Charter loses 100K subs due to Disney dispute
Charter Communications (CHTR), which saw shares plunge nearly 10% after reporting earnings on Friday, said it lost about 100,000 subscribers due to its cable dispute with Disney (DIS) earlier this fall.
“The overall impact to customer relationships was less than we expected, facilitated in part by the wide availability of over-the-top alternative,” Charter CFO Jessica Fischer said on the company’s earnings call.
Residential video customers decreased by 320,000 in the third quarter of 2023, a 6% decline compared to a loss of 211,000 customers in the year-ago period, “partly driven by video disconnects related to the temporary loss of Disney programming in early September.”
The two companies had hit a stalemate in contract negotiations over whether Disney should give Charter subscribers free access to its ad-supported streaming services as part of the telecom giant’s cable packages. The blackout impacted a slew of high-profile sporting events including the US Open and arrived on the heels of the NFL’s debut — upping the pressure for both sides to make a deal.
On September 11, the companies announced they had reached an agreement to end the media blackout. As part of the deal, Charter will offer some Disney streaming services — the ad-supported version of Disney+, ESPN+, and ESPN’s yet-to-be-launched direct-to-consumer offering — as part of select cable packages at no additional cost to the consumer.
But the Disney dispute clearly wasn’t the only challenge for the cable giant this quarter.
Charter missed estimates for quarterly broadband additions amid increased competition and also raised its annual expenses forecast. The company now expects full year 2023 capital expenditures, excluding line extensions, to total about $7.2 billion, an increase from the previously expected range of $6.5 billion to $6.8 billion.
Free cash flow also disappointed with the company reporting Q3 free cash flow of $1.1 billion, a decrease from $1.5 billion in the prior-year period, “primarily due to higher capital expenditures, mostly driven by Charter’s network evolution and expansion initiatives.”
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