The Walt Disney Co. has seen its share price get whacked around by the news of its carriage-deal issues with Charter Communications Inc.
The Burbank-based entertainment and media giant initially saw its stock price drop by more than 2% on Sept. 1 to close at $81.64, a $2-plus decrease from the closing price of the day before, when it announced it was pulling ESPN, ABC and other channels from the 15 million subscribers of Charter’s Spectrum cable service, including those in Los Angeles.
But that blackout lasted only about a week.
On Sept. 11, the companies announced they had reached a deal to return the Disney-owned channels to the Stamford, Connecticut-based cable provider. That news, announced in the morning, sent the share price up by more than 1% to close that day at $82.52. It has continued to rise since then, closing at $83.68 on Sept. 12, an increase of 1.4% from the day before.
Shares closed at $84.48 on Sept. 14.
Charter shares increased by 3% on Sept. 11 from the previous day’s closing price, after having dropped by nearly 4% on Sept. 1.
In announcing the deal on Sept. 11, Disney Chief Executive Bob Iger and Charter Chief Executive Chris Winfrey said in a joint statement that their goal was always to build an innovative model for the future.
“This deal recognizes both the continued value of linear television and the growing popularity of streaming services while addressing the evolving needs of our consumers,” Iger and Winfrey said. “We also want to thank our mutual customers for their patience this past week and are pleased that Spectrum viewers once again have access to Disney’s high-quality sports, news and entertainment programming, in time for Monday Night Football.”
The deal between Disney and Charter gives the cable operator the ability to provide the Disney+ Basic ad-supported offering to customers who purchase the Spectrum TV Select package, as well as the ESPN+ streaming channel to Spectrum TV Select Plus subscribers.
When the ESPN direct-to-consumer streaming channel eventually launches it will be provided to TV Select Plus subscribers as well.
Spectrum TV Select Plus is the sports-centric cable channel from Charter.
Additionally, Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo will no longer air on Spectrum.
So who won the negotiations?
Michael Nathanson, an analyst with MoffettNathanson, said in a research report from Sept. 11 that both companies came out as winners.
Charter can claim victory if the framework to make the call is an evolution of prior deals to include streaming content along with cutting down on cable network payments, Nathanson wrote.
However, from an economic standpoint, as long as Disney gets the very strong rate increases on its core cable networks and retransmission of ABC shows, plus the wholesale arrangement for the Disney+ ad tier, Nathanson said he expects that the $2.2 billion that Charter will pay Disney this year to continue increasing over the multiyear agreement, Nathanson said in the report.
“We would call this a win for Disney,” he added.
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