Disney’s Charter Spectrum blackout: impact on advertising, cable TV

The core of the dispute lies in the future of cable TV, and Charter’s desire to incorporate Disney’s streaming assets—Hulu, Disney+ and ESPN+—without paying Disney additional fees.

In its investor call last week, Charter claimed it pays Disney $2.2 billion annually to air its channels. During a conference call with investors on Friday, Charter’s Winfrey said he was “disappointed that Disney so far has insisted on higher prices, forcing customers to take on their products when they don’t want them or can’t afford them and asking to require customers to pay for direct-to-consumer apps that their linear fees already pay for.”

‘ESPN was always the must-have’

While Spectrum subscribers stand to lose out on key programming, advertisers appear to be far less impacted. 

Multiple media buyers have told Ad Age that they don’t anticipate any impact on clients from the service blackouts, particularly because advertisers are protected by agreed-upon audience guarantees that Disney is obligated to make good on. One buyer said, “We have yet to see any impressions drop for any of our clients’ campaigns,” although the buyer noted information is still emerging.

While Charter claims just a quarter of its subscribers view Disney’s networks and owned channels, Disney responded that 71% of Charter subscribers have tuned into its content, citing Nielsen. According to Insider Intelligence, Charter is the second-largest cable provider, with a subscriber base of 14.7 million.

More: Why advertisers aren’t racing over to streaming

At the heart of the carriage negotiation is sports. In addition to college football and the US Open, the NFL’s regular season kicks off today, Sept. 7, with ESPN’s first matchup set for Monday, Sept. 11.

“ESPN was always the must-have,” a second media buyer said, and has been able to secure lucrative terms because of sports’ dominance in the linear TV ecosystem.

“Charter is clearly drawing a line in the sand and saying ESPN doesn’t command that same value,” the second buyer said. “If this continues, it could accelerate cord-cutting and unbundling the [cable] bundle that everyone believes ESPN is holding together.”

Watch: How ESPN is marketing college football this season