Disney and Altice spar over cost of carrying ESPN and ABC
Dispute will sharpen focus on performance of networks in an age of cord-cutting
Walt Disney is in a stand-off with one of America’s largest cable companies over the cost of carrying its ESPN and ABC channels in a dispute that will sharpen the focus on the performance of its networks in an age of cord-cutting.
Altice USA, the acquisitive cable group controlled by Patrice Drahi, said Disney had asked for “hundreds of millions of dollars” in new fees to carry ESPN and ABC despite audience ratings at ABC “declining in the double digits for years”.
It added that Disney, which also owns the Disney Channel, was threatening to pull its networks from Altice. The company owns cable systems including Optimum and Suddenlink and has more than 4m subscribers.
Disputes between cable companies and media groups over the cost of carrying channels are not new, but this is thought to be the first time that a carrier has publicly balked at charges sought for ESPN, the most watched sports network.
The dispute underscores the fact that ESPN is no longer immune to the negative effects of cord-cutting — the cancellation of pay-TV subscriptions in favour of cheaper online alternatives.
For years ESPN had seemed impervious to changes in viewing trends even as rival channels have been hit by subscriber and ratings declines. But in the summer of 2015 warnings from Disney’s chief executive Bob Iger about slowing subscriber growth at the network sent the media sector into a tailspin.
Disney has responded by exploring new ways of delivering ESPN programming to consumers. It recently acquired a controlling stake in BAMTech, a video technology group, and is working on a standalone ESPN streaming service with new sports programming.
Disney said it had “a responsibility to make our viewers aware of the potential loss of our programming” from Altice USA. Customers of Altice’s Optimum service in New York will be affected if Disney yanks its networks, meaning they will no longer be able to watch ESPN’s Monday night NFL games or ABC hits such as Modern Family.
Altice, which was recently linked with a bid for rival Charter Communications, kept most of the money its customers paid for cable television, Disney said. “The typical Optimum customer pays $160 or more each month for service to Altice, and the bulk of that money goes into their pocket.”
Altice hit back saying “skyrocketing programming costs, particularly those charged by broadcasters and sports networks, are the greatest contributor to rising cable bills”. ESPN, it added, was “already the most expensive basic cable channel in history. This behavior by ESPN is anti-consumer.”