You may have heard that cable television customers of Charter Communications lost access to Disney networks like ESPN and ABC over the weekend, because they’re trying to work out how much Charter should pay Disney for the right to carry these channels (called carriage fees). This sort of dispute happens from time to time, as the cable companies and the network owners negotiate these fees.
This time, however, is a little different because Charter openly says the whole model is broken. Cable television is getting too expensive for consumers, many of whom are responding by cancelling cable service entirely (more than five million consumers cut the cord each year) while the fees are getting higher. Link to a PDF presentation from Charter for its investors. And here is a gift link to a New York Times article on the situation. (Another one from Axios.)
Another way this change in the television model is playing out is the current situation with ESPN. It was founded in 1979 and purchased by ABC in 1984 and was, as I remember, a big reason why Disney bought ABC in 1996. For a long time, ESPN made a lot of money for Disney but now that’s changing (and partly because it’s committed a lot of money for future television rights). So rather than being a cash cow for Disney, ESPN is now a trouble spot for them. so much so that Disney is considering selling it, if only a minority share (perhaps to the NFL or MLB or the NBA).
This is what Disney and other entertainment providers are wanting to push, so that consumers will cut out the middleman (cable provider) and purchase their entertainment directly from the source. With wifi access more readily available, being a cable provider (distributor) is a cost that many people now directly cut out. Stocks of these types of companies have lagged the broader market significantly over the last few years.
Wifi access may be more widely available but I think most people need and want high-speed internet at home and for many, the only option might just be the cable company. So people “cut the cord” in terms of cancelling cable television service but continue to pay the cable company for internet access. And I think providing internet is more profitable for them than providing cable service (where they have to share revenues with the owners of the networks).
This evening I opened my Disney+ app only to find a notice that the fee will increase to $18.95/mo. effective Oct. 12. My Charter subscription is looking pretty damn good by comparison.
Hulu is also getting more expensive. It’s going up to $17.99 per month. They’re pushing the bundle of the two, with an ad-supported bundle of both available for $9.99 per month or $19.99 without ads.
I think the $19.99 price quoted is for the Live TV option. I did the $1.99 Black Friday deal, which is just for Hulu streaming with ads. That one is normally $6.99 I believe.
…investors in traditional media companies have also grown impatient with attempts to build new streaming businesses, saying they are not as profitable as cable TV used to be.
No kidding. That’s because traditional cable TV was just horrible for the consumer. It was so difficult for competition to operate under that model for the benefit of the consumer. So we had to commit to 2-year contracts for bloated overpriced “packages” with 300 channels of crap, every cable interface I ever used was horrible, and there were 3 minutes of ads every 10 mins. Why did we put up with that nonsense?
The new model of paying for internet service, then paying content providers directly for the streaming services that you want - with or without ads, and with healthy competition among providers - is a vastly better deal for the consumer.
I’m not seeing the problem here. Cable TV should just die.
Charter and Disney have made a deal “just in time for Monday Night Football.”
As part of the deal, Spectrum no longer carries Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild, or Nat Geo Mundo.
On the other hand, I am not entirely sure I am reading this right, but the press release makes it sound like Spectrum’s “TV Select” level now comes with Disney+ Basic (with ads) included - i.e. you’re paying for it whether you want to or not.
It’s an interesting compromise. It recognizes the way that companies like Disney insist that cable companies supply obscure channels (BabyTV?) to their customers if they want to supply popular channels (ESPN, for one). So we all end up with dozens of channels, many of which we don’t want to watch.