Disney and Charter vs. Cord Cutting?

 by Ray Keating

Analysis

DisneyBizJournal.com

September 12, 2023

 

The Walt Disney Company and Charter Communications came to an agreement on Monday (September 12) just in time for Jets fans with Spectrum cable to see their bad luck continue with a potentially season-ending injury for quarterback Aaron Rodgers during “Monday Night Football.”

But this wasn’t your typical last-minute deal regarding carriage fees cable companies pay for assorted channels. In a joint press release, Disney and Charter called this a “transformative” agreement – and that might not be your typical corporate PR hyperbole.

 

Disney had pulled its cable channels from Charter’s Spectrum cable on August 31. In the deal announced on Monday, the Disney offerings on Spectrum will be reduced from 27 channels to 19, according to the Associated Press. At the same time, Charter’s fees to Disney are “expected to increase, although financial terms were not released on Monday.”

 

But the truly big news in this announcement is about Disney’s streaming services. Here are the four key points from the release:

 

• “In the coming months, the Disney+ Basic ad-supported offering will be provided to customers who purchase the Spectrum TV Select package, as part of a wholesale arrangement.”

 

• “ESPN+ will be provided to Spectrum TV Select Plus subscribers.”

 

• “The ESPN flagship direct-to-consumer service will be made available to Spectrum TV Select subscribers when it launches.”

 

• “Charter will also use its significant distribution capabilities to offer Disney’s direct-to-consumer services to all its customers – in particular its large broadband-only customer base – for purchase at retail rates. These include Disney+, Hulu and ESPN+, as well as The Disney Bundle.”

 

So, Disney streaming services are going to be offered through Spectrum cable. This is a striking melding of linear and streaming. Could this Disney-Charter agreement be “transformative” in terms of its effects on cable and streaming? Maybe. 

 

It definitely warrants watching, and keeping an eye on how other streamers and cable companies react, including how Disney works with other cable companies. As AP noted: “While making a direct-to-consumer product available through a cable system may seem counterintuitive, the deal will help the soon-to-be launched ESPN service get established and have more access to advertisers, [ESPN President Jimmy] Pitaro said.”

 

In a joint statement, Disney CEO Bob Iger and Charter CEO Chris Winfrey said: “Our collective goal has always been 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.”

 

Immediate thoughts? Fascinating. Weird and challenging – given what we’ve heard and assumed about streaming killing cable and accelerating cord cutting. Maybe a game-changer – at least possibly for the near term.

 

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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, the Alliance of Saint Michael novels, and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right? (Keating is a Disney shareholder.)

 

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Disney Down But Still Ranks “Good” on Corporate Reputation Poll

 by Ray Keating

News/Analysis

DisneyBizJournal.com

May 27, 2022

 

Brand and reputation matter a great deal to businesses, and The Walt Disney Company would agree. Indeed, advancing and protecting the “brand” long has been a big emphasis with Disney.

Therefore, the latest Axios Harris poll ranking the reputations of 100 companies is worth noting. At the same time, though, polls can be fickle (the Axios Harris poll is “a survey of 33,096 Americans in a nationally representative sample conducted March 11-April 3, 2022”), to say the least. Therefore, company management, analysts, shareholders and general observers should take note of where companies rank, while also recognizing that one poll doesn’t tell the full story. 

 

In particular, there are plenty of businesses that might suffer in a poll or polls, and yet continue to do gangbuster business. I have referred to this as the “Wal-Mart effect,” whereby some people say they don’t want a Wal-Mart in their neighborhood, yet when the store opens, they shop there.

 

Keeping all of this in mind, the Walt Disney Company clearly took a hit in the 2022 edition of this reputation poll. The company ranked #65 (with a score of 73.4) out of the 100 firms ranked. That was down 28 spots from the 2021 poll, but still ranked in the “good” category. 

 

Only two companies dropped by more spots, with Spectrum falling 71 spots and Pfizer by 37 places. Pfizer ranked #44 in the 2022 list, and Spectrum #82.

 

The following chart from the report shows where Disney scored and ranked in each category covered by the survey.

The subject of politics is unavoidable when seeing this shift. Axios addressed the matter broadly, and also specifically regarding Disney, in an accompanying analysis.

 

The piece stated early, “The findings suggest that companies that are slow to respond to political crises, or do it inconsistently, suffer the most in terms of consumer reception and trust.” Or, another interpretation would be that companies that venture into political issues that have nothing to do with their business can suffer.

 

The Axios analysis offered other points:

 

• “Disney's ranking dropped significantly — from 37th last year to 65th this year — likely because of its decision to speak out about Florida's ‘Don't Say Gay’ bill after initially opting not to address it.”

 

• “‘Disney’s about face shows the reputational hit that comes when the public perceives you as being calculating rather than clear in what you believe in and stand for,’ said John Gerzema, CEO of The Harris Poll.”

 

• “There are some notable exceptions. Netflix faced backlash from its employees for failing to address anti-LGTBQ comments made by Dave Chapelle late last year, but its score wasn’t impacted.”

 

In fact, Netflix ranked #22 in this year’s survey, moving up 16 spots from last year.

 

As a final takeaway on how politics might, or might not, play into corporate reputation, the Axios analysis noted: “Some brands with strong political positions continue to rank high among consumers because the quality of their products and services outweigh their political values.” That point lines up with consumers being far more concerned about product quality and price from a company, rather than the real or perceived politics of a firm.

 

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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.

 

The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?

 

Two great ways to pre-order Cathedral: An Alliance of Saint Michael Novel, which is Ray’s sixteenth work of fiction, and the first in the Alliance of Saint Michael series. Signed paperbacks here and the Kindle edition here. 

 

Two great ways to order Ray Keating’s new nonfiction book – The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks here, and paperbacks, hardcovers and Kindle editions here.  

 

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