Cable giant Charter Communications and Disney are in a battle over contract fees that has left millions of people without access to U.S. Open, college football and potentially "Monday Night Football," with the NFL's season starting in just days.
On Thursday, Disney said that the two companies have been in ongoing negotiations but yet to agree to a new deal. That resulted in Charter's customers losing access to its networks, including broadcaster ABC and pay-TV channels such as ESPN and FX, according to CNBC.
Charter's Spectrum TV service has roughly 14.7 million customers across 41 states, with some of its top TV markets being New York, Los Angeles, Dallas-Fort Worth and Atlanta.
These sorts of battles, which can lead to so-called blackouts for pay-TV customers, are common in the industry. But, in the age of streaming, this one is different.
"This is not a typical carriage dispute," Charter CEO Chris Winfrey said Friday on a call with investors.
Early Friday, Charter executives called the pay-TV ecosystem "broken." They said they pushed for a revamped deal with Disney that would see Charter cable customers receive access to Disney's ad-supported streaming services like Disney+ and ESPN+ at no additional cost.
This seemed to be the sticking point as Charter said it accepted Disney's request for higher fees, although Charter executives didn't provide specifics on the negotiations as they remain hopeful to get a deal done.
Disney shot back in a statement Friday that Charter refused to enter into a deal after it offered favorable terms and proposed "creative ways" to make Disney streaming services available to Spectrum customers, including "opportunities for new and flexible packages where those services become a focal point." The company didn't elaborate on specifics.
ESPN is said to reap high fees. ESPN receives $9.42 per subscriber a month, while other Disney networks like ESPN2, FX and Disney Channel gets $1.21, $0.93 and $1.25, respectively, according to data from S&P Global Market Intelligence. A Disney representative didn't immediately comment on the fees. The media giant has more than 20 networks.
Winfrey noted that in the last five years the entire pay-TV ecosystem has lost nearly 25 million customers, or almost 25% of total industry customers. "It's staggering," he said.
Between the high cost of the traditional bundle and the option to switch to more affordable streaming options – most of which are provided by the same companies behind the networks on pay-TV – the speed at which cord-cutting is only accelerating.
Disney said in its Friday statement that Charter rejected their offer to extend the contract amid the U.S. Open, and called it a disservice to customers also ahead of college football season on ABC and ESPN.
In response, a Charter spokesperson said Friday, "Disney knows this is not the case. But we'll leave it at that so we can get back to more productive conversations for the benefit of our mutual customers."
Live sports, particularly those shown on ESPN, have long been considered the glue holding the pay-TV bundle together, especially as customers flee for streaming services.
Despite the public feud, Disney said in a statement on Friday it was "ready to get back to the negotiation table to restore access to our unrivaled content to their customers as quickly as possible."
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