Disney yesterday reached an agreement with cable operator Altice, and ESPN drew "cheers from Wall Street" after a "long run of negative headlines," according to Brooks Barnes of the N.Y. TIMES. Once the multiyear contract is made final, Altice will "pay more to carry ESPN and other Disney-owned networks, including ABC, despite declines in their ratings." MoffettNathanson Founding Partner Michael Nathanson described the payment increases as "a very bullish sign for Disney." He saw the deal as a step toward changing the "highly negative narrative that has enveloped” ESPN for much of the last two years. Morgan Stanley Managing Dir & Head of Media Research Benjamin Swinburne said the renewal “shows that, despite the rapid and even accelerating pace of change in the TV business, there continues to be pricing power for certain network groups.” Disney shares increased $1.29 yesterday to $99.86. What "kind of price increases Disney secured for ESPN and ABC is unknown." Altice also "agreed to distribute" SEC Network and the soon-to-be-introduced ACC Network. As part of the agreement, Altice will drop ESPN Classic (N.Y. TIMES, 10/3). In L.A., Meg James writes Disney and ESPN "still have plenty of muscle in the market." Some analysts had "feared that Disney would struggle to secure substantial carriage fee increases for its ESPN and entertainment channels." Wall Street was "closely monitoring the dispute because the Altice talks represented Disney’s first major deal renewal since ESPN’s fortunes have fallen" (L.A. TIMES, 10/3).
NEXT STEPS: VARIETY's Andrew Wallenstein wrote even without yet "knowing the deal points, Altice-Disney needs to be appreciated less than however those particulars emerge and more as an indicator of what comes next for Disney." Altice is "just the first of many affiliate deals Disney will begin striking over the coming months with the country’s reigning pay TV providers." Disney "wants to reinvigorate a critical revenue stream that has seen growth come down across the industry to the low single digits for all involved." Altice will "help set the prices that will be paid by other distributors, including a few that got a lot bigger since the last time Disney stared across from them at a negotiation table" (VARIETY.com, 10/2).
