Will Disney+ Help Lower Your Cable Bill?
Of course, that’s assuming you still have a cable bill…
Disney and Charter are now talking about “carriage fees.”
No, that’s not how much The Mouse charges for a zesty jaunt around the castle in Cinderella’s pumpkin carriage; rather it’s a serious discussion about costs, possibly sowing the seeds for lower cable bills.
Carriage fees are a weighty subject; and a discussion between Charter and Disney on these fees is likely to be heated; especially since Disney owns ESPN’s streaming rights, and will debut Disney+ later this year.
Contentious Carriage Fees
Disney is set to renew its multiyear carriage agreement with Charter, the second-largest U.S. pay-TV provider, at the beginning of August, according to people familiar with the matter. So far, there are no signs the two sides will have a testy public renegotiation. That is par for the course for Disney, which usually hammers out a deal without fanfare. After all, pay-TV providers have never had the stomach to black out ESPN, Disney’s most valuable cable channel and by far the most expensive network in the pay-TV bundle.
But this particular Disney deal has widespread implications for how future TV carriage deals will be crafted. The outcome could lead to more contentious battles between TV providers and content creators, and perhaps stem the tide of rising cable TV bills. That’s because Disney is about to transition to a new era of direct-to-consumer streaming.
AT&T’s WarnerMedia and Comcast’s NBC Universal, the next largest media companies, will follow in its footsteps in early 2020.
So what’s that mean to us?
The distributor and the content company usually reach an agreement, because the traditional pay-TV ecosystem has long been symbiotic — operators need material for customers to watch, and the programmers need people to see their programs.
But the advent of direct-to-consumer streaming products could lead to blowout public fights over the declining value of linear TV networks.
Content providers who have long pushed for higher carriage fees could face severe pushback from pay-TV providers who say that linear networks aren’t as valuable because so much content is available online — not only at Netflix and Amazon but now within the content companies’ own streaming products. Moreover, if customers do flee the pay-TV bundle for streaming services, pay-TV providers may want to cut content spending, even more, to keep costs down.
So, don’t throw out your cable boxes just yet. But don’t assume that streaming will cover all the base yet, either.
The bottom line: Stay tuned…