With its carriage fight with Charter about to enter its second week, Disney issued a statement blasting the Spectrum TV owner’s “indifference” to customers and a Wall Street investment bank predicted a compromise by the ESPN parent.
“As the U.S. Open reaches the men’s and women’s finals, and fans gear up for a weekend of college football and the opening of the NFL season, it’s unfortunate that Charter decided to abandon their consumers by denying them access to our great programming,” Disney said. “While they have stated their ‘indifference’ to the needs of millions of paying customers, we will not lose sight of what is most important – investing in the highest-quality stories, news and sports for our audience. The question for Charter is clear: Do you care about your subscribers and what they’re telling you they want – or not?” (The word “indifference” appeared in quotes because Charter itself had used it last Friday on an investor call.)
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While Disney added that it “stands ready to resolve this dispute and do what’s in the best interest of Charter’s customers,” Charter CEO Chris Winfrey indicated little progress has been made in negotiations. “If I had anything material to highlight, I would,” he said of the talks in an appearance today at a Goldman Sachs investor conference. “So that should tell you something.”
Disney’s statement went out in the middle of Winfrey’s conference session. The company has said in recent days that Charter rejected multiple offers to extend talks before the signals went dark for 14.7 million Spectrum customers, as sometimes happens during carriage disputes. The timing of the outage has been rough for sports fans who are also Spectrum subscribers. On Saturday, a game featuring high-ranking teams Alabama and Texas highlights a full slate of college football across multiple ESPN networks. The U.S. Open women’s final is also Saturday, and the men’s final is Sunday, capping first-ball-to-last-ball coverage of the tournament on ESPN. Then comes Monday Night Football‘s debut, featuring two Spectrum-market teams in the New York Jets and Buffalo Bills.
As the companies kept jockeying, Deutsche Bank put out a research note to its clients predicting that Disney would “concede” some of its demands. “We believe a permanent end to Charter’s distribution of Disney’s channels would be a more negative outcome for Disney than for Charter in that it would accelerate Disney’s linear revenue decline and make future distribution renewals even more challenging and critical (shifting leverage to distributors), while leaving the vast majority of Charter’s broadband business intact,” analysts Bryan Kraft and Benjamin Soff wrote.
Such an outcome would “still be negative for Charter,” they added, especially with the company poised to launch a new streaming offering Xumo in partnership with Comcast later this year. Bringing that service to market without Disney programming would not be ideal.
The analysts also predict that Charter will agree to pay Disney’s asking price per subscriber and drop its demand for Disney’s streaming apps to be included for free to Charter linear customers. They called the latter demand “unrealistic.”
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