It has been an anxious week for the multi-billion dollar Disney Corporation, as they are now directly in the crosshairs of a high-stakes cable television dispute with the U.S. provider, Spectrum. This carriage dispute is quickly becoming a lose/lose situation, as both entities fight to minimize the damage, but at least one of them is certain to suffer.
For Disney, the stakes could not be higher. All of their networks, including the flagship ESPN, are now unavailable to over 14 million paid subscribers of the cable provider. This blackout over the weekend came in the midst of the college football season, with the NFL season kickoff just around the corner. This means millions of viewers are going without their sports coverage, and their viewing preferences will find their way to another provider.
Adding injury to insult, Disney networks are not the only ones affected, as Disney also owns prominent channels like The Disney Channel, the FX networks, Freeform, and more. According to Disney, the blackout is costing them a staggering $125 million every month from just their ESPN revenue alone. When taking into account all of their other channels the losses become far more considerable.
Spectrum, however, makes no secret of their need to drastically lower their operating costs, as business for them is not far from its all-time lows. They believably assert that the high cost of carriage fees has become an unsustainable medium-term option, and triggered the blackout.
There are ways around the issue, some of which involve switching to other cable providers or streaming services, but this option could have its own costs, both for the customer and Disney. For Disney, the idea that consumers would flee to streaming services could result in their biggest loss of all.
Thus a middle ground must be quickly drawn, with little room to maneuver. For Disney, the goal is to recuperate as much of their existing ROI (Return on Investment) as possible, but they must also contemplate the longer-term picture, or else risk losing subscribers to streaming services altogether.
For their part, Spectrum must recoup costs where possible, but also realize that any loss of customers could spell doom for their business.
It is in the best interest of both companies to draw a resolution soon, as they run the risk of every day of blackout leading to further losses both financially and in customers. If a resolution is not quick, we could see a similar case play out as when Disney recently took ABC off of Dish Network, with losses that were initially estimated at $200 million.
Only time will tell who wins and who loses out in this battle of titans, but it’s certain that the outcome will have long-lasting consequences for both entities. At this time, that timeline for resolution is, unfortunately, as uncertain as if it will be a favorable one.
