Charter Stock Drops After Carriage Dispute with Disney
By Movieguide® Contributor
While Charter’s deal with Disney has been heralded as a positive for the industry, the internet and cable provider saw a large slide in their stock as the extent of the dispute’s damage was revealed during the Q3 earnings report.
During the report, Charter revealed that it had lost 320,000 video customers over the previous period, 100,000 of which were directly attributed to the dispute with Disney, along with 15,000 lost internet customers.
The Wrap reported that the company’s shares dropped as much as 9% in pre-market trading on Friday.
Charter CEO Chris Winfrey, however, maintained a positive outlook on the dispute, calling the resulting deal “a significant step forward in the video industry.” During the earnings report, he also reiterated that the “new hybrid distribution model is good for customers.”
Looking ahead, Winfrey reinforced that this new contract is good for company growth, as it “better aligns video content and Direct to Consumer apps, which will be included for free in [its] video packages. We created a glide path to bridge from linear video to new growth.”
Whether this deal will allow Charter to float in a sinking industry is yet to be seen, but investors were unhappy with the report—beyond the impact felt from the dispute with Disney.
Charter also revealed that they had less free cash flow over the period than expected due to spending on internet infrastructure. Furthermore, the number of internet customers added in Q3 was 63,000, considerably lower than the 75,000 added over the same period last year.
While the fall in Charter’s stock is disappointing, it is unlikely to deter other cable providers from seeking similar solutions in the future as nearly everyone in the industry believes breakthroughs, like Charter’s deal with Disney, are necessary for the future of cable TV.
Movieguide® previously reported:
Comcast CEO Brian Roberts says the battle between Disney and Charter “won’t be the last dispute” between distributors.
“When you have many distributors of the same product in the same geography, you’re going to have disputes,” Roberts explained. “It’s not the first dispute and probably won’t be the last dispute.”
Charter Communications, which owns Spectrum, removed Disney-owned channels like ESPN and ABC from their programming lineup due to disputes over pricing.
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