Disney, Charter Deal Could 'Transform Business Model'

Under the terms of the deal announced Monday, Charter has agreed to pay Disney higher rates to carry its TV channels, in return for being able to provide the Disney+ and ESPN+ streaming services to its Spectrum pay-TV subscribers, which was a big point of contention during the standoff.

Specifically, according to The Wall Street Journal, the ad-supported version of Disney+ will be included in Spectrum’s TV Select video packages, which are among the cable operator’s most popular. The ad-supported ESPN+ will be available to Charter customers who subscribe to a tier that includes other sports channels such as regional sports networks. 

In addition, when Disney releases its much-anticipated direct-to-consumer version of its ESPN cable channel—which is separate from ESPN+—Charter pay-TV customers will be able to get it as well.

“This deal sets the framework for what should be developed throughout the entire industry,” said Charter Chief Executive Chris Winfrey in an interview. Winfrey added that Disney’s willingness to meet Charter halfway gives the entertainment giant an opportunity to “transform the video business model.”

Disney executives acknowledged that the agreement with Charter represented some concessions but said they felt the new price terms the company got for its TV channels—as well as the boost the deal is likely to give its streaming services’ reach and advertising revenue—will make it worthwhile.

Bloomberg reports customers who pay for Charter’s more expensive Spectrum TV Plus, which includes regional sports networks, will get the ESPN+ streaming service at no added cost. Disney won’t receive a fee for those additional streaming subscribers, said the people, who asked not to be identified discussing details that haven’t been released.

With the agreement the companies are attempting to blend the worlds of traditional TV and online viewing in a mutually beneficial way. The deal between the two media giants ends a blackout for millions of pay-TV customers and came hours before ESPN’s first broadcast of the new NFL season’s Monday Night Football.

“This is the first big step toward changing the model,” Rich DiGeronimo, Charter’s president of product and technology, said in an interview. “It puts us on a glide path to provide the best of TV with the most popular streaming apps, which gives customers significantly more value than they have today.”