Charter CEO Chris Winfrey said Disney and ESPN are the “lynchpin” to driving bigger industry transformation. But if they aren’t receptive, the cable giant is ready to walk on its own path.
“We’ve always seen video as an asset to broadband,” Winfrey said during the Goldman Sachs Communcapia + Technology conference on Thursday. “It’s on the verge of flipping to a liability.”
Winfrey was on stage at the conference a week after talks broke down between Charter’s Spectrum and Disney, which resulted in key channels like ESPN, FX, The Disney Channel and several college sports networks going dark for the cable provider. The result has been a war of words between the two, with Charter calling the video ecosystem “broken” and asking for bigger changes, and Disney arguing that cable’s demands are unreasonable. The result has been 14 million customers left without these channels just as college football season kicks off, with some fans even suing Charter for the dispute.
Winfrey didn’t offer any substantial updates to the talks, suggesting they’ve continued to stall. “If I had anything material to update you with, I would,” he said.
But the CEO took investors through an “alternative world” in which Charter did walk away from Disney. He acknowledged that Charter would likely have a small base of customers, but the company would have a small package of channels to offer at a lower price. The company would shore up its lack of sports by partnering with other companies to offer direct-to-consumer and streaming options.
“In the end, it’s all gone a la carte,” he said. The move would be “great for customers, and it might be good for us over time.”
Disney issued a statement as Winfrey spoke at the conference.
“As the US Open reaches the men’s and women’s finals, and fans gear up for a weekend of college football and the opening of the NFL season, it’s unfortunate that Charter decided to abandon their consumers by denying them access to our great programming,” the company said in an email. “The question for Charter is clear: Do you care about your subscribers and what they’re telling you they want – or not? Disney stands ready to resolve this dispute and do what’s in the best interest of Charter’s customers.”
The crux of the dispute lies with how the two sides value the content, and how it’s packaged to consumers. Charter argues the requirement to include ESPN into bundles forces higher prices on consumers who may not even watch sports, while Disney says that its content is expensive to produce, and it needs to be fairly compensated. Charter has also demanded that subscribers get free access to Disney’s streaming services, including Disney+ and its upcoming ESPN offering. Winfrey argued that it was unfair to consumers to charge them on the cable side and then charge them again directly. Disney has balked at this demand, noting the high-cost of content production.
Charter has said that this kind of structure is what it would take to other media companies, which include the likes of Warner Bros. Discovery and Paramount. While Winfrey wouldn’t offer any names, he mentioned that “interest in what we’re proposing is very high.”
Disney had said that it had offered to extend talks to work out a deal, which Charter denied. But the cable giant said it had offered a short extension of the existing contract, which Disney walked away from.
Regardless of how this goes, it looks like Winfrey wants to get this settled quickly.
“I think it’s in all of our interest to make a decision on where we all go,” he said. “If we move on, that’s okay.”