Disney-Charter Battle Makes Pay-TV Bundle’s Fadeout A Stark Reality For Streaming-Focused Media Companies And Investors: “The Lifeboats Have Already Been Burned”
deadline.comJust as this summer’s New York City wildfire smoke, LA hurricane and sneaker-melting heat have brought home the reality of climate change, the Disney-Charter carriage battle is foregrounding the fragility of the pay-TV bundle.
Charter’s Spectrum TV service is in its fifth day of darkness as the companies fight over carriage terms, leaving nearly 15 million customers without access to 18 Disney networks, including ESPN, as well as eight ABC stations.
When the fight broke into public view last Thursday, initial reactions raised existential questions about the fate of the bundle. “Is this the video tipping point?” wondered the headline of a research note by Guggenheim analyst Michael Morris, who believes the situation poses “increased and sustained risk for not only Disney but for video economics.” Bank of America analyst Jessica Reif Ehrich also sounded the alarm in a note to clients today. “If this posture were to be extrapolated across all other major video distributors, we believe it would have a devastating impact on the P&L of the entire traditional Media & Entertainment group,” she wrote. “The result would lead to a significant decline in highly profitable linear subscribers that would be only partially recouped by likely fewer and less profitable DTC subs.” The debt carried by media companies, already a worry in the cases of Warner Bros.
Discovery and Paramount Global, could get even more unwieldy if cash flow from affiliate fees declines markedly, many analysts have noted.
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