Charter CEO Has “Sense of Urgency” to Resolve Disney Carriage Dispute

Charter Communications CEO Chris Winfrey reiterated that his company is ready to explore alternative video options if it is unable to cut a new deal with The Walt Disney Co., though he added that his company does want to get a deal done.

“Look, we all have a sense of urgency to resolve it quickly because our customers are stuck in the middle,” Winfrey said at a Goldman Sachs conference Thursday, adding that “these are not just our customers, these are Disney’s customers as well.”

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The executive said that he did not have anything “material” to share about the talks, suggesting that a deal is a ways off.

Winfrey also elaborated on the issues that led to the current carriage impasse, and the possible future solution if Disney and Charter are unable to come to terms.

“Prices from the programmers continue to go up at rates that far exceed CPI. That’s the first [issue],” Winfrey said. “Secondly, with what’s called the minimum penetrations and tying, we’re forced to deliver packages and programming channels to customers that they don’t want or they can’t afford, and we’re not getting the flexibility to make it satisfying for the customer. And the third is that it’s compounded what’s taking place, which is those very rich linear fees that our customers are paying to the programmers, but then being funneled into direct-to-consumer products, not available to them unless they pay twice.”

“We’ve always thought about the video business as being an asset to our broadband connectivity business,” Winfrey added. “And I think it’s on the verge of flipping, where it’s becoming a liability.”

“If we’re moving on, that’s OK,” he continued. “I think we can do that in a way that might actually create more value for consumers and will be good for us. I don’t think it’s good for the rest of the video ecosystem.”

As for the possible future solutions:

“If you had an environment where we no longer carry Disney content — which is becoming more and more of a potential reality — you have to say, well, what other additional sports content would you renew? At that point, there’s very little, so you’d have a smaller base of customers, but you’d have a smaller package with a much better price,” Winfrey said. “And it would be a package of general entertainment content that customers actually wanted, watched and valued, and it would stick and it could actually grow from that point.

“That doesn’t mean that you wouldn’t sell sports, you can sell have a reseller virtual MVPD relationship with any of those that are out there that can be economically beneficial to us,” he added. “And it would be self-selecting for customers who are actually looking and willing to pay that type of price for sports content.”

Winfrey says that Charter has also had conversations with other programmers.

“We’ve already had a bunch of reach-outs, we’ve already had a lot of people who would … like to either do something outside of a renewal or actually accelerate a renewal with this in context, and so I’m pretty confident that we can get this in place,” he said. “In the end, Disney is the linchpin, ESPN is the linchpin, and I don’t mean that in a bad way, I mean it in a very complimentary way. They have the opportunity to lead here and drive the industry. And if it works, it’s going to be because of them. And so I’m rooting for them to, you know, in some sense to make that decision.”

Disney meanwhile released a new statement of its on Thursday.

“As the US Open reaches the men’s and women’s finals, and fans gear up for a weekend of college football and the opening of the NFL season, it’s unfortunate that Charter decided to abandon their consumers by denying them access to our great programming,” the statement said. “While they have stated their ‘indifference’ to the needs of millions of paying customers, we will not lose sight of what is most important — investing in the highest-quality stories, news and sports for our audience. The question for Charter is clear: Do you care about your subscribers and what they’re telling you they want — or not? Disney stands ready to resolve this dispute and do what’s in the best interest of Charter’s customers.”

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