Advertisement

Disney Urges Charter Customers to Switch to Hulu + Live TV

As Spectrum customers looking to watch ABC, ESPN and other Disney-owned channels remain in the dark due to a carriage dispute, the entertainment giant is urging Charter’s 14.7 million subscribers to ditch the cable giant for Hulu with Live TV.

Disney channels were pulled from Charter stations on Thursday, ahead of the start of college football and the ongoing U.S. Open over the holiday weekend, as Disney and Charter were unable to come to terms on a new deal. Now Disney is pointing upset customers towards its direct-to-consumer service.

Hulu with Live TV, which is available for $69.99 per month, offers 90 live channels that include sports, news, and entertainment. In addition, Disney said its networks and stations are also available through offerings such as DIRECTV Stream, YouTube TV, Sling and Fubo. ABC Owned Television Stations are also available over the air at no cost.

“Disney deeply values its relationship with its viewers and is hopeful Charter is ready to have more conversations that will restore access to its content to Spectrum customers as quickly as possible,” the company wrote in a blog post Monday evening. “However, if you are one of these frustrated customers, it can be infuriating to not be able to access the content you want. Luckily, consumers have more choices today than ever before to immediately access the programming they want without a cable subscription.”

The move comes after Charter held a conference call with analysts on Friday in which they said that Disney offered a traditional long-term deal that insisted on “high penetration payment minimums despite its own a la carte offerings,” forced its channels into packages where they are currently not included, required additional large rate increases by “forcing DTC service inclusion and additional payment to existing linear customers,” and offered “little incentive” to sell DTC apps to broadband customers.

In return, Charter said it offered to accept Disney’s rate increases in exchange for bundling ad-supported streaming apps with packaged linear products and “lower penetration payment minimums” to provide packaging flexibility to customers. It also offered to market Disney’s streaming apps to its broadband customers and a shorter extension to its current contract to continue to discuss its proposal, but said Disney declined.

According to Charter, the multichannel video industry has lost 25 million customers over the last five years, or nearly 25% of its total base. In comparison, Charter’s customer base has only declined about 10% over the same period. The company added that it’s paying roughly $2.2 billion to Disney in annual programming costs, not including the impact of advertising revenue for both parties, and only about 25% of its video subscribers regularly engage with Disney’s content.

“We’re on the edge of a precipice. We’re either moving forward in the new collaborative video model or we’re moving on. This is not a typical carriage dispute. It’s significant for Charter and we think it’s even more significant for programmers and the broader video ecosystem,” Charter CEO Christopher Winfrey told analysts. “We propose the model to Disney that we believe creates better alignment for the industry and better products for customers, a model that can stabilize linear video and create a clear growth path for direct to consumer video with a more customer friendly and financially attractive end state for programmers.”

Disney fired back on Friday, arguing that Charter refused to enter into a new carriage agreement that “reflects market-based terms.”

In a statement, Disney said it offered “the most favorable terms on rates, distribution, packaging, advertising and more” and “proposed creative ways to make Disney’s direct-to-consumer services available to their Spectrum TV subscribers, including opportunities for new and flexible packages where those services become a focal point of what the consumer might choose.”

“Although Charter claims to value our direct-to-consumer services, they are demanding these services for free as they have stated publicly,” Disney added. “Charter is depriving consumers of that content because they are failing to ascribe any value in exchange for licensing those services.”

Disney argued that it offered Charter an extension to keep its networks up during negotiations, but that they “declined in the middle of programming that is important to their subscribers, including the US Open.”

“Charter’s actions are a disservice to consumers ahead of the kickoff for the college football season on ABC and ESPN’s networks. We value our relationship with Charter and we are ready to get back to the negotiation table to restore access to our unrivaled content to their customers as quickly as possible,” the statement concluded.

In a separate blog post, Disney noted that ESPN aired more than half (53) of the top cable 100 telecasts in Charter homes during the past year, citing Nielsen data. It also noted that 71% of Charter subscribers tune into Disney’s networks and stations in the average month and that Charter subscribers watched more than 3.3 billion hours of content on Disney networks and stations over the past year, according to Nielsen.

If the impasse between the two parties is unable to be resolved, Charter says it would look to platforms like Xumo, Apple TV and Roku to create new packages for general entertainment with more flexibility and the ability for consumers to add on a la carte direct to consumer packages as they see fit.

Chief financial officer Jessica Fischer said Charter anticipates a loss to video-related revenue as a result of the dispute, due to an expected decline in video customers and any potential credits or adjustments. It also expects reduced advertising revenue from the loss of content, significant reductions to programming expenses and higher costs to handle a large number of customer calls.

Shares of Disney, which are down 7.6% year to date, are up 0.7% during Tuesday’s trading session, while Charter stock, which is up 22% year to date, are down 1.25%.

The post Disney Urges Charter Customers to Switch to Hulu + Live TV appeared first on TheWrap.