N.Y.-area viewers could lose ABC, ESPN
Disney, Altice point fingers at each other in cable TV dispute
More than 2.6 million New York-area pay-TV customers could soon lose ABC and ESPN in a dispute over how much cable company Altice USA should pay The Walt Disney Co. for its programming.
Disney has been warning viewers — with scrolling messages on broadcasts — that they could lose those channels, as well as the Disney Channel, if the two companies don’t come to an agreement, reportedly by the end of the month. Those customers, who get Altice’s Optimum service, were previously served by Cablevision in New Jersey, New York, Connecticut and Pennsylvania. The Netherlands-based Altice acquired Cablevision two years ago for $17.7 billion.
The fourth-largest U.S. cable operator, Altice USA has nearly
5 million customers nationwide, including those from its May
2015 $9.1 billion acquisition of Suddenlink, which covers parts of Texas, West Virginia, Louisiana and 14 other states.
“Our contract with Altice is due to expire soon, so we have a responsibility to make our viewers aware of the potential loss of our programming,” Disney said in a statement. “We remain fully committed to reaching a deal and are hopeful we can do so.”
Altice charged Disney with making “anti-consumer demands,” including “double the rates for ABC” and “exorbitant” fee hikes for ESPN, overall amounting to “hundreds of millions of dollars more” than the current contract, the company said in a statement. “We want to carry ESPN and its sister networks, including ABC and Disney, at a reasonable rate and have already offered an increase in retransmission fees and sports programming costs.”
Disney programming has seen double-digit declines annually among Optimum viewers, Altice says. ESPN has seen slowly eroding viewership but still remains the most expensive cable channel, costing providers more than $7 per monthly subscriber.
The dispute comes at a crucial time for Disney, which wants to solidify traditional pay-TV viewership while at the same time increasing its offerings to cord-cutters and customers who shun traditional pay-TV bundles. Declining cable network revenue led to job cuts at ESPN in May.
Early next year, Disney plans to launch a streaming subscription sports service expected to broadcast about 10,000 live sports events, including Major League Baseball, National Hockey League, Major League Soccer, tennis and college sports. Then in 2019, a new, Disney-branded subscription service will deliver new animated and live-action theatrical Disney and Pixar films.
Also as part of the new contract, Disney wants Altice to carry two additional sports networks, the ACC Network and the SEC Network.
Disney had its own harsh words for Altice. “The typical Optimum customer pays $160 or more each month for service to Altice, and the bulk of that money goes into their pocket,” the com- pany said in a statement. “For broadcast basic, Altice charges its customers $34, which is more than 15x the amount we are seeking for the market’s most watched station, WABC.”
Disney’s deal with Altice is just the first of several programming deals expiring between now and the end of 2019, representing more than half its viewers, Disney CEO Robert Iger said this month at an investor conference. “We think with ESPN, in particular,
Cable operator Altice accuses Disney of demanding “double the rates for ABC.” Disney, meanwhile, claims Altice overcharges its customers.
with Disney and with ABC, we’re well-positioned going into these discussions,” he said.
But BTIG analyst Rich Greenfield questioned Disney’s strategy in a Monday research note, suggesting that cord-cutting and alternative Net TV services have likely changed the dynamics for future deals.
“Legacy negotiating tactics based on bullying/threatening distributors and gouging consumers may not work the way (they) have in the past,” he said.
Should the two not reach a deal, Altice could drop subscribers’ bills on Oct. 1 by at least $12 to offset the lost Disney programming, Greenfield says. “Does Disney really want consumers all across the country to understand just how much they have been overcharging them for years?”
With more options for consumers to get streaming content and Disney’s need to reserve some programming for its own new streaming services, he said, “We believe Disney has little choice but to fold.”