Bob Iger’s path to rescuing Disney just ran into a roadblock. Disney’s cable channels, including ESPN, went dark on Thursday on the No. 2 cable operator, Charter Communications, amid a fight about how much Charter should pay to carry the channels. Make no mistake: This is not one of those boring cable TV industry battles that have been going on intermittently for years. This is shaping up to be a defining moment in the yearslong decline of cable TV. Charter says it will ditch Disney’s channels permanently if it can’t get the deal it wants. And while that might sound like more of the same bluster, there’s reason to believe Charter executives mean what they say. The cable operator, which is partly owned indirectly by wily cable mogul John Malone, appears to be choosing a moment to squeeze Disney when it is most vulnerable.
To understand why, think of the history. In past negotiations like these, cable operators couldn’t afford to lose channels like ESPN because of the likelihood some subscribers would cancel. ESPN used that leverage to charge more money than anyone else. But things have changed. Charter CEO Chris Winfrey noted that a quarter of cable and satellite TV subscribers have cut the cord in the past five years alone, largely because cable has become unaffordable for many. Yes, some Charter subscribers will cancel if ESPN disappears from the service now, executives noted. But more might cancel if Charter takes Disney’s offer and has to raise its rates to pay the higher fees, they indicated. In other words, what does Charter really have to lose? Like most cable operators, it likely makes little money from offering video anyway. Internet service is where the money is for cable nowadays.