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Spectrum Has Been Preparing For This Fight With Disney For Years

Disney wasn't prepared for Spectrum fight
Credit: Disney/ Spectrum

Last week, when 26 Disney-owned channels went black in the 15 million Spectrum customers’ homes, it was a tremendous shock. These types of disputes happen all the time between the cable providers and the networks, but they never usually get to the point where the channels disappear. But this time is different, and Charter Chief Executive Officer Chris Winfrey saw this coming seven years ago. And while the Walt Disney Company and its CEO, Bob Iger, were caught off-guard by the blackout, Winfrey knew this battle was coming, and he’s in for the long haul to change the cable industry fundamentally.

Spectrum Disney TV bundle

Seven years ago, Winfrey warned against a consumer rebellion against over-the-air cable companies and their high fees. For the consumers, the decision was simple: they pay incredibly high cable bills for hundreds, if not thousands, of stations, and they only watch a handful of them.

The solution to this problem was simple: allow cable providers to create customer bundles. For example, if a customer did not like sports but preferred news and cooking shows, Spectrum could make a bundle that included channels like CNN and the Food Network and exclude ESPN and Fox Sports.

Winfrey said:

It’s still not easy to put small packages together that are compelling and it’s not in the interest of big programmers to let that happen.

bob iger ruining disney

Credit: Disney

But Iger and other executives hated this idea. They make money from the number of viewers and billions off of the number of households their networks are in. So, even if customers don’t watch ESPN, they still pay for it. The system has been in place since the beginning of cable. Last year, Disney made $2.2 billion in fees from Charter alone for stations like ESPN, ABC, FX, and National Geographic.

But Winfrey is moving forward with his plan to create a tiered system for Charter/Spectrum customers. One will include ESPN, and the other will not. This will dramatically reduce the fees Disney receives from Charter. But Winfrey knows that cable television is dying, and he needs to adapt, even if Disney won’t let him. He also wants Disney to give Spectrum premium customers Hulu and Disney Plus for free.

For pay TV providers, the fight is for their future, as the departure to streaming services is the single most significant factor behind the loss of more than 30 million subscribers.

But for the Walt Disney Company, the revenues lost from Spectrum TV subscribers could not have come at a worse time. ESPN went dark on the opening weekend of the college football season. It went out in Florida during the Utah/Florida college football game.

Monday Night Football

Credit: ESPN

The ESPN networks paid billions for the rights to college football and are now down 14.5 million Charter/Spectrum customers. Disney also paid $2.6 billion per season to broadcast the NFL’s Monday Night Football, which starts next weekend.

While pay-TV providers can do without Disney entertainment channels and Disney content for now, Disney cannot afford to lose any more money, especially when its stock hits a nine-year low.

So, while Charter Communications is fighting for its life, Disney is fighting for its stock price. Winfrey is dug in, while Iger doesn’t have a plan.

We will continue to update this story at Disney Fanatic.

About Rick

Rick is an avid Disney fan. He first went to Disney World in 1986 with his parents and has been hooked ever since. Rick is married to another Disney fan and is in the process of turning his two children into fans as well. When he is not creating new Disney adventures, he loves to watch the New York Yankees and hang out with his dog, Buster. In the fall, you will catch him cheering for his beloved NY Giants.

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