Sept 1 (Reuters) – Walt Disney ( DIS.N ) and Charter Communications ( CHTR.O ) traded salvos over an unresolved distribution deal after several channels, including ESPN, went dark for customers of Charter’s Spectrum cable service on Thursday.
Disney excluded ESPN, ABC and other cable channels from Spectrum, which serves large markets including New York and Los Angeles, in the middle of US Open tennis coverage and other live sporting events, including college football.
Charter flashed a message on the screen that urged viewers to contact Disney. “We offered Disney a fair deal, but they are demanding an exorbitant increase,” it said.
“The cost of programming is a huge factor in high cable TV prices, and we struggle to control the programming fees that companies like Disney impose on us.”
The dispute centers mainly on sports network ESPN, which does not have a streaming service and is a major cable draw despite losing subscribers to cord-cutting every year.
Disney said Friday it offered Charter “very favorable terms on rates, distribution, packaging, advertising and more.”
“Charter has declined to enter into a new agreement with us that reflects market-based terms,” Disney said in its statement.
The media giant added that it is ready to return to the negotiating table to restore access to content.
Charter said Friday that ESPN is the “linchpin” of its video business. The company’s shares fell 2%, while Disney fell 2.7%. Other media companies including Warner Bros. Discovery ( WBD.O ) and Paramount Global ( PARA.O ) lost between 4% and 6%.
“We are extremely disappointed for our fans and viewers across the country that Spectrum and Charter were unable to resolve their dispute with Disney, resulting in the loss of ESPN’s coverage of Thursday night’s matches,” the US Tennis Association said in a statement Friday. .
“We are very hopeful that this dispute will be resolved as quickly as possible.”
Rosenblatt Securities said Disney had “more to lose” than Charter. If a deal isn’t reached, Disney could lose billions in profits each year from its traditional television business, according to the company’s brokerage.
“Prolonged fight with Charter could accelerate Disney’s DTC (direct-to-consumer programs).” Analysts have said Disney is reluctant to quickly unveil a DTC plan for ESPN because it needs cash from its profit engine to fund its money-losing streaming service, Disney+.
CEO Bob Iger told ESPN in July that Disney would like to find a strategic partner to form a joint venture or buy a stake that would help it take direct-to-consumer content.
“Charter and Disney are ideal partners to establish a hybrid linear TV and direct-to-consumer model,” Richard DiGeronimo, Charter’s president of products and technology, said Friday.
The company, which serves more than 32 million customers in 41 states, pays the entertainment giant about $2.2 billion in annual programming costs.
Reporting by Savi Mehta, Jaspreet Singh, Zakir Kachwala and Akansha Khushi in Bangalore; Editing by Nivedita Bhattacharjee, Arun Koiyur and Maju Samuel
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