Charter again is ahead of the game. On Thursday it struck a carriage renewal agreement with Warner Bros. Discovery – nearly a year early and marking the cable operator’s second early renewal since last week.
The long-term agreement involves continued carriage of WBD’s portfolio linear networks on the largest pay TV provider in the U.S., including TNT, CNN, Food Network, HGTV, TLC, Discovery, Adult Swim and Investigation Discovery.
Like other renewals, it also brings WBD’s ad-supported direct-to-consumer apps into the Charter Spectrum TV fold. Max and Discovery+ SVOD apps with ads will be included in Spectrum Select TV packages at no additional cost to the operator’s pay TV customers. As of the end of Q2, Charter had 13.3 million video subscribers, after losing 408,000 net pay TV subscribers in the period.
The carriage deal also involves promoting and offering WBD’s DTC streaming apps to Charter’s large broadband subscriber base, which stood at 28.3 million as of Q2. The deal makes Max a “preferred partner” for Spectrum as Charter markets and sells DTC apps and bundles to broadband subscribers. According to the companies, Charter’s Spectrum intends for full deployment of its DTC distribution to broadband customers in 2025 after this year’s deployment of DTC apps included in pay TV packages and upgrade offers.
Charter noted its distribution plan for DTC services will include separate pricing, packaging and billing capabilities for DTC streaming services to broadband customers but didn’t provide additional details.
The renewed deal with WBD follows a similar model that Charter’s been pursuing with multiple programmers since reaching a deal with Disney last year, following an impasse and related channel blackout just as the 2023-2024 football season kicked off. That deal included adding Disney+ with ads, ESPN+ and the forthcoming flagship ESPN DTC offer in Spectrum TV packages.
Charter has since renewed carriage agreements with TelevisaUnivision, Paramount, and most recently AMC Networks just last week. AMC, like others, agreed to include that ad-supported version of AMC+ for Charter pay TV customers (something AMC separately, it’s worth noting, has been doing for a while).
Taken together the cable operator has negotiated deals with programmers to include eight direct-to-consumer apps at no cost added cost for pay TV customers, including Max, Discovery+, Disney+, ESPN+, Paramount+, AMC+ BET+ and ViX. Collectively, Charter said this offers pay TV customers a nearly $60 per month retail value for DTC apps.
“This innovative partnership with Charter recognizes the value of our linear content and the investments we’ve made in premium original programming, sports and news, while also significantly expanding the distribution of Max’s ad-supported service to Spectrum’s millions of Select customers,” said David Zaslav, president and CEO of WBD in a statement. “We did this agreement together nearly a year early to set a framework for the future and to provide more consumers access to our unparalleled content offering while giving the industry more resilience as it evolves.”
The renewal comes as some others in the pay TV ecosystem are waging battles over what some see as a broken video model – namely DirecTV which is coming up on a second week of a channel blackout amid an ongoing dispute with Disney.
Issues at hand in those negotiations revolve, in part, around industry practices such as minimum penetration rate guarantees and forced bundling on distributors by programmers to combine carriage of expensive “must-have” networks like sports (ESPN in Disney’s case) with less popular entertainment channels, which distributors like DirecTV and others contend result in pricey and bloated pay TV packages that consumers don’t necessarily want and further fuels linear TV declines. DirecTV has taken issue with Disney over the practice as the latter continues to invest in its own DTC streaming efforts while seeking rate increases from traditional distributors for the right to carry its channels. Concerns over channel bundling requirements have also been flagged in virtual MVPD Fubo TV’s ongoing antitrust lawsuit against Disney, Warner Bros. Discovery, Fox and the entities’ sports streaming joint venture Venu Sports.
Part of DirecTV’s stance is that it wants to be able to offer more flexibility and options for consumers in packaging and pricing pay TV channel lineups, including genre- or interest-based bundles.
Charter too has been pursuing more hybrid-linear pay TV models and trying to address challenges it sees in what’s become a low-margin video business with its new vision for carriage deals.
In announcing the WBD renewal, Charter President and CEO Chris Winfrey in a statement pointed to the opportunity for more flexible packages.
"This strategic relationship with WBD further evolves the linear and broadband video distribution model and supports Spectrum’s efforts to provide flexible packages, whether through hybrid linear-DTC full video relationships, smaller video packages with DTC add-ons, or a suite of a-la-carte or bundled DTC options for broadband customers," Winfrey stated. "The inclusion of the ad-supported version of Max and Discovery+ in our most popular packages at no additional cost ensures we provide the most value to our customers, particularly when combined with the utility of Xumo, which seamlessly integrates live linear, DVR and VOD, DTC, and SVOD content with unified search and discovery for the best overall customer experience.”
Reached by StreamTV Insider via email a Charter declined to share additional details of the agreement, including whether there was any easing of minimum penetration requirements or channel bundling.
Financial details were not disclosed.
Some reports earlier this year suggested tepid activation of Disney+ among Charter’s subscriber base so far. But it’s still early days for the cable operator’s inclusion of the services, for which it recently tweaked some aspects. With multiple renewals now under its belt, it appears most programmers have been open to get on board with Charter’s new approach.
As we’ve previously noted, DirecTV is in a bit more of a dire boat than Charter in terms of an impasse with Disney and seeking new models. Unlike Charter, DirecTV only offers pay TV video services and doesn’t have broadband or other lines of business to help offset or cushion linear declines (nor a broadband base to help market programmers' DTC apps to), so efforts to reach an agreement and evolve a sustainable pay TV model represent more of a make-it or break-it proposition longer-term for the company.