Roughly 32 million Americans received an email from Spectrum (Charter Communications) announcing that Disney was pulling the plug on a partnership that provided buyers with channels such as Disney, ESPN, ESPN2, EPSN Deportes, FX, FXX, National Geographic and Nat Geo Wild.
The “Disney-Spectrum” blackout caused an abrupt service stoppage that occurred hours before the college football season kicked off, affecting nearly 15 million customers. Disney earns about $2.2 billion per year with its partnership with Spectrum. On the contrary, executives at Spectrum are claiming that they endured a 25% loss in revenue due to the popularity and expansion of Disney-owned streaming services such as Disney+ and Hulu. Now, the two major media conglomerates are at a contractual impasse regarding the future of their partnership. According to Spectrum, the financial stalemate stems from Disney’s desire for “higher license fees” and “less packaging flexibility.” While Disney argues that allowing Spectrum to broadcast their most popular channel, ESPN, “does not make economic sense.”
“[Disney] wants to require customers to pay twice to get content apps with the linear video they have already paid for,” Spectrum (Charter Communications) said. “This is not a typical carriage dispute. It is significant for [Spectrum], and we think it is even more significant for programmers and the broader video ecosystem.”
Thus far, the dispute has caused Disney’s stock to fall about 2.6%, while Spectrum (Charter Communications) has seen a 3.4% decrease in shares. Therefore, if the two sides do not resolve their disagreement soon, some predict that it could signify the end of Cable Television. During the ongoing blackout, Spectrum has encouraged its customers to sign up for Sling and FuboTV in order to watch the Disney-owned channels that they lost. On the flip side, Disney capitalized on the blackout by heavily promoting their Hulu+ plus buddles, which includes live sports, live television, premium channels, and more.