Disney Headlines for September 14th, 2023
This week, we talk about the Destination D23 event that underwhelmed and the reason why Charter and Disney kissed and made up.
A Silent Showcase
One of the highlights of D23 is typically the Walt Disney Studios presentation.
Historically, Disney has used this platform to announce many of its most impressive titles.
More recently, the panelists have revealed upcoming Disney+ titles.
Two years ago, Disney showed footage from Elemental and The Little Mermaid remake. It also provided news regarding Wish and Disenchanted.
During this year’s event, Disney announced…nothing new. I’m talking literally nothing.
Instead, Disney showed highlights from The Marvels, I Am Groot, Loki, Ahsoka, and Wish.
Two of those titles, I Am Groot and Ahsoka, are already available on Disney+, while the other three titles debut over the next ten weeks.
So, fans are understandably wondering what happened here. I mean, this is around the time when Disney should be revealing an Encanto 2 project.
We all know that one is coming eventually, as there’s too much money involved for Disney to pass on the sequel.
Disney ceded the opportunity for a positive news cycle surrounding Encanto, but there’s a reason for it.
With Hollywood currently on strike and Disney cutting costs all over the place with its streaming services, the timing here is atrocious.
Frankly, Disney would raise more questions than it answered by revealing any new films right now.
That knowledge turned this year’s Disney Studios Showcase into an oddly austere experience.
Attendants got to watch the first ten minutes of Wish, a film that doesn’t come out until the day before Thanksgiving.
They also saw a short Disney documentary called Once Upon a Studio that will accompany Wish in theaters.
The 'Once Upon a Studio' @DisneyAnimation short is generating lots of buzz after it was screened earlier today during Destination D23. It's obvious Disney is VERY proud of this one – and it's great to see the short exceeded fans' high expectations. pic.twitter.com/dynxSMYxeu
— Scott Gustin (@ScottGustin) September 11, 2023
Everything else at the presentation involved non-new footage or stuff people could already watch on Disney+ on their phones.
We did learn that Haunted Mansion will debut on Disney+ on October 4th. Sadly, that’s this year’s big reveal.
The Spectrum/Disney Deal
Right as the college football season started, Charter Spectrum and Disney drew a line in the sand regarding the future of linear television.
Charter felt strongly that paying a steep increase in ESPN carriage fees made no sense.
With the entire cable television industry in steep decline, Charter worried that it would face significantly more cord-cutting if it raised prices.
Meanwhile, Disney recognizes that ESPN functions as the primary reason why many cable subscribers haven’t cut the cord yet.
So, the two mega-corporations spent ten days absolutely eviscerating each other in the press.
Charter ran a smear campaign against Disney that even included a ridiculous assertion that ESPN would go bankrupt with Charter subscribers.
That’s pretty close to me saying that if I cancel Disney+, the service will collapse.
Meanwhile, Disney went on offense to a rare degree. It reminded Charter customers about Hulu + Live TV, which is its skinny bundle service.
A skinny bundle is basically an internet version of a cable service, and Disney monetizes its Hulu + Live TV product ridiculously well.
Customers pay $69.99 to $82.99 for the service, which includes Hulu and dozens of cable channels plus DVR capabilities.
Somehow, Disney earns $91.80 per customer for a service that people pay $69.99-$82.99 monthly to use.
That astounding statistic underscores how much Disney benefits from advertising on its linear networks.
Well, as a shot across the bow at Charter, Disney suddenly offered a $49.99 introductory rate for Hulu + Live TV, a deal that would last for three months.
Why is that duration important? It’s pretty much the length of the college football season.
After college football, Charter faced one other deadline, which is Monday Night Football, a New York Jets game involving a famous quarterback, Aaron Rodgers.
Charter needed ESPN back by Monday.
Why Both Parties Settled
I’ve discussed how revenue shortfalls are fine in the eyes of Wall Street as long as they are only theoretical. Once they hit the balance sheet, everyone freaks out.
So, Charter started these negotiations with the threat that they might walk away from a deal with Disney, even though they really had a ten-day bargaining window.
Then, Bob Iger and his team countered with Hulu + Live TV deal and promotional campaigns with customers.
Meanwhile, Wall Street analysts stubbornly split down the middle about who had more to lose.
Some swore that Charter had the upper hand, while data suggested otherwise.
YouTube TV, a competing skinny bundle service, increased its sales by 115 percent. Similarly, Hulu + Live TV tracked increases of more than 60 percent.
Many of those subscribers were Charter Spectrum cord-cutters looking for a skinny bundle that offered ESPN in time for college football season.
The fact that this happened is proof enough that Charter suffered from its decision to hold the line against Disney. It irrefutably lost customers.
However, that strategy worked in one vital way. Charter has added Disney+ ad-supported streaming and ESPN+ streaming for two of its tiers.
In the process, Charter assures remaining customers that it can offer newer, better packaging options.
For its part, Disney acquired higher carriage fees for ESPN’s lineup of services as desired.
That’s guaranteed passive revenue for Disney…and LOTS of it.
What Charter Gave Up and What Happens Next
Charter also dropped several Disney channels from its lineup. Those include Disney Channel, FXX, FXM, and Freeform.
Charter describes its updated offerings as a “more curated” form of Disney content. That’s a polite way of saying it wouldn’t pay for some channels.
Linear network executives made a hard choice about which channels justify the carriage fees vs. which ones Charter could ditch without fear of cord-cutting.
Since Disney+ ostensibly offers some of this content, it’s an understandable strategy, but it relies on the hope that Hulu content is coming to Disney+ soon.
Disney has indicated as much, but this tactic from Charter may change the calculus a bit. Disney still must negotiate another extension with Comcast.
Charter is the second-largest cable carrier in the country; Comcast is the first. Folks, this story is only half over.
Comcast should reasonably expect Disney to make similar concessions by offering its streaming services as a bargaining chip for higher carriage fees.
Of course, Disney and Comcast are also negotiating something else, which makes the stakes even higher.
Disney’s bumpy 2023 still has another couple of hurdles yet to come.
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Feature Photo: Disney