Charter’s dispute with the Walt Disney Company over retransmission consent fees and other matters added fuel to the fire of cord-cutting during the final quarter of 2023.
On Friday, Charter revealed its residential customer base for its Spectrum TV product shed 248,000 accounts, with the company ending the year at nearly 13.5 million accounts, a 7 percent decrease on a year-over basis.
The steep decline in Spectrum TV customers indicates Charter’s dispute with the Walt Disney Company — which started in the third quarter of the year — had a lingering effect in the final months of 2023.
Last September, Charter dropped ABC-owned local broadcast stations and a handful of Disney-owned networks, including ESPN, FX and National Geographic, after the programmer demanded more money for the same set of channels.
In press statements at the time, Charter said it was willing to pay Disney a higher rate for those channels, but it wanted additional perks for its customers, including access to streaming services where Disney was shifting more of its core programming. Charter also said it wanted greater flexibility in how it offered Disney-owned channels, to include relegating more-expensive channels into different packages and the ability to drop lesser-viewed channels entirely.
The issue with Disney came around the start of the National Football League’s (NFL) 2023-2024 season, and threatened to leave millions of Spectrum TV customers without access to ESPN, where Monday Night Football games aired. (Due to dual Hollywood strikes at the time, Disney made a decision to simulcast most Monday Night Football games on ABC, though the strategy wasn’t apparent at the time of the dispute.)
Charter and Disney settled the dispute about a week after it started, with Disney granting Charter the flexibility it sought — channels like Freeform and FXM were dropped from Spectrum TV, while Spectrum TV customers received access to ESPN Plus and Hulu as part of wholesale purchase agreements between the companies.
Before the dispute came to an end, both sides pushed Spectrum TV customers to consider other streaming services, including the sports-inclusive Fubo and Google-backed YouTube TV, as alternatives to cable. Charter’s earnings on Friday indicated around a quarter-million customers felt those streaming services might be better for their video needs, or they opted for a different solution other than Spectrum TV.
“The environment wasn’t consistent through the quarter,” Jessica Fischer, Charter’s Chief Financial Officer, said during a conference call with investors on Friday. “Early on, we had some carryover from the Disney dispute in the August rate event…we had expected November and December to recover to the levels that we had seen going into that event, and they didn’t.”
Things still haven’t recovered, Fischer warned, with video losses continuing in December, “and January net adds are consistent with what we saw in December, so that environment does continue.”
Overall, Charter said its revenue grew by less than a half-percent during Q4 2023, with the company counting $13.7 billion driven primarily by new residential customers buying Spectrum Internet and Spectrum Mobile, the latter being Charter’s white-label wireless phone solution that runs on Verizon’s network. More than 546,000 new Spectrum Mobile lines were activated during Q4, Charter said.
Net income clocked in at $1.1 billion during Q4, with year-end net income reported at $4.6 billion.
