Is the clock ticking on cable TV?
A recent spat between Disney and Charter Communications, the second-largest U.S. cable provider, illustrates just how divergent the interests of content programmers and distributors are. Some analysts believe that the very foundations of the $200 billion TV industry may collapse amid seismic changes and clashing interests.
Up until recently, Charter paid Disney billions for the right to serve the Mouse's linear channels via cable TV. While negotiating a new contract, Charter argued that since their subscribers were already paying for Disney content as part of their cable TV packages, they should get access to apps, including Disney+ and ESPN+, at no extra cost.
Disney balked and negotiations broke down. After Charter refused to pay Disney's $2.2 billion carriage fee, millions of Charter's cable subscribers lost access to ESPN, the Disney Channel, and other Disney-owned outlets. Some analysts believe that Charter could lose north of a million subscribers as a result.
Many content programmers have launched streaming apps to distribute their own content. Yet these apps so far have largely been bleeding cash and subscribers. Disney's streaming operations lost $512 million during the third quarter and Warner Bros reported that they lost nearly two million subscribers in the second quarter compared to the first quarter.
Carriage ees from cable networks have been one of the healthiest revenue streams for Disney and other programmers, but distributors have argued that these fees essentially subsidize programmers' efforts to build the very streaming platforms that are now an existential threat to cable. In the first quarter of 2023, 2.3 million people dropped cable TV packages, and subscriber numbers hit the lowest point since 1992. Over the past decade, more than 40 million U.S. households cut the cord, with many turning to streaming apps.
Given the fundamentally opposed interests of distributors and programmers, it's fair to wonder if cable television could go the way of the dinosaurs.
