Finance

Altice USA Turns Up Heat as Disney Deadline Looms

Airs 30-sec TV spots claiming huge increases to offset overpaying for sports rights 9/26/2017 3:03 PM Eastern

As the official deadline to reach a new deal with The Walt Disney Co. looms, Altice USA is stepping up the rhetoric, creating TV spots claiming the programmer is making up for overpaying for sports rights by seeking huge monthly fee increases from its Optimum customers in the New York metro region.

Disney began warning Optimum customers Friday that they could lose access to its cable networks like ESPN, Disney Channel and Freeform as well as the ABC broadcast network if it did not reach a carriage agreement by the end of the month. Optimum parent Altice USA countered that Disney was asking for substantial rate increases and would not bow down to threats.

The latest spots, airing on its systems in New York, New Jersey and Connecticut, start with an ominous tone: “The Walt Disney Co. has a dark secret,” says a deep-voiced announcer. “It owns ESPN.”

The 30-second spot continues that the network believes the solution for its paying too much for sports rights and to “make up for ESPN’s crumbling business” is to charge Optimum customers “hundreds of millions of dollars more” in carriage fees.

“It’s not right for ESPN’s owner to force us and our customers to have to pay more to make up for their bad business decisions, so we will continue to fight on your behalf to keep the networks on, but only at a price that is fair for our customers,” Optimum said in the spot.

Local politicians are also beginning to voice their concern. In a statement, Congressman Joseph Crowley (D-NY), chairman of the House Democratic Caucus, warned the companies not to use customers as pawns in the dispute.

“When broadcasters and cable companies negotiate new carriage contracts, it is imperative they always keep the best interests of their customers in mind,” Crowley said in the statement. “Customers should not be unfairly targeted or used as leverage in ongoing talks. As major players in broadcast television, Altice and The Walt Disney Company need to ensure that programming is maintained and that blackouts are avoided throughout their negotiations. I hope that both sides are fully committed to reaching a deal so that New York viewers aren’t impacted or victimized during this process."         

Disney has said it is asking for fair value for its networks, adding that its ABC television station is the most watched station in the New York area. Optimum claims that the price ESPN is asking for is about 8 times its viewership in the market.

ESPN has fired back that Optimum customers pay $160 or more for cable service and for broadcast basic, including set-top rental, customers can pay $34, or more than 15 times what Disney is asking for WABC.

While the carriage talks are for all Disney cable and broadcast networks, the focus has been on ESPN, which has weathered sharp subscriber declines as viewers have cut the cord and opted for video packages without sports programming.

BTIG media analyst Rich Greenfield has said he believes the Altice USA negotiations could set the tone for future carriage talks for Disney, and urged the programmer not to dig in its heels. He has claimed in a blog post that Disney is asking for more than $15 per month per subscriber for the networks, and is asking for increases in minimum carriage requirements that could hamper the cable operator’s ability to offer skinny bundle programming packages.

“Does Disney really want consumers all across the country to understand just how much they have been overcharging them for years?” Greenfield wrote, adding that Disney chairman and CEO Bob Iger’s negotiating approach appears “completely disconnected from reality.  The bundle is in deep trouble and rather than admit his/Disney’s mistakes and attempt to fix the price/value of the multichannel video bundle, Iger and Disney are trying to drive the final nail in the bundle’s coffin.”

  

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