu anyway, Disney could be creative about which channels it kept on Spectrum and which were pulled permanently.
“When we looked across the portfolio to try to identify where the greatest value in this deal was to us, we definitely made some trade-offs with the following thinking in place: The digital networks are for the most part targeted, and they super-serve an audience in the linear ecosystem, but they are also windowed onto what we are calling our primary channels [Disney Channel, FX, Nat Geo],” Walden explained. “So you know the Nat Geo suite, ultimately that programming also airs on Nat Geo and then it is windowed over to Disney+, similarly with Disney Junior and Disney XD. And then FXX has been a valuable source of programming for Hulu, and so we don’t intend to change how we program that channel right now. It’s very much connected to our pipeline of general entertainment to Hulu.”
The comments make it clear that Disney is keeping its focus on cable channels that still create value, but more importantly can funnel more customers toward its streaming services. Disney CEO Bob Iger said earlier this summer that the company’s linear channels aren't necessarily “core” to its business going forward, and while the future of Disney is all about streaming, the company has to figure out a way to transition slowly away from them rather than just dumping them and hoping customers find their way to Disney+ and Hulu somehow.
ESPN chairman Jimmy Pitaro is also focused on the company’s streaming future, namely the plan to offer a streaming version of the full suite of ESPN channels that won’t require a cable subscription. That’s why the company added ESPN+ login credentials for subscribers to the new Spectrum Plus TV package; it feels it can expand its customer base for that service now, so that when the full product arrives it will have a potential market ready-made.
“Let’s create this opportunity to expand that ESPN platform so that ultimately when we do take our primary channels direct-to-consumer, we have the opportunity to upsell that offering to a much larger sports fan base,” Pitaro said to THR. “Just on a macro level, this idea of expanding ESPN+ — not flagship, but the current product — expanding ESPN+’s reach will help us continue to ease sports fans into this direct-to-consumer environment.”
Content exclusivity made Disney hesitant to give into Spectrum’s desire to get its customers access to Disney streamers. Ultimately the Mouse House gave into those demands, and now has a way to ease the transition from linear TV to streaming for Spectrum customers in the coming years.
Disney+
Disney+ is a video streaming service with over 13,000 series and films from Disney, Pixar, Marvel, Star Wars, National Geographic, The Muppets, and more. It is available in 61 countries and 21 languages. It is notable for its popular original series like “The Mandalorian,” “Ms. Marvel,” “Loki,” “Obi-Wan Kenobi,” and “Andor.”