There was more reason for concern this morning when Disney and Charter announced a new agreement after 10 days of carriage disruption on the Spectrum cable systems. As part of the deal, eight Disney networks, including FXX, FXM, Freeform, Disney Junior, Disney XD and Nat Geo Wild, are being dropped — probably the biggest such exclusion of established cable nets in a carriage negotiation — with Disney getting wide distribution for its ad-supported Disney+ Basic service on Spectrum as well as improved terms for the ESPN suite of networks.
The news raises further questions about the viability of the eight networks, which are losing almost 20% of their distribution overnight amid industry-wide shift from linear to streaming. In an internal memo, Disney Entertainment Co-Chairmen Dana Walden and Alan Bergman and ESPN Chairman Jimmy Pitaro sought to assuage fears by stating their commitment to the affected networks and indicating that the loss of distribution won’t trigger layoffs.
“Our commitment to all our brands and the people who work for them is unchanged,” the trio said in the memo, a copy of which was obtained by Deadline. “We will continue to program these channels and deliver the same high-quality shows to our fans.”
Several of the networks in question run original series, including FXX (It’s Always Sunny In Philadelphia, Archer), Freeform (Good Trouble, Grown-ish), Disney Junior, which just announced a slate of originals, including a Mickey Mouse Clubhouse reboot, and Nat Geo Wild. (Disney Junior’s shows are available on Disney+, which Spectrum Select subscribers will have access to via the new carriage deal.)
With a schedule built on animated reruns and a couple of high-profile originals, FXX has been a solid ratings and financial performer. What’s more, it was the shrewd 2013 deal FXX had made for The Simpsons library, which included digital rights, that allowed Disney to put the hugely popular animated series on its digital platforms and use it to launch Disney+.
“Our customer-first strategy has served The Walt Disney Company well for a century, and as we look to our work ahead, we must be open to a blend of business models as our industry evolves,” Walden, Bergman and Pitaro said.
You can read their memo in full below:
After a lengthy negotiation process, we have been able to create a transformative, multi-year distribution deal with Charter Communications that continues to support the existing linear ecosystem while also growing our direct-to-consumer business and positioning us well for our future. And, we are pleased that our viewers will once again have access to the majority of our networks and stations, just in time for the kickoff of Monday Night Football tonight on ABC and ESPN. As part of the agreement, Charter will distribute Disney+ Basic to millions of Spectrum Select subscribers, supercharging our ad tier and further expanding our reach and revenue. This is especially valuable as it reinforces our streaming strategy, one of the company’s key priorities.
In every negotiation, especially in times of transition, tradeoffs are necessary. On that front, while Spectrum will continue to carry ABC/ABC’s Owned Television Stations, Disney Channel, FX and the Nat Geo Channel, in addition to the full suite of ESPN networks, some of our networks will no longer be carried by Charter. Those include Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Mundo and Nat Geo Wild. These channels will continue to be carried by our other distribution partners who represent over 80% of the reach for these networks. Our commitment to all our brands and the people who work for them is unchanged. We will continue to program these channels and deliver the same high-quality shows to our fans. And, of course, our viewers will also be able to enjoy specific titles and content from these networks on our streaming services.
Our customer-first strategy has served The Walt Disney Company well for a century, and as we look to our work ahead, we must be open to a blend of business models as our industry evolves. We encourage everyone to continue to embrace innovation and new ideas because it is precisely that creative thinking that opened an avenue to this agreement with Charter and will continue to fuel our future business.
To all our teams at Disney Entertainment and ESPN, thank you for your dedication.
Dana, Alan & Jimmy