Last week, the 15 million American subscribers to Charter Communications cable TV system lost access to Disney-owned networks, including ESPN, ABC, Disney Channel, FX and National Geographic.
The reason for this blackout is a dispute between Charter Communications and Disney over cable affiliate fees. In a nutshell, cable providers like Charter pay a per-subscriber fee to the networks like Disney. For decades, cable providers were happy to do it because it gave them exclusive access to premium content. But now with multichannel video, customers have options outside of cable TV to access this content. And the cable providers are not impressed.
This slide from Charter’s investor call sums up their view
This article from Ben Thompson of Stratechery takes a look at the broader dispute between cable providers and network operators and where it could go next. The conflict is particularly pronounced in the sports world as rights owners are moving to build their own direct-to-consumer streaming services while trying to preserve their legacy cable revenue streams. Which means ESPN is at the forefront of the current conflict. But as millions of cable subscribers around the world continue to cut the cord each year, this is a dispute that is only going to escalate.
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