Disney facing test of ESPN mettle in cable dispute
Walt Disney Co. is facing a crucial test of the strength of its ESPN sports empire as a New York pay-TV provider is balking at the entertainment giant’s contract demands, setting the stage for a high-stakes showdown.
Altice USA is refusing to meet Disney’s demands to carry ESPN and Disney’s entertainment channels, including ABC, saying Disney is asking for too much money, particularly for ESPN, which has been struggling with subscriber losses and ratings declines.
The carriage agreement — which covers Altice’s 2.6 million customer homes in the New York City suburbs — expires Saturday. Millions of sports fans could be left unable to watch “Monday Night Football” or a pivotal New York Yankees wildcard playoff game next week.
“Disney is not going to back down, and neither is Altice,” said veteran media analyst Michael Nathanson.
Much is riding on the negotiations, according to people familiar with the discussions. The Altice talks represent the first major deal renewal for Disney in nearly three years — and the first since ESPN’s fortunes have fallen.
For years, Disney, based outside Los Angeles, was able to extract substantial rate hikes for ESPN, and cable and satellite-TV operators grudgingly paid. But now, distributors are pushing back because they are trying to keep a lid on costs as they lose more customers to internet streaming services, such as Sling TV or Netflix.
Although Altice is not the biggest pay-TV operator — it is dwarfed by such giants as Charter Communications, Comcast Corp. and AT&T’s DirecTV — the deal terms that Disney strikes with Altice could provide a template for other renewals that are coming up for the company in the next few years.
“This is a big deal. Disney needs to get rate increases and more subscribers for ESPN,” Nathanson said.