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The ongoing standoff between Charter Communications (CHTR), one of the U.S.’s largest cable entities, and Walt Disney (DIS) is more than just a typical “carriage dispute” — it’s likely a roadmap for television in the age of streaming.

At the heart of this conflict is a fundamental shift in content consumption. Disney channels, including ESPN and ABC, vanished from Charter’s Spectrum service, impacting nearly 15 million subscribers. While such disputes aren’t new, the underlying dynamics here are. Media giants like Disney are investing heavily in streaming platforms, while cable providers like Charter feel they’re subsidizing a model that’s eating into their core business.

Charter currently pays Disney $2.2 billion annually to distribute channels like ABC and ESPN. However, with ever-rising costs and cord-cutting consumers, Charter and similar companies have been compelled to hike prices. Charter’s solution? A hybrid model that marries traditional cable with streaming. Charter’s CEO, Christopher Winfrey, succinctly summed up the company’s stance: “We’re either moving forward with a new collaborative video model, or we’re moving on.”

Charter’s demands are clear. Despite acknowledging a decline in viewership for Disney’s channels, they’re willing to pay higher fees. In return, they seek more flexibility in bundling, including options to exclude sports channels from certain packages and to offer Disney’s ad-supported streaming services to its broadband users at no extra cost.

Disney, on the other hand, is navigating the decline of cable subscriptions while bolstering its streaming arsenal. They rely on fees from companies like Charter to offset increasing programming expenses. Their goal: retain as many cable subscribers while gearing up to launch direct-to-consumer offerings, like an ESPN app. Disney has resisted Charter’s push to offer its streaming services to Spectrum subscribers for free.

The industry stands at a crossroads. Unless this battle ends in a draw (which it won't), the winning business model will set the stage for future industry-wide negotiations. The stakes could not be higher.

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