A customer of Charter Communication’s pay television service is suing the company in federal court after it removed around a dozen broadcast and cable channels owned by the Walt Disney Company last week.
The lawsuit was filed on Wednesday by Jen Gonzalez, a Florida resident and subscriber of Spectrum TV who lost access to ESPN, FX, the Disney Channel and other Disney-owned networks after Charter failed to reach a new agreement over carriage of those channels.
In her complaint, Gonzalez says Charter “rob[bed] their own customers of the joy of football season kickoff and their money to boot” after the company turned down an offer by Disney to continue providing channels to Spectrum TV customers while both sides continued to negotiate over a new agreement.
Last week, Charter said Disney was demanding higher programming-related fees in exchange for the right to carry its channels, a common point of contention between broadcasters who own local and national channels, and the cable and satellite companies who carry them.
Over the last few years, cable and satellite companies have started refusing demands for higher programming fees, noting that those higher fees are passed on to customers in their bills, which has accelerated a trend known as “cord-cutting.”
But last Friday, Charter said it was willing to agree to Disney’s fee request, though it wanted something more than just the same broadcast and cable channels it has provided to Spectrum TV customers for years.
To that end, Charter said it wanted to negotiate a new agreement that included free access to Disney’s ad-supported streaming services for Spectrum TV customers, and the ability to move Disney-owned channels around its programming packages. Charter recently introduced two new programming tiers, including one that does not include some sports channels, as part of a strategy to offer consumers more pay TV options at different prices.
While Charter believes its negotiating tactics are novel, Gonzalez blamed Charter for using customers as bargaining chips in order to strong-arm Disney into a new deal, when Charter could have simply agreed to the extension offered by Disney that would have prevented the programming blackout in the short term.
If that had happened, Spectrum TV customers would have been able to enjoy live sports programming like the U.S. Open and various college football events that took place last week, and wouldn’t be scrambling to find alternative services to watch upcoming Monday Night Football games, which are broadcast exclusively by ESPN.
“To make matters worse, they attempted to divide people and anger them with an anti-Disney campaign,” Gonzalez wrote in her legal complaint.
DOCUMENT: Read the amended complaint filed against Charter
Among other things, Gonzalez complains that Charter has continued to collect normal fees associated with its Spectrum TV programming from customers, while depriving them of ESPN, FX and other channels.
“[Charter] failed to perform its contractual duty by not consistently delivering Disney-owned channels, including ESPN, despite [customers’] continued payment for access to those channels,” the lawsuit says.
It continues: “As a result of Spectrum’s breach of contract, the plaintiff has suffered damages in the form of monetary loss due to overcharges for undelivered services and has experienced inconvenience and frustration.”
The lawsuit is seeking class action status, and justifies itself through various state consumer protection laws, including the Deceptive and Unfair Trade Practices Act and Florida’s Consumer Collection Practices Act.
Charter isn’t commenting on the specific lawsuit, but officials at the company have said over the past week that they continue to seek a fair agreement with Disney that provides access to broadcast channels while working with programmers who increasingly relegate more-premium content for their own streaming services.
Disney operates three such services, including its family-oriented streamer Disney Plus, general entertainment service Hulu and sports-centric ESPN Plus. While ESPN Plus doesn’t typically offer live access to the same programming that appears on ESPN’s cable channels, executives at Disney say it is inevitable that ESPN will be offered over streaming and without a cable bundle in the future.
Those comments have been leveraged by Charter executives over the past several days as the company tries to justify its ongoing dispute with Disney. From their perspective, it makes no sense for Disney to demand higher fees for the same set of channels while the company pursues a strategy that would relegate more premium programming toward its own services, which cut distributors like Spectrum TV out of the equation entirely.
“Our likelihood of being willing to pursue a deal decreases over time as those downgrades to video occur, and our likelihood of a moving-on scenario into a completely different video structure as described goes up significantly,” Chris Winfrey, the CEO of Charter, said on a conference call with investors last Friday.
In the meantime, Charter is pushing customers toward other streaming services like Vidgo, YouTube TV and Fubo while the dispute with Disney drags on. Those services offer access to local ABC stations and affiliates, as well as Disney-owned channels, including ESPN, and are available without a contract.
