A week of speculation about carriage negotiations between Disney and cable operator Altice USA has ended with Disney suggesting that a “potential loss” of programming is possible and Altice calling for the owner of ESPN and ABC to stop the threats.
The drumbeat has grown recently over negotiations to carry Disney-owned networks on the nation’s No. 4 cable operator following deals to acquire Cablevision and Suddenlink that give Altice 4.3 million subs. Disney also owns Disney Channel, Freeform and other networks.
But at the center of the heat is ESPN, the most valuable of all cable networks, with the most recent SNL Kagan estimate that distributors pay $7.54 per subscriber per month to carry it. ESPN has suffered ratings declines of late, making operators wary of paying more, which would result in higher costs to consumers.
“Despite the fact that viewership of their programming by Optimum customers has been declining in the double digits for years, ESPN and its owner are demanding double the rates for ABC for the same content they offer today, exorbitant fee increases for ESPN, and are trying to force customers who don’t receive ESPN to have to pay for it,” Altice said in a statement this evening, adding that it has “already offered an increase in retransmission fees and sports programming costs.”
At stake: Disney could pull its programming when the current contract expires, reportedly at month’s end (and take with it Monday Night Football and upcoming postseason baseball), and keep it off even if negotiations continue. Altice has about 2.4 million pay-TV customers alone in the nation’s top TV market, New York City.
“This behavior by ESPN is anti-consumer, and we urge ESPN and its owner to stop the threats, leave their programming on for customers and focus on negotiating an agreement that is fair for our Optimum customers,” Altice said today.
Said Disney: “The typical Optimum customer pays $160 or more each month for service to Altice, and the bulk of that money goes into their pocket. For broadcast basic, Altice charges its customers $34, which is more than 15x the amount we are seeking for the market’s most watched station, WABC.”
The war of words comes on the heels of an eMarketer report this month in which the research firm cut its forecast for 2017 U.S. TV ad spending by 1.5% to $71.65 billion, saying that cord cutting is accelerating faster than it expected. The report forecasts about 196.3 million adults to be traditional pay TV viewers this year, down 2.4%. By 2021, the number will be down 10%.
It also comes as Disney is prepping its own video service to bow sometime next year.
“Our contract with Altice is due to expire soon, so we have a responsibility to make our viewers aware of the potential loss of our programming,” a Disney spokesperson said this evening. “We remain fully committed to reaching a deal and are hopeful we can do so. Our company has never had a disruption of service for our family of networks and there is no reason that should change now.”