Disney’s Rope-A-Dope On Spectrum

Do you think Bob Iger plans to continue offering Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo as channels in the future? I bet he doesn’t. When Iger recently mentioned that,

“Disney is going to be “expansive” in its thinking about the traditional TV business, leaving the door open to a possible sale of the networks. “They may not be core to Disney,” Iger said, adding the creativity that has come from those networks has been key for Disney.

That statement led some to surmise that Disney was going to get out of the TV business entirely as cord-cutting became the obvious future of TV. But maybe, considering that he was not at all specific he was planning on pruning derivative networks in a give-and-take for future negotiations. Because what Disney actually got out of the negotiation with Charter Spectrum is that they dropped networks that did not have major programming from the slate and agreed to allow Spectrum customers to access the ad-supported version of Disney+. Spectrum of course will be getting a better price on the cost of the plan than the average consumer but what Disney gets out of all of that is 15 million eyes on the advertisements it sells for its new ad-supported streamer. And it came off like it was making a connection.

This was Ningutsu. The ad-supported Disney+ is Disney’s newest cash cow and if the deal ads new viewers along with what ever fee Spectrum is paying it will make the company a lot of money. Yes they do lose out on fees for the 8 missing networks but as I said, aside from Free Form most of the programming was just repeats of things already on networks such as Nat Geo, FX and the Disney Channel. Disney can easily drop anything it wants onto Disney+ if it thinks people will tune in and watch the ads that Disney sells vs having a channel on Spectrum and letting Spectrum sell the ads and control the rates.

Spectrum actually asked Disney for the ability to offer Disney+ as part of its cable package. And now it allows Disney to market its products to possibly new customers in the format that has been pushing lately as it aims to make Disney+ profitable. Now what we don’t know is how many Spectrum customers already pay for Disney+. With over 100 million subs there is likely overlap. But now essentially every time Spectrum advertises its TV packages it will say Includes Disney+. Think of how many of the hundreds of channels on the Spectrum lineup would die to be specifically recognized on the website and commercials of the second-largest cable provider in the US. If customers sign up for Spectrum’s more expensive TV package “Spectrum TV Select+ they get access to ESPN+. Another ad-supported offering that Disney has been pushing through its Hulu, Disney+, and ESPN+ bundle. Again that means however many people with that package might now try ESPN+ for the first time. And even if they do not try it, Disney will get money from Charter Spectrum just for the right to have the chance to. If nobody logs onto the app then Disney makes more money off of it then if those same customers did not sign up for the service at all. Because now Spectrum is paying a fee for every one of the customers who aslo have Spectrum TV Select+.

So what Charter Spectrum negotiated was this. It got to stop paying for additional low-value Disney channels, FX channels, and Nat Geo channels, agreed to pay more for ESPN and paid Disney for two of its streaming services which Disney will be able to sell commercial time on. Nobody was signing up for Spectrum for the chance to watch FXX. Most probably didn’t even know it existed. And even more, the deals allow Disney to try to hook in a whole new group of potential customers should they decide to cut cable themselves at some point. They may have gotten used to ESPN+ or Disney+ and be glad to drop a 157.00 bill and pay $15.99 for Hulu, Disney+ with ads and ESPN+. It would be a savings of $141.00 per month. And in the end Charter Spectrum will still get almost all of the blame if and when the bills go up to pay for the new agreement.

This is what Bob Iger came back for. Next let’s see what he does about Hulu.