Disney (DIS) -) went dark over Labor Day weekend.
Around 15 million Charter (CHTR) -) customers lost access to Disney-owned channels over the weekend -- including ABC and ESPN, right in the midst of the U.S. Open -- due to an ongoing clash between the cable giant and the media conglomerate.
Related: Former NBC Exec Says Disney 'Has a Big Hole to Dig Out Of'
The clash revolves around the two companies failing to come to agreeable terms around a new distribution deal. Under the current terms, Spectrum paid Disney $2.2 billion annually to make Disney's channels part of customers' cable packages. Charter proposed a new model Aug. 31 that Disney declined.
The Mouse House subsequently pulled its programming in a move that could infect other legacy media brands as the contest between streaming and cable intensifies.
"I think Disney has gone from stud of the media space to dud. It did not need this fight right now," Tom Rogers, a former NBC cable president told CNBC, noting the numerous deals -- between Hulu, ESPN and ABC -- the brand currently has on the table. "This is much more existential for Disney than it is for Charter."
Part of the existential threat to Disney, Rogers said, involves the simple fact that, in the past, cable companies "couldn't withstand the pressure" of a conflict with their programmers. But the business has changed; cable companies are more focused now on broadband than video, so they can afford to not really care about their margins on the video side.
More Business of AI:
- To These US Veterans, AI Is a Tool That Could Help Prevent Mass Shootings
- One Tech Startup Found the Key To Safe AI Adoption
- This Tech Startup Is Powering 'the Core Infrastructure' of AI Models
Cable companies "used to be scared to death of these fights," Rogers said. "This could really be a watershed event in terms of the programming side of the industry. If they have lost their leverage, [Disney] probably deserves to be rated downward."
This fight comes as media brands across the sector are attempting to transition to streaming, and losing tons of money in the process. The operating costs of streaming are significant; few companies have enough subscribers to truly offset that expense.
"All media companies are trying to milk their legacy businesses to get as much cash as they can to support the development of their streaming businesses," Rogers said. "There's probably going to have to be some kind of compromise that Charter distributes those streaming services at some kind of discounted price and Disney looks to get Charter's shoulders behind their streaming services, which are very under-distributed compared to Netflix."
Action Alerts PLUS offers expert portfolio guidance to help you make informed investing decisions. Sign up now.
