OK so apparently Beehiiv doesn’t let you publish 2 posts within a 12 hour period. Our bad.

Aside from this excellent e-mail tagline that serves both as an excellent movie quote AND an Ahmed/Peter inside joke, we’re sorry for forgetting yesterday’s email.

It’s Wednesday Thursday bites. We’re talking about the Disney/Charter Communications deal, specifically the deal points that’ll help you condescend the idiots in your group chat.

Let’s fire up the dial-up and get to it

Explainers: The Charter/Disney Deal

The deal got done before Monday Night Football. It’s expected, the distribution of Cable TV still has a few leverage points. We wrote something about it here.

1. What did Disney get?

   • Higher payouts from Charter for its cable channel offerings
     

2. What did Charter get?

   • The ability to offer the Disney+ ad-supported version and the future ESPN streaming service across select packages
     

3. How does each side benefit?

   • Disney: higher payout rates for its channels and an expanded user-base for its streaming platform, Disney+

   • Charter: The ability to offer streaming platforms on a revenue share basis, signaling an opportunity for cable to use its distribution to profit off of D2C streaming

The condescension starts here: Distribution

A lot of people were expecting the result of this deal to provide the ‘the future of television’ vibes. But what this deal actually shows is the importance of distribution. A point we’ve always stressed when it comes to content.

Take this newsletter for example.

Content: A+ revolutionary shit

Distribution: Shitty. We have an instagram page, but we don’t do the heavy lifting of posting, nor do we employ paid media tactics.

Result? Making great content for you fine folks..and you fine folks only (for now).

Half-assed analysis: Cable’s advantage

For all the statements you hear your idiot friends make when they say ‘cable is going to die at the hands of streaming’ etc. etc…

Here’s the real point: The Disney/Charter deal is an incredibly cost-efficient deal for Disney’s burgeoning (Disney+) content channels.

Cable is a single instantaneous access point that’s BEAMED INTO UR TV. That’s not nothing.

Here’s why:

1. Bulk Subscriber increase: Disney tapping into Charter’s existing subscriber base means they’ve just gotten a crap ton of new subscribers for its ad-supported service. It’s a great 1-2 punch from subscriber revenue AND the ad revenue from content.
   

2. Lower Turnover rate: If you’re a standalone service, your content budget needs to be through the roof in order to make existing subscribers stay. If you’re part of a larger cable package, that burden is shared with other channels to help ease that burden and maintain that cost.

A note about the ‘death of cable’

Cable subscribers declined from ~100mm to ~74mm since 2013. Why? For the advantages of streaming, of course!

Here’s what we’re talking about:

• Lower + Transparent Pricing

• No commitments

• No ads

Over the last 12 months, we’ve seen Netflix, the behemoth of streamers, do the following:

• Increase their pricing

• Account-gate their content

• Introduce/Announce an ad-supported version

It’s starting to feel the same. It’s the logical move for streaming companies to increase ad-supported content, as it’s the next big growth wave for content on these platforms. That’s why you’re also seeing the attempted consolidation of sports onto digital-first platforms.

Commercials have been subsidizing content for years and years, and it always worked until someone decided it didn’t. Now we’re seeing these ‘new’ platforms finally acknowledge that…it works after all.

Just a thought.

What AI made this week

Have a great week!

Ahmed and Peter