- Spectrum serves 14.7m homes in the US, including in New York
- Deal reached ahead of season debut of Monday Night Football
- Full DTC version of ESPN expected in 2025 or 2026
Disney has reached a new multi-year carriage deal with Charter Communications that will restore ESPN to the Spectrum cable platform and includes provisions for the media giant’s existing streaming services and the future direct-to-consumer (DTC) version of the sports network’s flagship channel.
The channels were pulled after negotiations between the two sides broke down last week. Although Charter was willing to pay higher carriage fees, meaning Disney would receive more revenue for each cable subscriber, it also wanted customers to receive ad-supported versions of Disney+ and ESPN+ at no extra cost.
Disney refused, leading to a week-long stand off that saw nearly 15 million homes lose access to major events like the US Open tennis Grand Slam and college football, with fears growing that the blackout would affect the first National Football League (NFL) Monday Night Football of the season.
Such a scenario would be hugely damaging for ESPN and the NFL, meaning Charter customers in New York would be unable to watch quarterback Aaron Rodgers’ debut for the New York Jets.
However, an eleventh-hour deal has avoided that scenario. While some channels are no longer available on Charter’s Spectrum TV service, ABC, Disney, ESPN and FX have been restored, while ad-supported versions of Disney’s streaming platforms will be added to certain packages.
ESPN+ will be included in the Spectrum TV Select Plus plan, which also includes regional sports networks (RSNs). The full DTC version of ESPN is expected to launch in 2025 or 2026.
“Our collective goal has always been to build an innovative model for the future, said Disney chief executive Bob Iger and Charter chief executive Chris Winfrey in a joint statement.
“This deal recognises both the continued value of linear television and the growing popularity of streaming services while addressing the evolving needs of our consumers. We also want to thank our mutual customers for their patience this past week and are pleased that Spectrum viewers once again have access to Disney’s high-quality sports, news and entertainment programming, in time for Monday Night Football.”
The longer this dispute went on, the more damaging it was for both parties – but possibly more for ESPN.
Disney clearly felt that it was negotiating from a position of strength given live sport, and its flagship ESPN network, is arguably the only thing holding the cable bundle together. Indeed, when the blackout started, Disney pushed out a statement claiming its channels accounted for more than half of the most-viewed broadcasts in Charter homes in the past year and that 71 per cent of subscribers tuned into its services in a given month. Surely its channels were too important for Charter to hold out for too long?
Yet 14.7 million homes is a large proportion of the 72.5 million that ESPN is available in. That’s a lot of subscription fees. And what if affected households decided they would swap cable for ESPN+ or even ditch ESPN altogether? The loss of valuable cable income at this moment in time would have placed considerable strain on ESPN’s carefully orchestrated migration from linear to streaming.
Charter might need ESPN for its cable service to be attractive to consumers, but it also knows the writing is on the wall when it comes to cord cutting. It arguably had less to lose than ESPN and sensed an opportunity to secure concessions that will futureproof its business as both a high-speed broadband provider and aggregator of content.
It’s also significant that Charter has also launched a cable package without ESPN, RSNs and other sports services, hoping a cheaper offering would reduce churn among consumers who still want a linear service without the additional expense. Charter clearly sees a future for cable without sport – at least for now.
ESPN’s migration to DTC is one of the most significant developments the sports industry must contend with in the next few years. This dispute shows why it will also be one of the most complex.
The bundle lives to fight another day, but its future is still uncertain.