One of the biggest cable companies in the United States has a message for media companies: The traditional cable-TV model is broken, and it needs to be fixed or abandoned.
Cable TV is too expensive for consumers and providers, Charter Communications, which has nearly 15 million pay-TV subscribers, said in a 11-page presentation to investors on Friday. It added that cord-cutters and rising fees are contributing to a “vicious video cycle.”
The presentation comes amid negotiations between Charter and the Walt Disney Company, owner of popular cable channels including ESPN and FX, that has spilled into public view. The channels will not be available to Charter subscribers until both sides agree on how much Charter will pay Disney to carry its channels. These so-called carriage fights are commonplace in the media industry, with channels going dark for days or weeks on cable systems owned by companies like Charter while both sides haggle over how much the channels are worth.
But Charter’s presentation goes a step further. Charter delivered a scathing indictment of the cable television industry, which has generated billions of dollars for companies like Disney and Charter for decades. It’s a notable acknowledgment from Charter, one of the companies that propelled much of that growth.
“Customers are leaving the traditional video ecosystem, and losses have accelerated,” according to Charter’s presentation.
In a statement earlier this week, Disney said that it had been in negotiations with Charter Communications and many of its channels had gone dark for Charter subscribers as a result of the impasse.
“We’re committed to reaching a mutually agreed upon resolution with Charter, and we urge them to work with us to minimize the disruption to their customers,” Disney’s statement said.
At issue are the rates Charter will pay for Disney’s programming and how those movies and shows will be distributed to Charter’s customers. Charter has said it does not want to pay a premium for channels its customers do not watch, adding that rate increases are pushing customers to cut the cable cord.
Christopher Winfrey, the chief executive of Charter, said on an investor call Friday that he was “disappointed” with the stalemate with Disney. He said the company proposed an alternative model that Disney would not accept.
“We’re either moving forward with a new collaborative video model, or we’re moving on,” Mr. Winfrey said.
As viewers abandon cable television for streaming services like Netflix, companies like Charter and Comcast have increasingly focused on providing other services to consumers, including internet and wireless services. They have weened themselves off the pay-television business, which is in long-term decline, and have grown frustrated with paying a premium for content that fewer people are watching through traditional means.
Content providers like Disney are making adjustments of their own. The media giant has said that it plans to offer a streaming version of ESPN, one of its most valuable TV channels, which has long been a linchpin of the traditional cable bundle. Robert Iger, Disney’s chief executive, has said he is exploring options for ESPN, including finding a new partner for distribution or content.
On Friday, Charter said that it proposed a subscription package that included both traditional television and streaming apps, but Disney rejected its terms, Rich DiGeronimo, president of product and technology. Charter said that it was prepared to walk away from Disney’s channels, instead adopting “alternate video solutions” that include services offered by Apple and Roku.
Charter has explored splitting off some sports programming, including regional sports networks, into a higher-cost package called Spectrum Select Plus. Mr. Winfrey said Friday that it did not push Disney to agree to put ESPN into that package.
Source: | This article originally belongs to Nytimes.com
