Charter and Disney reach carriage deal, Disney+, ESPN DTC apps included in Spectrum TV packages

Most Disney-owned channels, including ESPN, are returning to Charter cable systems in time for Monday Night Football.

Charter and Disney reached a new carriage deal, the companies announced Monday, that restores 19 of the media company’s linear networks to the cable operator’s pay TV customers – and notably – involves terms to include certain Disney direct-to-consumer streaming services in select Charter TV packages at no extra cost to consumers, with Charter also promoting the streaming services to broadband-only customers.

It is a significant deal after a major blackout that saw Disney networks, including ESPN, down for Charter’s 14.1 million pay TV subscribers for more than a week starting August 31 – with timing of the dispute coinciding with the college football and the kickoff of the NFL season.

While carriage disputes are not uncommon, this was one that Charter categorized as atypical, with the cable operator proposing a new type of model that it believed would “stabilize linear video and create a clear growth path for DTC video,” and vocalized plans to pursue with other programmers as well. Executives also cited a willingness to walk away from Disney programming for good in the face of rising carriage costs that are passed on to consumers and what it views as a broken video pay TV ecosystem as some media companies simultaneously pursue their own DTC efforts, arguing it devalues content. Disney, meanwhile, asserted that Charter rejected multiple offers to extend negations before channels went dark and said offering DTC apps to the operators’ customers for free didn’t make economic sense.

The new agreement restores 19 networks from The Walt Disney Company, including ABC Owned TV Stations, Disney Channel, FX, Nat Geo Channel and the full ESPN network suite. Networks no longer included in Spectrum TV packages include Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo, Wild, and Nat Geo Mundo.

And it looks as though Charter was successful in some of its key asks that were previously rejected, with the inclusion of some Disney-owned streaming apps in certain Charter Spectrum TV packages – including ad-supported Disney+, ESPN+ and the forthcoming ESPN flagship streaming service.

Here are some of the key aspects of the deal:

  • In the coming months the Disney+ Basic ad-supported streaming service will be included for Charter customers that buy the Spectrum TV Select package, under a wholesale arrangement.
  • ESPN+ will be included for customers that subscribe to Spectrum TV Select Plus
  • The forthcoming ESPN flagship direct-to-consumer service will be included in Spectrum TV Select video packages when it launches
  • Charter said it will be able to maintain flexibility “to offer a range of video packages at varying price points based upon different customers’ viewing preferences.” One of the points Charter made during the dispute was related to minimum penetration thresholds required by programmers and tying channels, which it contended forced pricey channels into packages that customers didn’t want or couldn’t afford. It wasn’t disclosed if Charter secured lower minimum thresholds in the new agreement (meaning the number of subscribers Charter must deliver certain channels to) and a company spokesperson told StreamTV Insider the company is not providing guidance on that aspect.

Also of note is Charter’s agreement to put its marketing, promotional and distribution power behind Disney’s DTC apps and offer them to all of its customers, including its large base of broadband-only customers, to purchase at the regular retail rate. That includes Disney+, Hulu, ESPN+ and the Disney Bundle that combines the trio. Charter had approximately 28.5 million residential internet customers as of the end of Q2.

“Our collective goal has always been to build an innovative model for the future. This deal recognizes both the continued value of linear television and the growing popularity of streaming services, while addressing the evolving needs of our consumers,” said Disney CEO Robert Iger and Charter President and CEO Chris Winfrey in a joint statement. “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.”