Charter Communications, the cable giant that owns the Spectrum TV brand, lost 320,000 video customers in Q3, disclosing the impact of the company’s high-profile carriage dispute with The Walt Disney Co.
Charter noted that it had lost only 211,000 video customers a year earlier (and around 200,000 in the first two quarters of this year) and that the 6 percent decline was “partly driven by video disconnects related to the temporary loss of Disney programming in early September.”
Charter’s CFO Jessica Fischer said that the company lost somewhere around 100,000 more subscribers than it would have otherwise had the dispute not happened.
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“The overall impact to customer relationships was less than we expected, facilitated in part by the wide availability of over-the-top alternatives,” Fisher said on the earnings call.
Disney’s channels went dark in the middle of the U.S. Open tennis tournament and with the NFL season about to kick off. Charter CEO Chris Winfrey framed the dispute at the time as a make-or-break moment.
“We’re on the edge of a precipice. We’re either moving forward with a new collaborative video model, or we’re moving on,” Winfrey said at the time. “This is not a typical carriage dispute. It’s significant for Charter, and we think it’s even more significant for programmers and the broader video ecosystem.”
Ultimately, after a couple of weeks, the companies reached a new deal, one that will see Disney+ bundled into Charter’s core video offering, but will also see the removal of a number of Disney’s cable channels, including Freeform, Disney Junior and Disney XD.
Dana Walden, co-chair of Disney’s entertainment division, acknowledged that the company “made some trade-offs” in the dispute, but argued that the deal will lead to the best outcome for the company by giving it a glide path to a profitable streaming business.
And Winfrey, on the earnings call, said that the company intends to pursue similar deals with other programmers.
“We plan to modernize all of our distribution agreements upon renewal in a way that works for customers,” Winfrey said. “That means packaging flexibility, value and not asking customers or us to pay twice for similar DTC and linear programming. As programmers insist on customers paying twice, we just won’t carry those channels. But you know, we’d still be happy to sell their content in an à la carte app the same way as they do. Our goal is to modernize these agreements quietly and seamlessly for mutual customer base.”
Charter and Comcast also rolled out their Xumo platform earlier this month, planning to use it as a new focal point for video content.
Charter reported revenue of $13.6 billion in the quarter, up 0.2 percent year over year, and net income of $1.3 billion. The higher revenue was driven by an increase in both Internet and mobile customer relationships.
“We continue to make significant progress against the multiyear strategic initiatives we outlined last year,” said Winfrey in a statement. “These initiatives drive continuing improvements in the quality of our products, and when combined with our customer-friendly pricing and packaging and high-quality service, will drive significant, long-term growth in shareholder value.”
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