Aaron Rodgers, No. 8 pick of the New York Jets, warms up prior to the game against the New York Giants at MetLife Stadium in East Rutherford, New Jersey, August 26, 2023.
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Charter And Disney have reached a rights deal and the media industry has been duped.
The Wall Street Journal published a story Friday with the headline: “Disney Fight Marks the Last Stand of Cable TV.” Slate’s headline on the same day further amplified: “Disney is fighting a battle that could change TV forever.” Analysts appearing on CNBC weighed in on the future of the cable bundle.
“Mutually assured destruction is a good way to think about it,” says Guggenheim Securities entertainment and media analyst Michael Morris of how both Disney and Charter would face existential risk if they don’t reach a carriage deal for networks like ESPN and owned by ABC television stations.
Over the past 10 days, Charter Chief Executive Chris Winfrey has put the company on notice, telling reporters and investors that the decision to drop the Disney networks was no ordinary feat. After decades of agreeing to programming increases that led tens of millions of Americans to cancel cable because they saw it as an overpriced and bloated product, one pay-TV operator has reached its “No Mas” point.
“We had to say: enough is enough,” Winfrey said Thursday at a Goldman Sachs investor conference.
But the details of Charter’s pact with Disney, which was announced in a press release Monday, don’t really suggest enough was enough. Disney will receive a higher programming fee increase as part of the deal, CNBC’s David Faber first reported. Charter will be able to include ad-supported Disney+ and ESPN+ at no additional cost to certain consumers of its cable TV programming.
That’s about it. The inclusion of Disney’s streaming packages for cable subscribers is a significant and unprecedented gift. But this isn’t a groundbreaking deal. It’s a step-by-step deal reminiscent of a slow-moving landscape in which media companies aren’t ready to let go of cable, an increasingly multibillion-dollar behemoth.
The sides struck a deal in time for cable customers to watch “Monday Night Football” on ESPN in Week 1, which has been the key deadline for carriage deals for decades. Charter customers were unable to watch the US Open tennis final this weekend. But ultimately, Charter wouldn’t risk losing millions of customers if it didn’t offer Monday Night Football — especially for New York-area fans, as the New York Jets (and new quarterback Aaron Rodgers) take on the Buffalo Bills to play. – and Disney wouldn’t risk the revenue losses from denigrating football.
Instead, the media executive’s rhetoric won out. Carriage disputes between pay TV providers and networks are old-fashioned. It has become standard procedure for pay-TV company executives and programmers to rage at each other in strongly worded statements in which distributors talk about the rising costs of cable and media companies that are undermining the importance of their content. In recent years, media journalists have largely adopted this and not taken the bait.
This deal was different because Winfrey said it was different. He held a call with investors the day after Charter and Disney failed to reach a deal, an unusual move that indicated Charter may be content to move away from the linear cable TV business — something then-Cablevision CEO Jim Dolan talked about as a possibility 10 years ago.
But there’s a reason Dolan discussed this concept a decade ago and linear cable TV still exists. Charter still makes money by offering linear cable TV. Comcast, the largest U.S. cable TV provider, owns a slew of cable networks. DirectTV and Dish don’t have robust broadband operations, so both companies are dependent on their survival no matter how dominant streaming becomes.
It’s a happy ending for cable consumers, who can see what they’re already paying for. But it’s not a transformative deal — and the media should keep the resolution of this conflict in mind when the inevitable next channel blackout occurs.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.
WATCH: Disney and Charter reach carriage agreement.