Disney Temporarily Cuts Hulu + Live TV Price 29% as Charter Carriage Dispute Drags On

Disney-owned Hulu Sept. 8 announced it was cutting the monthly subscription fee to ad-supported Hulu + Live TV by 29% to $49.99, effective immediately for new and returning subscribers through Oct. 11.

The move comes as Disney and the nation’s No. 2 cable operator, Charter Communications, continue their public carriage dispute that has resulted in Charter’s 14.7 million pay-TV subscribers losing access to ESPN, ABC and other Disney channels — a situation made more acute for subscribers wanting to watch college football, the NFL, and the U.S. Open tennis tournament, among other marquee events.

The Hulu + Live TV subscription provides viewers the ability to stream more than 90 TV channels, including ESPN, and others featuring live sports, national and local news and entertainment. Plus, subscribers have access to  Hulu’s entire on-demand streaming content library, originals, next-day network TV shows, access to Disney+ and ESPN+, and features such as unlimited DVR.

Charter contends Disney is mandating exorbitant carriage fee price hikes at a time when legacy pay-TV continues to hemorrhage subscribers to streaming video services, including Disney+, ESPN+, Hulu and Netflix.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In a Sept. 4 statement, Charter said that this year alone it was expected to pay Disney more than $2.2 billion for “just the right to carry [branded] content,” while ignoring the ongoing impact of a softening advertising market. Commercials, along with subscription fees, is how Charter, and other pay-TV operators, pay carriage fees to content holders.

The promotion ends ahead of Disney’s previously-announced plans to increase costs for most of its direct-to-consumer services, including Hulu + Live TV. The platform with 4.7 million subscribers is upping the monthly fee for ad-supported access to $76.99, and the ad-free plan is going from $82.99 to $89.99 per month.

Disney+ Drops Ad-Supported Basic Monthly Price to $1.99, Touts Hulu + Live TV As Charter Spectrum Carriage Dispute Continues

Disney+ is offering its ad-supported basic tier option to new subscribers for $1.99 monthly through Sept. 20 — down from its normal $7.99 fee. Thereafter, the promotional fee reverts back to the standard price until canceled. Disney is also pushing its $9.99 Bundle Duo Basic package, which includes ad-supported versions of Disney+ and ESPN+.

Although not mentioned, the promotion comes as the Walt Disney Co. remains embroiled in a carriage distribution dispute with Charter Communications, which operates the Spectrum pay-TV platform with 14.7 million subscribers — the second-largest cable TV operator in the country.

Last week, Spectrum subscribers lost access to Disney-owned ESPN and ABC, among other channels, days before the start of the 2023 college football season. The NFL begins its new season Sept. 7.

Charter claims Disney is asking for more to carry its programming, while continuing to aggressively market its direct-to-consumer streaming options. Charter, which is paying Disney more than $2 billion this year in carriage fees, is also asking Disney to offer its subs free access to ad-supported versions of Disney+, ESPN+ and Hulu.

Earlier this week, Disney urged affected Charter subscribers to sign up for its Hulu + Live TV platform, which ended the most-recent fiscal period with 4.3 million subscribers. Disney is offering the ad-supported online TV service, along with ad-supported versions of ESPN+ and Disney+ for $69.99 monthly until Oct. 12, when the bundle increases its price to $76.99.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The dispute comes as both Disney and Charter face ongoing subscriber losses across both direct-to-consumer and legacy pay-TV markets. Disney+ saw 300,000 North America subscribers drop the service in its most-recent fiscal period. Spectrum lost 789,000 pay-TV subs year-over-year for the 90-day fiscal period ended June 30.

Charter CEO: ‘Video Ecosystem Is Broken’

The Charter Communications leadership team during a Sept. 1 investor meeting laid out the company’s vision for a cable-TV business model it they said is in a serious state of disrepair.

The presentation was framed by the company’s ongoing carriage fee dispute with the Walt Disney Co., and comes the day after Disney pulled its programming from Charter Communications’ Spectrum cable packages as negotiations hit an impasse.

“We’ve generally been able to manage relationships with our programming partners behind the scenes,” said Charter president and CEO Chris Winfrey. “We respect the quality product that Disney produces and its management team, but the video ecosystem is broken.”

In its presentation notes, Charter expressed disappointment that Disney has “insisted on unsustainable price hikes and forcing customers to take their products, even when they don’t want or can’t afford them. They also want to require customers to pay twice to get content apps with the linear video they have already paid for.”

“This is not a typical carriage dispute,” Winfrey said. “It’s significant for Charter, and we think it’s even more significant to programmers in the broader video ecosystem.”

The CEO indicted that Charter and Disney together are in a unique position to lead the way.

According to the presentation, Disney’s cable portfolio has seen significant viewership declines across sports, general entertainment and children’s programming over the past four years, as Disney has focused on growing SVOD substitutes such as Disney+. According to Charter’s leadership team, “as we entered negotiations, The Walt Disney Co. proposed a long-term deal that continues to ignore the realities of a shifting marketplace.

They said Disney wanted higher license fees, less packaging flexibility, and for Charter to pay for customers that do not receive its services. For 2023, Charter had expected to pay Disney more than $2.2 billion for carriage rights, “not including the impact of advertising on either party.”

“We’re on the edge of a precipice,” Winfrey said, echoing a quote Bob Iger made a year ago before returning as Disney CEO. “We’re either moving forward with a new collaborative video model, or we’re moving on.”

Winfrey summarized the tug-of-war between MVPD (multichannel video programming distributors, or traditional cable companies), and SVOD (streaming services, including studio direct-to-consumer options). As the proliferation of streaming services devalued content and cannibalized MVPD services, content providers continued to increase fees to linear services in order to finance their direct-to-consumer efforts, while enforcing carriage restrictions requiring cable providers to carry lesser-watched channels alongside the popular ones, ultimately leading to higher cable bills for customers. After years of growing content creation costs and billions of dollars in losses from chasing subscribers, DTC services are now turning toward raising rates, advertising, bundling options and password-sharing crackdowns, all the while “asking linear video customers to fund their mistakes.”

“Without a coherent DTC strategy and with programmers constantly chasing the winds of the capital markets, we believe the time for a more-coherent strategy is now,” Winfrey said.

Over the last five years, the linear video industry has lost nearly 25 million customers, almost 25% of total industry customers, according to Charter. On the other hand, Charter’s video customer base has declined only about 10%, according to Rich DiGeronimo, Charter’s president of product and technology, who credited Charter’s commitment to linear video, and flexibility in pricing and packaging.

“We’ve proposed a model to Disney that we believe creates better alignment for the industry and better products for customers, a model that can both stabilize linear video and create a clear growth path for direct-to-consumer video with a more customer-friendly and financially attractive end state for programmers,” Winfrey said. “Given how much of the expense is tied up in sports, Disney has to lead instead of pursuing the same playbook that drives the vicious cycle of customer declines. Ultimately Disney gave us a choice, to either carry on with the bad path for consumers, or to look to completely new video models for our customers. Because we’ve reached the point of indifference under the current industry model, we have a unique ability to stand firm for a deal where Disney and Charter cooperate for video products that are valuable and relevant to consumers.”

Charter’s team said it would accept Disney’s market rates in exchange for

  • Lower penetration minimums to deliver package flexibility for our customers;
  • Inclusion of Disney’s ad-supported DTC apps within Charter’s packaged linear products so the customer does not have to pay twice for similar programming;
  • Charter’s commitment to market Disney’s DTC products to its broadband-only customers.

 

This, according to Charter, would give customers “flexibility to choose from a variety of high-quality packages with varying content and pricing to meet their viewing and budgetary needs.”

For Disney, Charter indicated, “this model provides a glidepath to manage its migration pace to a larger DTC business, including the ability to stem linear subscription and advertising revenue losses, reduce DTC churn, increase advertising revenue and likely drive more upgrades within their digital television apps. Ultimately, it provides a more sustainable revenue stream, in our view.”

According to the presentation, Charter “offered The Walt Disney Company a shorter-term contract extension, with penetration minimums that would allow us to continue to provide flexible options to consumers. However, The Walt Disney Co. has informed us that they would not be willing to accept a contract extension.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In a statement released to the press on Friday, Sept. 1, The Walt Disney Co. stated that “Charter has refused to enter into a new agreement with us that reflects market-based terms. Contrary to their claims, we have offered Charter the most favorable terms on rates, distribution, packaging, advertising and more. We have proposed creative ways to make Disney’s direct-to-consumer services available to their Spectrum TV subscribers, including opportunities for new and flexible packages where those services become a focal point of what the consumer might choose.

“Although Charter claims to value our direct-to-consumer services, they are demanding these services for free as they have stated publicly. Charter is depriving consumers of that content because they are failing to ascribe any value in exchange for licensing those services. Our linear channels and direct-to-consumer services are not one and the same, per Charter’s assertions, but rather complementary products. We continue to invest in original content that premieres exclusively on our linear networks, including live sports, news and appointment viewing programming.

“Likewise, on our direct-to-consumer services, we make multi-billion-dollar investments in exclusive content, which is incremental to our linear networks.

“We offered Charter an extension in the negotiations to keep our networks up and they declined in the middle of programming that is important to their subscribers, including the U.S. Open. Charter’s actions are a disservice to consumers ahead of the kickoff for the college football season on ABC and ESPN’s networks. We value our relationship with Charter and we are ready to get back to the negotiation table to restore access to our unrivaled content to their customers as quickly as possible.”

Charter Communications to Launch Free Streaming Option for Regional Sports Networks

Charter Communications is planning to launch a direct-to-consumer (DTC) alternative for its proprietary regional sports networks, Spectrum SportsNet and Spectrum SportsNet LA, which will be made available to all affiliate subscribers for free.

The future DTC access to the NBA’s Los Angeles Lakers and MLB’s Los Angeles Dodgers comes as regional sports networks nationwide deal with declining advertising and fiscal bankruptcy. Bally Sports’ parent Diamond Sports Group, which has TV distribution deals with almost 50% of MLB teams, filed for Chapter 11 protection in March.

Charter, in a July 10 release, said Spectrum TV Select in the third quarter would be relaunched as two new services: Spectrum Select Plus, which will include sports programming services and local RSNs, while Spectrum Select Signature bows as an alternative service that will exclude certain sports programming and provide non-sports fan a reduced subscription rate option.

Live sports, while popular with a significant portion of pay-TV viewers, is expensive. Traditionally, sports networks’ agreements have required pay-TV distributors to pay for, and make available their programming service to a large majority (80%) of subscribers — even if many of them never watch it.

Charter says its new options are based on the customer’s viewing preferences, while also supporting the RSNs as they pursue DTC streaming options.

“This new model paves the way for a more flexible approach to the outdated packaging model for sports, and it puts the focus where it should be, on the customer,” Tom Montemagno, EVP of programming acquisitions, said in a statement.

AXS TV, Spectrum Launch Program to Support Music Education

AXS TV has joined forces with Spectrum to launch “AXS TV’s Band Together for Music Education” — a new initiative connecting AXS TV with affiliates, local communities, and schools to support music education programs.

“AXS TV’s Band Together” is set to launch this month in five markets across California, Florida, New York, Ohio and Texas.

“AXS TV’s Band Together” awards five $10,000 grants to school-age music education programs across the country. These are established programs that exemplify top leadership, instruction, and participation, yet also demonstrate a strong need for further funding and support. Selected teachers can then use the grant to purchase music, fix instruments or buy new ones, repair or replace performance equipment and uniforms, etc.

The inaugural winners were picked from programs in five key Spectrum markets, including Heart of LA — HOLA in Los Angeles; Eastmoor Academy in Columbus, Ohio; Dr. Billy E. Dade Middle School in Dallas; Prine Elementary in Bradenton, Fla.; and Rochdale Early Advantage Charter School (REACS) in Jamaica, N.Y. AXS TV will present each grant at designated events during December and January.

“Enrolling children in music education at an early age has proven to positively impact several facets of their development that continue with them throughout their lives — from building confidence and creativity, to improving reading, math, and communication skills; boosting classroom attendance; and so much more,” according to an AXS TV press release. “Despite this, public school music programs often experience a severe lack of funding and are the first casualties when budget cuts are made. It is a problem that has only increased in recent years.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“We’re grateful for the AXS TV ‘Band Together’ partnership, which will help even more children pursue their musical dreams,” said Catherine Bohigian, EVP of government affairs for Charter Communications, which operates the Spectrum brand of internet, TV, mobile and voice services. “Through music education, young people can learn valuable social, academic and creative skills, enriching their lives and preparing them for the future, which complements our commitment to support initiatives that strengthen the communities where we live and work.”

“Instilling a deep passion for music in the younger generations is a major part of AXS TV’s mission, and ‘Band Together’ is a perfect representation of that,” said Anthony Cicione, president of entertainment for AXS TV’s parent company, Anthem Sports & Entertainment. “We are excited to join with Spectrum on this important initiative, giving these talented students vital tools to reach even greater heights as they progress in their musical journeys. Who knows? The students of today could very well become the stars of tomorrow — and we just might be featuring them on our network in the coming years!”

AXS TV is a multi-platform music, entertainment and lifestyle digital platform and television company owned and operated by Anthem Sports & Entertainment. 

Charter Communications is a broadband connectivity company and cable operator serving more than 32 million customers in 41 states through its Spectrum brand.

 

Charter Communications Names Chris Winfrey as New CEO, Replacing Tom Rutledge Who is Retiring After 50-Year Career

Charter Communications Sept. 21 announced that Chris Winfrey has been named president and CEO, effective Dec. 1. Winfrey most recently served as COO after more than a decade as the cabler’s CFO. As CEO, Winfrey will report to board of directors. 

Tom Rutledge

Current CEO Tom Rutledge, who announced his plans to retire as CEO after a 50-year career, beginning as a technician in 1972 while in college, will serve as executive chairman through the end of his contract in November 2023. Rutledge will maintain oversight of Charter’s government affairs during that time and provide his guidance to ensure a smooth and successful transition. 

Rutledge helped grow Charter to a pay-TV, broadband and telecom operator with more than 30 million subscribers. He grew the company both organically and through transformative acquisitions, which included Time Warner Cable, Bright House Networks and Optimum West (Bresnan).

“It has been an honor and a pleasure to lead Charter and this incredible team over the past 10 years,” Rutledge said in a statement. “We have grown the company through innovation and strategic investments and have positioned Charter to provide the best converged connectivity products and services available today.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Chris Winfrey

Winfrey joined Charter as CFO in 2010, added oversight of Spectrum Enterprise in 2019, and operational leadership of the residential and SMB sales and marketing organization, and Spectrum Community Solutions in 2021. Later in 2021, he was named COO. 

Prior to joining Charter, Winfrey served as CFO, and as managing director for cable operations, broadcasting and satellite entities at Unitymedia GmbH, Germany’s second-largest cable operator. Earlier in his career, Winfrey served as SVP of corporate finance and development at Cablecom, GmbH. He was previously a director of financial planning and analysis and director of operations services of NTL Incorporated’s continental European operations, and a senior associate in the private equity group at Communications Equity Associates. He has spent nearly 25 years in the cable industry, and in 2015 received The Internet & Television Association’s (NCTA) Vanguard Award for Young Leadership.

Charter CEO Upbeat on Comcast Streaming Video Joint Venture

Charter Communications chairman and CEO Tom Rutledge has high hopes for the upcoming joint venture Charter and Comcast Cable announced in April.

The JV is aimed at offering video app developers, streamers, retailers, operators, and hardware manufacturers a platform to better reach their customers in major markets across the country.

Comcast would license Flex, its aggregated streaming platform and hardware to the joint venture, XClass TVs, the company’s branded smart-TV platform and include Xumo, the ad-supported streaming service it acquired in 2020. Charter is funding the venture with $900 million over multiple years.

With a marketing mindset, “build it and they will come,” Charter and Comcast contend third-party content distributors would have access to a larger retail footprint — in exchange for a fee and share of advertising revenue.

Charter CEO Tom Rutledge

Speaking at  a Sept. 14 Goldman Sachs + Technology confab in San Francisco, Rutledge said the joint venture gives the companies an opportunity to monetize video and create an advertising and transaction business that directs consumers to content and media companies get more customers.

Of course, delivering the platforms to end-users requires high-speed internet, which both Charter and Comcast dominate the market.

“We’ll make further investments to drive advertisers and conveyors of content and have us sell their content on that platform,” Rutledge said. “So, yeah, we’re going to deploy that.”

Charter and Comcast combined have more than 62 million broadband subscribers, accounting for more than 66% market share. The companies have more than 35 million combined pay-TV subscribers.

“If you want to have a job, you need broadband. If you want to be entertained, you need broadband,” Rutledge said, adding that high-speed internet is almost inflation proof.

“If you think about all the things, you could spend your money on if you don’t have very much, [high-speed internet] is the best value there is,” he said. “And we can make it even more valuable. I’m not really worried about our ability to interact with consumers and to grow in a negative market environment.”

Rutledge said voluntary subscriber churn (customers who do not renew service) is still “incredibly” low.

“It’s well below historic norms. Consumers still have money and unemployment is still low. I think our ability to sell to consumers will still be good. That said, we’ll still do rate increases,” he said.

Charter/Spectrum Loses High-Speed Internet Subscribers in Q2

In a switch, cable pay-TV operator Charter Communications July 29 disclosed it lost 42,000 high-speed internet subscribers in the second quarter, ended June 30. With the rise in over-the-top video distributors, consumers have been migrating to broadband in order to receive streaming service.

Charter, which operates under the Spectrum brand, still saw a spike in overall residential and small business broadband subs, ending the period with 30.2 million subs compared with 29.6 million subs in the previous-year period.

CEO Tom Rutledge

Meanwhile, the pay-TV subscriber attrition continues. Spectrum lost 240,000 video subs in the quarter — a decline softened slightly by the addition of 642,000 small business accounts. Still, the pay-TV sub loss dwarfed last year’s decline of 63,000 video subs. Spectrum ended the period with almost 15.5 million video subs, down from 16 million a year ago.

CEO Tom Rutledge said he believes the company can continue to grow its overall business by melding fixed and mobile broadband service at a reduced price to customers.

“Our growth has always been driven by offering value-rich packages at prices customers can afford,” Rutledge said in a statement. “Looking forward, we remain well-positioned to grow our business using that same strategy.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Charter/Spectrum Hit With $7 Billion Wrongful Death Civil Penalty

A Texas jury has slapped Charter Communications with a whopping $7 billion wrongful death verdict in a civil case involving the 2019 in-home robbery and murder of a 83-year-old woman by a Spectrum cable technician. The penalty comes on top of $375 million in compensatory damages awarded to the woman’s family, citing “gross negligence” on behalf of Charter.

Former Spectrum field technician Roy Holden Jr. reportedly pleaded guilty to the crime in 2021 and was sentenced to life in prison.

Lawyers for the victim’s family claimed that Spectrum allegedly got rid of an employee background check procedure after acquiring Time Warner Cable in 2016.

Charter, which is appealing the verdict, denies ending employee background checks, saying it is “committed to the safety of all our customers.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The cabler, which ended the most recent fiscal period with more than 30 million video and broadband subscribers, said it took the necessary pre-employment steps, including a thorough pre-employment criminal background check on Holden, which showed no arrests, convictions or other criminal behavior.

“Nor did anything in Mr. Holden’s performance after he was hired suggest he was capable of the crime he committed, including more than 1,000 completed service calls with zero customer complaints about his behavior,” Charter said in a statement.

Legal observers doubt the financial judgments will stand and will be reduced on appeal or by the trial judge.

Marcien Jenckes to Head New Charter, Comcast Streaming Video Joint Venture

Charter and Comcast May 12 announced that Marcien Jenckes has been selected to lead their recently announced streaming platform joint venture. After closing, in this new role, Jenckes will focus on leading the team and developing the business and monetization models.

The recently announced JV aims to offer a new streaming platform on a variety of branded 4K streaming devices and smart TVs, providing all the top apps, and more choice in the streaming marketplace. Comcast will license Flex, its aggregated streaming platform and hardware to the joint venture, contribute the XClass TV retail business, and contribute Xumo, an ad-supported streaming service it acquired in 2020. Charter will make an initial contribution of $900 million, funded over multiple years.

“Marcien has been an outstanding leader within our company for over a decade,” Dave Watson, CEO of Comcast Cable, said in a statement. “His blend of experience as an entrepreneur, as an expert in improving customers’ entertainment experience, and an innovator in the rapidly changing advertising environment, makes him uniquely qualified to helm this partnership with Charter.”

Jenckes has served as president of advertising for Comcast Cable since 2017. Prior to this role, he was responsible for the cabler’s residential lines of business, including video and Internet.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In 2019, Jenckes spearheaded On Addressable, along with Charter and Cox, designed to bring additional scale and momentum to addressable television advertising. He also pioneered Blockgraph, first incubated within Comcast’s FreeWheel, an advertising technology company serving the video and television ecosystem, before spinning out as a joint venture between Comcast, Charter and Paramount Global (formerly ViacomCBS), to help marketers use audience insights for TV and premium video advertising.

Before joining Comcast, Jenckes was involved with a host of digital advertising and media syndication start-ups, including Grab Networks and Voxant. He also held a variety of leadership roles at AOL, where he launched the platform’s free web services, including the free AOL.com portal. Prior to AOL, Marcien worked as a consultant for McKinsey & Company in their media and telecom practice.

The closing of the joint venture is subject to customary closing conditions. This joint venture does not involve the broadband or cable video businesses of either Comcast or Charter which will remain independent.