Penny Ramirez of Buffalo is missing some of her favorite television programs this week as a contract dispute between Charter-Spectrum and Disney continues into a second week. She and her husband Joel are already considering ways they can cut both companies out of their television-watching routine.
The couple said they were flabbergasted when more than two dozen Disney channels — including ESPN and other sports programming — suddenly went dark last week with no advance warning.
Joel Ramirez had been planning to watch the opening of college football after dinner, while Penny Ramirez had plans to watch her favorite, the “Incredible Dr. Pol” about a veterinarian, during dinner.
“I don’t remember what we watched instead,” she said. “But it was pretty frustrating.”
Ramirez is not impressed with the two companies pointing fingers at each other for the outage.
Spectrum posted a message blaming Disney for the dispute. Spectrum said it had offered a fair deal for Disney-owned ESPN and other channels, but that Disney wanted an excessive increase that would force customers to pay for programming they may not want.
Disney, meanwhile, said in an email to Cowboy State Daily that it had offered Charter “the most favorable” terms, but that Charter was demanding it provide services for free.
While the truth of the matter likely lies somewhere between those two extremes, customers like the Ramirezes who are caught in the middle say they’ve had enough. They don’t care whose fault it really is.
The couple are giving up on both companies and eyeing new streaming television options instead, and those do not necessarily include Disney’s Hulu platform, which the company has been touting as an option for frustrated Charter customers.
“It’s baloney. Come on Disney,” Penny Ramirez said. “We’ll just pull the plug.”
A New Video Ecosystem
The Ramirezes’ thinking illustrates one of the realities Spectrum and Disney both face as they chart a new course forward in what Charter CEO Chris Winfrey has said is a broken video ecosystem.
Customers are not happy with either company, and they have plenty of opportunities to plant their eyeballs elsewhere, cutting both companies out of the loop.
In Charter’s recent earnings call, Winfrey lamented the fact that traditional broadcasters failed early on to stem the tide of new streaming options by developing a “TV anywhere” model. That gave upstarts like Netflix and Roku plenty of running room to develop new and much cheaper options for customers. Their success forced traditional broadcasters to offer streaming products piecemeal, which included shows that had once been restricted in distribution to more traditional outlets.
That in turn eroded the value proposition for cable television subscriptions, leading the sector to hemorrhage almost 25 million customers, or about 25% of the sector from peak, Winfrey said.
Charter has mostly bucked that trend, losing just 10% of its customer base, Winfrey said. One of the ways the company has done that is by keeping their prices and packages flexible, so customers don’t feel they’re paying for programs they don’t want and won’t watch.
Winfrey said Disney’s offers not only insisted on higher prices, but on bundling even more products in, further limiting Charter’s ability to offer flexible packages to consumers.
“Disney has to lead instead of pursuing the same playbook, which drives a vicious cycle of video customer declines,” he said. “Ultimately, Disney gave us a choice to either carry on with a bad path for consumers or to look to a completely new model for our customers.”
Winfrey indicated the company has already been discussing new and innovative options for programming so that it doesn’t need a deal with Disney.
“We’ve reached the point of indifference under the current industry model,” he said. “We have the unique ability to stand firm for a deal where Disney and Charter cooperate to create video products that are valuable and relevant to consumers.”
Disney Not Too Interested In A Deal Either
Disney, meanwhile, also appears to have its own ideas about how to chart a new course in the “broken” video ecosystem that Winfrey described.
Those alternative ideas make a deal between the two companies seem unlikely, at least in the short run that gets the opening of football season on the screen for Wyoming’s Charter-owned Spectrum customers.
On its most recent earnings call, Disney CEO Bob Iger said the company has alternatives for getting its products out, which includes direct-to-consumer options for ESPN.
“It’s not a matter of if, but when,” he told investors.
A team is already working on the components of that rollout, including pricing and a release date.
Ratings for ESPN have continued increasing, Iger added, and he believes that means tremendous future advertising potential. He’s also seen considerable interest from many different entities on new partnerships with ESPN that would include distribution technology, marketing, and content opportunities.
Iger wants to pursue a “one-app” experience for customers, something the company has already been testing out in international markets.
“We see a future where consumers can access even more of the company’s streaming content all in one place,” he said.
That’s led to higher user engagement, lower churn and new lucrative opportunities for advertisers.
Disney is rolling out ad-supported Disney+ subscriptions in Canada and select European markets Nov. 1. A new ad-free bundled subscription plan that includes Disney+ and Hulu has already debuted in the U.S.
In fact, Disney has been trying to push frustrated customers who cannot get the sports programming they want from Charter to that plan.
But many customers like Penny and Joel Ramirez have figured out a different calculus altogether. They plan to just cut both companies out of the loop altogether.
“It’s just getting ridiculous,” Penny Ramirez said. “I’ve never heard of TV channels fighting like that. I suppose they do now. But we can just run internet on our phones, so we can look at other options and pull the plug (on both of them).”
Renée Jean can be reached at renee@cowboystatedaily.com.
