Welcome back to Wednesday Thursday bites people. It’s been hot as hell for September, and we’re pretty sure the consistent swamp-ass can only mean bad things for the planet.

If there was ever going to be a petty ass corporate fight card we’d gamble our savings to watch, we’re pretty sure it’s the Disney/Charter Communications bullshit.

Notes:

Thank you to all of you for reading on Sunday. We got a 75% open rate, which is the highest we’ve ever gotten since hitting triple digit sub #’s.

Huge thank you to a couple of readers (Wealth Management guy and Public Health guy) who didn’t hold back with the feedback. It was the only way we could have done it.

ALRIGHT LET’S GO.

READ THIS BEFORE SCROLLING

Before we start, it’s important for you to understand that cable channels have multiple revenue streams:

• ads

• Owning/licensing content

• Subscription fees within the cable package itself

Every channel on TV has different % of this pie. But premium cable channels don’t have a ton of viewers, so it relies on creating great content to earn its chief revenue stream: subscription fees from cable packages

Take AMC as an example. It didn’t have a ton of viewers, but they were able to earn more on subscriber rates after Mad Men (20¢ to 40¢).

So please mansplain this concept to the idiots who think “advertisers boycotting cable networks” will have any impact whatsoever.

The Charter/Disney Feud in 6 points:

Charter Communicaitons (a cable company) and Disney are fighting over a STREAMING SERVICES piece of the pie

1. Charter Communications and Disney are having a big argument that's affecting Charter's subscribers.
   

2. Disney's channels went off the air for Charter's Spectrum cable customers, who are spread across the U.S., including New York and Los Angeles.
   

3. This means sports fans who use Charter can't watch college football, the U.S. Open, and "Monday Night Football" on ESPN.
   

4. Charter subscribers also lost access to ABC channels, FX, Disney Channel, Freeform, and National Geographic.
   

5. Disney offered to keep negotiating to keep their channels on Charter, but Charter said no, especially because they wanted to offer Disney's streaming services (like Disney+ and ESPN+) for free with their cable package (see above: subscription fees)
   

6. Charter thinks Disney's cable channels aren't as popular now because Disney is putting more of their good stuff on streaming. Disney disagrees.

omfg I made it this far just explain it to me.

So here’s the thing. This is kinda common. Channels go dark all the time, and then when people cancel their service, the cable company usually relents.

YouTube TV and Disney had the same feud years ago.

It lasted 2 days.

That….isn’t happening now. Disney-affiliated channels went dark on Charter Communications last Thursday.

The following is a slide from its last investor call and it says VIDEO PRODUCT IS NO LONGER A KEY DRIVER OF FINANCIAL PERFORMANCE…WHAT?

JUST FINISH YOUR POINT ALREADY

The cable industry is going through a major shift, and it's all about the internet. (Ben Thompson has an excellent analysis on this).

In the past, cable companies made a lot of money from TV, but now, it's not as important. They realized that the cables they laid down to deliver TV could also carry the internet, and that's where the real profit is.

The problem for cable companies was that some of those data packets turned into Netflix streams, which made people watch less TV. To compete, TV networks like Disney started their own streaming services, hurting the traditional TV bundle.

Now, Disney has its streaming service everywhere, but that's actually weakened their bargaining power when it comes to negotiating rates for cable TV. The cable industry is changing, and the future is all about internet access, not just TV. Disney's struggles highlight how the landscape is shifting, and the days of the traditional TV bundle might be numbered.

TL;DR:

The demand for ‘re-bundling’ these streaming platforms is only gonna go up. If Charter Communications stands its ground and wins, all of Disney’s streaming becomes available to customers for free. Which means Disney has to pass on the cost to existing subscribers; raising prices yet again.

What AI made this week

Have a great week!

Ahmed and Peter