Charter Communications will soon allow customers of its Spectrum TV service the ability to watch Disney Plus and Hulu content with ads as part of their service — but they’ll have to pay a few more dollars for the privilege.
The move comes about a year after Charter inked a new carriage agreement with Disney for its linear broadcast and cable channels, a deal that also includes complementary access to Disney Plus, Hulu and ESPN Plus for Spectrum TV subscribers on certain plans.
Since the rollout of the perk, customers have been limited to the ad-supported tiers of each service, with no way to upgrade. That will change by the third quarter (Q3) of the year, Charter CEO Chris Winfrey said on a conference call last week, when Spectrum TV customers with free Disney Plus are given the opportunity to upgrade to the ad-free tier for an extra $6 per month. The same perk will be offered to streamers who want ad-free Hulu, which will debut during the fourth quarter (Q4) of the year for an extra $2 per month. (ESPN Plus does not have an ad-free option.)
“Our efforts to deploy a new hybrid [direct-to-consumer and] linear model first for the industry remain on track, and we expect it to be fully deployed next year,” Winfrey said on the call. “Together with Xumo, our goal is to deliver utility and value for our customers irrespective of how they want to view content and better and more stable economics for programming partners.”
Charter believed the approach would help ease the rate of churn and keep customers locked in to their Spectrum TV plans by unlocking added value at a time when more premium programming is moving toward streaming services.
“Customers can’t be forced to pay twice and if the DTC standalone pricing is less-expensive at retail, then that’s what we really should help programmers sell instead,” Winfrey said on the call. “Fundamentally, we believe that evolving the video business, even if it isn’t growing, helps customer acquisition and retention, still has positive cash flow, it provides us with option value. And over time, we believe a high-quality video product gives us the opportunity to reintroduce more value into the converged connectivity relationship.”
While the approach is still in the early days, there is some data that suggests the offering of streaming services aren’t enough to attract and retain Spectrum TV customers. Last week, Charter revealed the company lost 393,000 Spectrum TV subscribers during the second quarter (Q2) of the year, or more than double the number of customers who fled Spectrum TV (189,000) during the same time period in 2023.
Charter is not alone in this respect: Other companies — including Comcast, Echostar (Dish Network, Sling TV) and Altice USA (Optimum) — have also reported losing customers over the past several years as more subscribers ditch comparatively-expensive cable and satellite plans for cheaper streaming options.
