Will the Charter-Disney Dispute Lead to New Laws Regulating Cable TV?

Charter Communications, one of the biggest cable companies in the United States, is locked in a battle with Walt Disney in a distribution dispute that may shape the future of television in the streaming era. ESPN, ABC, and other Disney channels disappeared from the cable service of the nation’s second-largest provider on Thursday night in a bitter fight over distribution fees that both sides blame for accelerating the pace consumers are cutting their cable TV subscriptions. The move deprives Charter’s nearly 15 million video subscribers of access to the U.S. Open tennis tournament, college football, and other programming.

Charter and Disney’s relationship goes back decades, but the latest fight is a symptom of a more significant change in how people consume television. The rise of digital streaming services, such as Netflix and Hulu, is forcing traditional cable providers to rethink how they offer their television packages. Many programs that formerly anchored the top-tier cable channel lineups are also available as standalone subscription services, attracting younger viewers who can’t or don’t want to pay for the entire cable bundle.

The dispute over carriage rates is just the latest chapter in a years-long battle between programmers and distributors that has defined how consumers watch television in the modern era. The programmers are trying to build profitable streaming businesses, while the cable and satellite companies argue that they’re subsidizing a business that cannibalizes their own. According to a recent Charter presentation, the conflict is contributing to a vicious cycle of price increases and drops in cable subscriber numbers, which have cost the industry 25 million customers over the last five years.

Disney’s move aimed to ensure that its linear channels — including ABC, ESPN, and FX — are offered alongside its direct-to-consumer streaming services. The company says Charter has refused to enter a new deal on fair terms, so it’s pulling the channels. It wants Charter to recognize its investment in linear channels and the value of Disney’s DTC offerings.

But Disney has been criticized for using its leverage to push for what many observers believe are unreasonable retransmission consent fees. The company has insisted that it only asks for fair rates determined by the market.

It’s unclear when Charter and Disney will re-engage in negotiations. But if they disagree soon, millions of cable TV customers across the country could feel the resulting disruption. In the meantime, Disney is urging customers to sign up for its streaming service and recommending other online options. The company said Friday that the dispute was a “disservice” to consumers who wanted to watch sports and other popular programming, particularly ahead of the NFL season opener on Monday night. The company says it has made multiple offers to reach a fair deal. But Charter, which has about 16 million cable TV subscribers nationwide, appears to be digging in its heels and pushing for a traditional long-term deal with higher rates and less flexibility regarding packaging channels in their offerings.