Charter Communications (CHTR.O), one of the biggest and oldest cable companies in the United States, is locked in a battle with Walt Disney (DIS.N) in a distribution dispute that may shape the future of television in the streaming era.
ESPN, ABC and other Disney channels disappeared from Charter's Spectrum cable service on Thursday, depriving its nearly 15 million video subscribers of access to the U.S. Open tennis tournament, college football and other programming.
While such "carriage disputes" are commonplace in the media world, with TV channels going dark as cable companies negotiate with media companies over how much its channels are worth and how to package channels, this fight is different.
Media executives are trying to build profitable streaming services even as cable providers argue they are subsidizing a business that cannibalizes their own.
Charter pays Disney more than $2.2 billion annually for the right to distribute ABC, ESPN, FX and other channels to subscribers, which include major markets like New York and Los Angeles.
Companies like Charter say rising distribution fees are forcing cable companies to increase prices, causing consumers to leave. This "vicious video cycle" has cost the industry 25 million customers the last five years, according to a Charter presentation.
The company wants a hybrid model that would slow the deterioration of its traditional business while giving subscribers access to new streaming services.
Charter President and CEO Christopher Winfrey indicated the company is willing to walk away from the traditional cable television business if Charter does not get acceptable terms.
Streaming services have given consumers alternatives to cable packages. Disney is urging Spectrum customers to sign up for a live TV package from its streaming service Hulu that includes ESPN and dozens of other channels, similar to other streamers.
For Spectrum customers who do not want to switch, Disney-owned channels will remain dark until the sides reach an agreement. If the dispute stretches into next week, those viewers will not have access to the U.S. Open finals or the season debut of the NFL's Monday Night Football.
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ESPN, ABC and other Disney channels disappeared from Charter's Spectrum cable service on Thursday, depriving its nearly 15 million video subscribers of access to the U.S. Open tennis tournament, college football and other programming.
While such "carriage disputes" are commonplace in the media world, with TV channels going dark as cable companies negotiate with media companies over how much its channels are worth and how to package channels, this fight is different.
Media executives are trying to build profitable streaming services even as cable providers argue they are subsidizing a business that cannibalizes their own.
Charter pays Disney more than $2.2 billion annually for the right to distribute ABC, ESPN, FX and other channels to subscribers, which include major markets like New York and Los Angeles.
Companies like Charter say rising distribution fees are forcing cable companies to increase prices, causing consumers to leave. This "vicious video cycle" has cost the industry 25 million customers the last five years, according to a Charter presentation.
The company wants a hybrid model that would slow the deterioration of its traditional business while giving subscribers access to new streaming services.
Charter President and CEO Christopher Winfrey indicated the company is willing to walk away from the traditional cable television business if Charter does not get acceptable terms.
Streaming services have given consumers alternatives to cable packages. Disney is urging Spectrum customers to sign up for a live TV package from its streaming service Hulu that includes ESPN and dozens of other channels, similar to other streamers.
For Spectrum customers who do not want to switch, Disney-owned channels will remain dark until the sides reach an agreement. If the dispute stretches into next week, those viewers will not have access to the U.S. Open finals or the season debut of the NFL's Monday Night Football.
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