Paramount CEO Bakish: Charter, Disney Dispute Underscores Need to ‘Modernize’ Pay-TV Deals

With the carriage dispute between Disney and cable TV operator Charter/Spectrum now in its second week, the standoff over the growing fiscal impact direct-to-consumer video distribution has on legacy pay-TV underscores the need to rethink standard business agreements, according to Bob Bakish, CEO of Paramount Global.

Speaking at last week’s Goldman Sachs investor event in San Francisco, Bakish was asked about the dispute, which has elevated beyond the usual public carriage rights negotiations. Charter has blasted Disney’s attempts to increase its fees while it also transitions its distribution beyond pay-TV to branded streaming platforms.

Charter in 2023 is slated to pay Disney $2.2 billion in carriage fees, according to CEO Chris Winfrey, who says that without a better deal, the cabler will not carry Disney content, which includes ESPN.

Bakish said the impasse was inevitable and underscores the need to modernize carriage agreements in the age of DTC.

“Frankly, it wasn’t a surprise; the exact timing was, but it was inevitable that something like this would happen,” Bakish said.

The executive said Paramount management’s strategy has evolved over the years to include co-marketing agreements with pay-TV operators and online TV platforms in the United States for Paramount + Showtime.

“So, [pay-TV] very much ha[s] an interest in the broadband side of our business, video distribution, as well as the linear side of the business,” Bakish said, adding that outside the United States, Paramount+ is carried by Comcast-owned satellite TV operator Sky, in addition to the SkyShowtime service.

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“When we look at skinny bundles, and Charter Spectrum Essentials is an example of a skinny bundle, we are in that too,” he said.

Bakish said Paramount “fundamentally” believes in multi-platform content distribution, which he contends includes embracing the linear ecosystem and the streaming ecosystem.

“We’re focused on providing our partners solutions as consumer behavior continues to migrate.,” he said. “So yes, inevitably you have to modernize these relationships. You have to do things like again, streaming co-marketing partnerships.

“We’re very pleased by the way with the financial expression of Paramount+ with Showtime on a multi platform basis. And frankly, I think we’re ahead of the curve.”

Charter/Spectrum Narrows Q2 Pay-TV Sub Loss, Ups Broadband Customers

Charter Communications, which operates the Spectrum media brand, July 28 reported a loss of 200,000 net Spectrum video subscribers (including small business) in the second quarter (ended June 30). That was down almost 12% from a net loss of 226,000 subs in the prior-year period. Spectrum ended the fiscal period with 14.7 million video subscribers, down more than 5% from 15.5 million in the previous-year period.

Charter CEO Chris Winfrey

Meanwhile, Spectrum high-speed internet added 77,000 broadband subs, compared with a loss of 21,000 subs in the prior-year period. The company ended the quarter with almost 30.6 million broadband subs (including small business), up 1.1% from 30.25 million subs last year.

Spectrum ended the quarter as the No. 2 pay-TV, broadband operator in the country behind Comcast.

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“We are growing our business by providing differentiated and valuable products,” CEO Chris Winfrey said in a statement. “We are also executing well on our evolution and expansion initiatives, and these strategic investments will lead to further customer and financial growth, creating long-term value for shareholders.”

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.”

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“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.


Judge Orders Charter/Spectrum to Pay $1.15 Billion to Family of Customer Murdered by Cabler’s Technician

A judge in Texas has ordered Charter Communications to pay $1.15 billion in punitive damages to the family of a pay-TV subscriber murdered by the cable operator’s technician.

The judgment is significantly lower than the $7 billion awarded by a Dallas County jury in July regarding the 2019 stabbing death of 83-year-old Charter customer Betty Thomas by Roy Holden Jr., an off-duty Charter technician who was in uniform and driving a company van.

Holden, who had serviced Thomas’ residence the day before, admitted to the robbery and murder and was sentenced to life in prison.

At the heart of the trial is the plaintiffs’ allegation that Charter was negligent in its background check of Holden. Charter claims that background checks of Holden showed “no arrests, convictions or other criminal behavior” that would suggest he was capable of committing such a horrific crime.

Charter contends Holden is solely responsible for his criminal actions and said it would appeal the judge’s decision, which reportedly seeks to pay $200 million to Thomas’ estate and $200 million to each of her four children.

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Comscore Nears Refinancing Deal With Charter Spectrum, Retail and Private Equity Groups

Comscore, the media metrics company headed by former Rentrak CEO Bill Livek, is reportedly finalizing a fiscal restructuring agreement that includes funding from cable TV operator Charter Spectrum, the corporate owner of QVC and Home Shopping Network (HSN), and private-equity firm Cerberus Capital Management.

Charter is a customer of Comscore’s media tracking software, a market that is rapidly evolving as a result of consumer migration toward over-the-top video consumption, including SVOD and ad-supported VOD. Major rival includes Nielsen Holdings, which in September began tracking Netflix, Disney+, Hulu and Amazon Prime Video content ratings over connected televisions.

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Bill Livak

When finalized, Comscore would be in a better position financially to deal with more than $200 million in debt repayment due this year, according to The Wall Street Journal, which cited sources familiar with the situation. Charter, in return, would garner enhanced media metrics across its growing distribution channels including pay-TV and broadband.

Comscore in 2019 named Bill Livak CEO after the firm acquired the assets of Rentrak Corp., the Portland-based former DVD revenue-sharing distributor and upstart media metrics company, for $768 million. At Rentrak, Livak spearheaded the firm’s move away from packaged media to next-generation products aimed at measuring theatrical and digital movies and TV everywhere content.


Charter Spectrum Gets Access to Peacock Streaming Service

NBCUniversal and Charter Communications Jan. 7 announced a multiyear distribution agreement for NBCUniversal’s portfolio of broadcast, entertainment, Hispanic, news and sports content in Charter’s Spectrum homes and businesses across 41 states.

As part of the carriage agreement, Charter will offer its pay-TV subscribers direct access to Peacock Premium, with the ad-supported $4.99 SVOD option available for an extended free trial to Spectrum’s broadband and pay-TV subscribers. Charter intends to distribute the Peacock app, which includes separate free AVOD and $9.99 ad-free Premium Plus options via its Spectrum Guide platform in the future.

The deal is significant since it helps NBCUniversal expand Peacock distribution channels, which include Amazon Fire TV and Roku. The SVOD/AVOD hybrid topped 26 million subs a month ago.

Spectrum will also continue to offer subscribers NBC, Telemundo, Bravo, CNBC, E!, MSNBC, The Olympic Channel, Oxygen, Syfy, USA Network, Universal Kids, Universo, The Golf Channel, CNBC World, New England Cable News (NECN), and NBC Sports Network, as well as five of NBC’s Regional Sports Networks: NBC Sports Bay Area, NBC Sports Washington, NBC Sports Northwest, NBC Sports Boston and NBC Sports Chicago.

Charter ended the most-recent fiscal period with 15.7 million pay-TV subs, and 26.8 million high-speed Internet subs — up 9% from 24.6 million a year ago.

“Charter is a valued partner with passionate NBCUniversal fans in millions of homes nationwide,” said Matt Bond, chairman of content distribution at NBCUniversal. “We look forward to delivering our industry-leading network content portfolio, as well as the strong collection of original and library content in our Peacock Premium offering, to Charter’s subscribers everywhere.”

Peacock is currently available on the Roku platform; Apple devices, including iPhone, iPad, iPod touch, Apple TV 4K, and Apple TV HD; Google platforms and devices, including Android, Android TV devices, Chromecast, and Chromecast built-in devices; Microsoft’s Xbox One family of devices, including Xbox One S and Xbox One X; Sony PlayStation 5, PlayStation 4 and PlayStation 4 Pro; and VIZIO SmartCast TVs and LG Smart TVs.

Charter/Spectrum Wants to Charge Netflix, Others Interconnection Fees

Charter Communications, owner of Spectrum cable, has petitioned the Federal Communications Commission to allow it to charge interconnection fees (or peering) to over-the-video services such as Netflix, Amazon Prime Video, HBO Max, Disney+ and Hulu broadband.

The fees were in part the genesis behind the Obama-era Net Neutrality guidelines, which specifically prohibited Internet Service Providers from up-charging streaming video services for faster access into subscriber homes.

Charter has been prohibited from charging fees as part of an anti-trust agreement with federal regulators when it acquired Time Warner Cable and Bright House Networks in 2016.

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The cable operator now claims that with online video booming and the FCC under new authority, it should be allowed to charge fees to third-party platforms delivering content on its broadband network similar to the interconnection fees charged by Comcast, Verizon and AT&T. Charter also wants the FCC to do away with its ability to impose data caps on subscribers.

“The online video marketplace has become extremely competitive,” Charter said in the June 17 petition. “Online video distributors have seen record-shattering growth and increased strength across all performance indicators, including number of subscribers, amount of content available, number of platforms, streaming hours, and revenue. In fact, the online video distribution marketplace is almost unrecognizable compared to what existed in 2016.”

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Charter contends that to ensure efficient allocation of its resources to accommodate the “explosive growth” in broadband usage, many Internet providers have incorporated data caps. It claims data caps imposed by companies such as Comcast, AT&T, Cox and Altice8 has not stifled the growth of SVOD services.

“In fact, the opposite is true: OVD services are thriving and growing at an unprecedented rate. In other words, the market is working,” Charter wrote.

Charter Spectrum Loses 77,000 Q3 Video Subs; Ups Criticism of Shared Passwords

Charter Spectrum joined other pay-TV distributors reporting ongoing subscriber losses of traditional linear video entertainment in the home.

The company Oct. 25 said it lost 77,000 video subs in the third quarter, ended Sept. 30. That compared with a loss of 66,000 subs in the previous-year period.

The service has jettisoned 415,000 video subs in the past fiscal year, ending the period with 15.7 million.

Charter did add 351,000 broadband subscribers, underscoring ongoing consumer migration towards over-the-top video services such as Netflix and online TV. It added 266,000 high-speed Internet subs during the previous-year period.

The service ended the period with 24.5 million broadband subs, up from 23.3 million subs a year ago.

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With the onslaught of high-profile SVOD services from Disney and Apple, in addition to WarnerMedia early next year, CEO Tom Rutledge was asked about the growing industry concern regarding the sharing of user passwords among non-subscribers.

Without naming offending OTT services, Rutledge alluded to third-party streaming services affording simultaneous access to five separate users with no location-based security.

“I feel like I’m beating my head against the wall talking about privacy or piracy, password sharing and pricing, but they’re all inter-related issues,” Rutledge said on the fiscal call.

Charter CEO Tom Rutledge

He criticized content creators entering the distribution market seemingly indifferent to where their programming is going.

Indeed, Netflix, which has heretofore turned a blind eye toward password sharing, has begun looking into the practice.

“It has not been part of their DNA [worrying about it],” Rutledge said. “Most households in the United States have two or less people in them. And as a result of that, there are more streams available [for free] than there are households.”

The executive contends that until there is increased scrutiny on video access in and out of the home on a single account, “it’s just too easy to get the product without paying for it.”

“When we look at data consumption, we can see that video consumption isn’t going down even when people disconnect their paid video,” Rutledge said. “And as a result of that, it makes the [subscription] price value relationship really difficult when it’s free.”

Separately, Rutledge said Spectrum was considering partnering with Comcast’s Flex SVOD service for broadband-only subscribers.

Charter several years ago bowed Spectrum TV Plus, a $12.99 monthly online TV service for its broadband-only subs. The service included a free Roku player.

In 2018, the service was changed to $14.99 Spectrum TV Plus. Last year Charter unveiled “TV Essentials,” a $15 monthly “skinny bundle” option for pay-TV subs.

“We have a significant number of app based relationships that we’ve developed on multiple devices, and that strategy is working for us,” Rutledge said. “And putting inexpensive devices out with your service makes some sense to us.”

Charter’s Spectrum TV App on Apple TV

Charter Communications has launched the Spectrum TV App on Apple TV.

Nearly 50 million homes across Charter’s footprint now have access to live channels and tens of thousands of programs on the Spectrum TV App for Apple TV, according to Charter.

Additionally, starting next week and expanding throughout 2019, new and existing Spectrum TV and Internet customers can get an Apple TV 4K as part of their monthly subscription for $7.50/month plus tax for 24 months, according to Charter.

Charter is the first U.S. based cable operator to offer customers the new zero sign-on experience from Apple, which further simplifies signing in to video apps on Apple TV, according to Charter. When first set up in a Spectrum household, Apple TV 4K or Apple TV (4th generation) will detect the Spectrum customer’s broadband network and automatically sign them in to the Spectrum TV App and all the supported apps they receive through their service — with no need to enter a username and password, according to Charter.

The new Spectrum TV App is also integrated with the Apple TV app and Siri.

“We are bringing our customers the most robust Spectrum TV App experience available today through Apple TV,” said Rich DiGeronimo, Charter’s EVP, products and strategy, in a statement. “With features like zero sign-on and Apple TV app integration, the Spectrum TV App on Apple TV delivers the best and most seamless viewing experience, giving customers even greater choice and flexibility to enjoy Spectrum TV.”

“With Spectrum TV on Apple TV 4K, customers can now enjoy the ultimate entertainment experience across their iPhone, iPad and Apple TV,” said Greg Joswiak, Apple VP of product marketing, in a statement. “We want to help customers get right to watching their favorite channels, shows, movies and sports, and with innovative features like zero sign-on, the Apple TV app and Siri, they are able to jump right in.”

Charter Agrees to Record $174.2 Million Legal Settlement Regarding Fraudulent Internet Speed Claims

Cable operator Charter Communications (a.k.a. Charter Spectrum) has agreed to pay the state of New York $174.2 million to settle a consumer fraud allegation regarding its Internet speed claims.

The settlement – following unsuccessful appeals by Charter – is considered the largest-ever consumer payout by an Internet Service Provider in U.S. history.

Charter’s 700,000 ISP subs in New York will split $62.5 Million in refunds (about $75 each, in addition to $75 each to 150,000 subs who had inadequate modems), plus $100 million in premium channels and streaming services compensation for the pay-TV operator’s 2.2 million active subs.

“This settlement should serve as a wakeup call to any company serving New York consumers: fulfill your promises, or pay the price,” New York Attorney General Barbara Underwood said in a statement. “[This] sets a new standard for how Internet providers should fairly market their services.”

In an age when streaming of movies and TV shows on services such as Netflix, Amazon Prime Video and Hulu, in addition to online TV, proliferate, ISPs regularly champion ever-faster download speeds.

Charter, which launched standalone online TV platform, Charter Spectrum TV Plus, to its broadband subscribers in 2015, had claimed ISP download speeds of 100, 200, and 300 Mbps, while failing to maintain enough network capacity to reliably deliver those speeds to subscribers.

Underwood claimed Charter mislead subs with claims they could stream over-the-top video service seamlessly, while at the same time engaging in “hardball tactics” with Netflix and other third-party content providers that, at various times, ensured subs would suffer through frozen screens, extended buffering, and reduced picture quality.

Those “hardball” measures contributed to net neutrality guidelines being imposed in 2015 by the Federal Communications Commission — and rescinded this year by FCC under the Trump Administration.

The direct restitution serves to compensate subscribers who, the N.Y. Attorney General claims, Charter equipped with outdated modems and routers and with premium speed plans that consistently failed to deliver the advertised speeds.

“The streaming benefits serve to compensate subscribers for Charter’s historic failures to faithfully deliver third-party Internet content that it had advertised,” reported the Attorney General.