Millions of people in the USA have missed numerous major sporting events such as the US Open and national and college football games since the end of August. The reason for this is a dispute between the cable provider Carter and the Disney Group.
• Dispute over new contract leads to “blackout”
• Sports channel ESPN is of central importance
• Consequence of the dispute: reshaping of the US media landscape
The media is talking about the failure of Disney channels at the cable provider Charter as a “blackout” – the Disney channels, including the sports channel ESPN, were simply switched off after a dispute between the two companies. Disney and the Connecticut-based cable provider Charter were unable to agree on a new contract: Charter, like other cable providers, has lost numerous customers to streaming providers in recent years and therefore wants Disney to be more flexible in bundling programs . The cable provider would also like to make ad-supported streaming channels such as Disney+ available to its subscribers free of charge. Disney, on the other hand, is preparing to sell its channels, especially the sports channel ESPN, directly as a streaming offer. Until that can happen, Disney is trying to keep its cable revenue stable to withstand growing cost pressures.
Consequences from the dispute between streaming and cable providers
“The carriage dispute between Charter and Walt Disney threatens to put both companies out of business and dramatically reshape both the pay-TV and streaming ecosystems, which could also impact content providers and millions of consumers,” is at MarketWatch to read. As a result, media and entertainment companies will spend significantly less money on content, it is concluded.
The sports channel ESPN is particularly important here: ESPN is part of 80 percent of the cable packages chosen by customers. Disney is thus urging viewers of the popular sports channel to sign up for a live package from the Disney streaming service Hulu if they don’t want to miss the major sporting events.
The public conversion of a sports channel into a streaming service, like the one Disney currently operates, also means great uncertainty for the future of US cable television. It remains unclear for now when ESPN streaming will be possible via its own app. Disney CEO Bob Iger remained vague in an interview with the Financial Times in July: “It’s not long-term, but it’s not tomorrow either.”
Carter CEO Christopher Winfrey is naturally unenthusiastic about Disney’s ESPN plans: “The idea that you can achieve the profitability of streaming services that don’t exist today by being [traditionelles Fernseh-]”Burning the program from which all the cash flow comes… that’s not a good outcome,” he told the Financial Times.
“The collateral damage could be far-reaching, from sports leagues whose rights are up for renewal, to local television networks looking for a significant increase, to creative talent tied to the linear networks’ programming investments,” analysts Michael fear Nathanson and Craig Moffett (MoffettNathanson), in a note obtained by MarketWatch.
According to the Financial Times, Disney has already spoken to Amazon and Verizon about the future design of ESPN and possible partnerships.
Disney and Charter shares: Analysts’ assessment is still positive
TV presenter Jim Cramer also spoke up. On the show “Squawk on the Street” he admitted that he had “made a big mistake” with his investment in Disney and that his attitude towards the strategy of the world-famous media group had changed. “I made a big mistake because I believed in the franchise and thought that Bob Iger could turn it around very quickly. (But) it’s a struggling franchise,” Cramer said, according to The Street.
On TipRanks, however, the 21 Wall Street analysts are mostly optimistic, and Disney shares receive a moderate buy recommendation in the consensus rating. With an average price target of 110.53 US dollars, they predict a price potential of 32.42 percent for the paper at a current price of 83.47 US dollars. The NYSE-listed share is significantly in the red compared to the beginning of the year and has again lost over eight percent of its value in the past month.
Charter, on the other hand, has seen an increase of around 30 percent on the NASDAQ since the beginning of the year. On TipRanks, the paper is rated by 15 analysts and also given a moderate buy recommendation by consensus. With a median price target of $480.77, there is an upside potential of 10.311 percent. Charter shares are currently trading at $439.40.
Editorial team finanzen.net
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