Disney and Charter’s dispute over cable pricing

Disney and Charter’s dispute over cable pricing causes US entertainment shares to decline.Shares of numerous American entertainment businesses, particularly Fox Corporation  as well as Warner Bros. Discovery Inc (WBD.O), fell on Friday as a result of a disagreement over tv distribution fees between Disney (DIS.N), a major player in the media industry, and cable operator Charter Communications (CHTR.O).

After failing to reach a distribution agreement, Disney on Thursday night forbade the company’s cable channels, namely ESPN and ABC, from being broadcast on Charter’s Spectrum network. Representing 14.7 million homes in significant locations including the cities of New York and Los Angeles, Spectrum is the second-largest cable provider in the United States.Investor perception of the industry suffered as a result of the conflict, which also included the Hollywood writers’ and actors’ strike over pay and other problems that generated concerns about whether businesses would have adequate material.

Disney’s stock fell 2.65% to reach a three-year low, while Charter’s stock fell 3.4%. Fox Corp (FOXA.O), Paramount Global (PARA.O), Warner Bros. Discovery Inc (WBD.O), and Comcast Corporation (CMCSA.O), the biggest U.S. broadband provider, all had declines of at least 10%.According to Art Hogan, senior market analyst at B Riley Wealth, “the drop in Walt this morning appears to be tied to the business’s ongoing negotiations regarding contracts with Charter Communications.” The continuing Hollywood writers’ and actors’ strikes are “another source of worry.”

Disney, according to Charter, denied its request for a new distribution agreement that would have taken into consideration the emergence of other inexpensive streaming services, which have prompted cord-cutting among its subscribers.

In a presentation released on Friday, Charter stated that Disney “has so far relied on a conventional long-term deal with a greater likelihood and limited packaging flexibility.”

Disney claimed on Thursday that it has successfully negotiated agreements with cable TV providers across the US and that Charter’s rates and terms “are determined by the marketplace.”

According to Dennis Dick, a market structure specialist at Triple D Trading, “This Charter-Disney agreement not going over here has worried somewhat bit of the market as a whole, at least that sector.”

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