By now, everyone knows the morality tale of the Disney and Charter rights negotiations dust-up: Charter, a largely unlovable cable company, felt understandably screwed that Disney (among other providers) was moving the vast majority of its marquee programming to its own streaming platform. Disney, a historic yet distressed company, was frustrated by the decay of the cable business (a secular behavioral shift facilitated by Charter’s own avarice) and wanted more money for its extremely popular ESPN, and it didn’t want to give away content on Disney+, either. A tense battle emerged and, on the eve of Aaron Rodgers’ 60-second career with the New York Jets, the companies came to an agreement.
The deal, which gave Charter customers reduced-price access to the Disney streaming bundle, wasn’t unprecedented: Charter already struck a similar deal with Paramount, Spectrum customers also get Peacock free for a limited time, etcetera. While Paramount+ and Peacock technically exist as retail options, the parent companies’ overall strategy is more in line with wholesalers.
Disney, however, wanted to morph from a wholesaler into a retailer—to own the relationship with its customers and cut out as many transaction participants as possible. Taking on Charter was a sign of its ambition; its capitulation to Charter’s requests was a sign that the company doesn’t have the leverage to cut out the cable companies, at least not yet. More specifically, Disney can’t yet build a fully scaled direct-to-consumer business without the advantage of the reach and revenue that cable companies provide.