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Disney’s feud with Spectrum owner slams entertainment stocks

Shares of several entertainment companies, including Fox Inc. and Warner Bros. Discovery Inc., tumbled on Friday after a dispute between media giant Disney and cable provider Charter Communications Inc. over TV distribution fees.

Disney blocked cable channels such as ESPN and ABC from airing on charter’s Spectrum network on Thursday night after the two companies failed to reach a distribution deal. Spectrum is the second largest cable provider in the United States, serving 14.7 million of his homes in large markets such as New York and Los Angeles.

The controversy has soured investor sentiment for the industry. The industry has also grappled with strikes by Hollywood writers and actors over wages and other issues, raising questions about whether companies will have enough content in the coming months.

Disney shares fell 2.65% to a three-year low, while Charter fell 3.4%. Warner Bros. Discovery is down 10%, Fox is down 6%, Paramount Global is down 8% and Comcast, America’s largest cable provider, is down nearly 3%.


Disney shares fell to a three-year low on Friday.
APs

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Spectrum is the second largest cable provider in the United States, serving 14.7 million homes in large markets such as New York and Los Angeles.
Christopher Sadowski

“Disney’s decline this morning appears to be related to the company’s ongoing contract negotiations with Charter Communications,” said Art Hogan, chief market strategist at B Riley Wealth. “Another cause for concern is the ongoing strike of both actors and writers in Hollywood.”

Charter said Disney has rejected a proposal for a new distribution deal given the rise of competing low-cost streaming services that are encouraging customers to cut cords. The cable provider said it pays Disney $2.2 billion annually to produce programming, excluding advertising.

“Disney has so far insisted on traditional long-term contracts with higher interest rates and limited package flexibility,” Charter said in a presentation released on Friday.


ESPN logo
Disney blocked cable channels such as ESPN and ABC from airing on charter’s Spectrum network after the two companies failed to strike a distribution deal.
SOPA image/LightRocket (via Getty Images)

Disney said on Thursday it had successfully struck deals with pay-TV providers across the country, saying the charter and the rates and terms it asked for would be “market driven.”

“The fact that this charter and Disney’s deal didn’t come through here at least scared the market a little bit in that area,” said Dennis Dick, market structures analyst at Triple D Trading.

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