The agreement reached by Disney and Charter to resolve their carriage dispute marks a "major shift in linear bundled offerings," with ESPN+ being "added to a new tier of TV service more focused on sports fans,” according to Alex Weprin of the HOLLYWOOD REPORTER. Disney Entertainment co-Chair Dana Walden said, “I think if we’re learning anything in this moment, it is that we need to remain flexible, that these models are changing rapidly.” Weprin wrote being flexible “also means being willing to give up a few cards.” Disney is focusing on its "core entertainment brands and its streaming ambitions,” and is “willing to give a bit in its more niche cable channels.” Walden said, “We protected our primary entertainment channels.” ESPN President Jimmy Pitaro said, “The first [priority] was protecting the traditional business model, one that’s been very, very good to us and continues to be good to us. And we were able to do that, we secured commitments that were very strong in terms of rates and minimum penetration.” Pitaro added, “Just on a macro level, this idea of expanding ESPN+ -- not flagship, but the current product -- expanding ESPN+’s reach will help us continue to ease sports fans into this direct-to-consumer environment.” Pitaro: “Another point is ad inventory, with expanded reach comes expanded ad inventory, and we have a fantastic sales team. There’s a lot of demand for sports content. And we’re confident that we’ll be able to sell that inventory.” Pitaro noted that giving ESPN+ greater reach could “help the company as it seeks new sports rights deals” (HOLLYWOOD REPORTER, 9/11).
WHOLE NEW WORLD: BLOOMBERG NEWS’ Scott Moritz wrote Disney “won an increase in the fees it collects for its channels.” Sources said that the company also “maintained contract terms that require 85% of Charter’s subscribers to get ESPN.” That minimum “will drop to 80%” when Disney offers the ESPN channel directly to consumers, something it “plans to do in the future.” Charter subscribers “will receive the ESPN online offering at no additional charge when they do” (BLOOMBERG NEWS, 9/11). The AP’s David Bauder wrote the deal guarantees Disney roughly $2.2B in “fees from Charter that had been put in jeopardy,” while giving the communications company “an entry into the streaming world.” Pitaro said, “We love the flexibility of this deal. We love the creativity.” Bauder noted Charter had “made noises about getting out of business of cable with ESPN entirely,” and had even “told its customers about other ways to access the network.” But that is an “awfully risky move.” The deal “allows both Charter and Disney to have their hands in both cable and streaming.” Insider Intelligence Principal Analyst Paul Verna said, “On the surface, the terms of the settlement that were made public suggest Disney could not afford to let the dispute simmer, and Charter may have been bluffing when it said it was ready to walk away from the cable TV business” (AP, 9/11).
