Disney Channels Go Dark on Cable, Costing Company Millions Daily

The global conglomerate seems to be unable to catch a break. The Disney Corporation seems to be the victim of bad news every now and then. No matter what the news is, whether it’s movies that aren’t doing well, streaming losses, theme park visitors dropping off, or anything else, there will be a problem for Disney. We can see that cable television is experiencing a new level of anxiety.

Disney’s television is already a bleak medium, with cord-cutting becoming a growing problem. Cable ratings have been declining, but the situation is worse for broadcast networks. Disney’s sports programming is the one exception to this trend. But even in that area, results have been less than stellar. The parent company has also been experiencing similar stress with its ESPN property. This year, the biggest story has been massive layoffs.

Now, things are getting worse. This week, the news was filled with the usual carriage dispute. It involved Disney’s cable services and Spectrum. Spectrum, unable to reach a satisfactory agreement, removed all Disney-owned channels from its package of channel offerings this month. It would include such staples as The Disney Channel and FX Networks. The most prominent name on this list is ESPN.

It could not have happened at a worse time. The timing could not have been worse. ESPN is also covering the U.S. Open Tennis Championship, which is currently taking place. We are seeing a cable company struggling to remain viable, and a giant entertainment company trying to prevent its declining returns on TV from becoming worse. Both sides are trying to minimize their losses.

Spectrum is taking a risk by launching this service, which could lead to more customers turning to streaming platforms for their sports. This is a necessary move as well, because the high costs of carriage fees and a shrinking client base basically force them to make this decision. Disney is no better off, except that it’s large enough to take a hit. It is unclear how long it can continue to do this.

This blackout of Spectrum affects just over 14 million subscribers. Disney faces a monthly loss of more than $125,000,000 if you include the carriage fees. Add in revenue from the other channels, and the impact is even greater. Disney’s finances are in the red due to the negative impact of losing those viewers on advertising and ratings.

There is a high likelihood that an agreement will be reached, but the timeframe may be longer than previous examples, where resolutions were achieved within a short period of time. Disney encourages customers who are unable to access these channels to use its Hulu streaming services as a possible solution. Disney’s headquarters is likely to be putting together a formula to determine how many customers are opting for this option, or another one. This will help them decide what threshold to use to negotiate with Spectrum. If the compensation amount is reached, the company may simply shrug and walk away.

Disney would reach a breakeven point if these customers make a sideways choice. The real risk, however, is that many customers will simply walk away. This will result in a lose/lose situation for both parties.