1. Charter Can Get It For You Wholesale

The Charter-Disney deal does not signify the death of TV As We Know It.

It merely signals the death of one type of bundle and the birth of a another one.

That’s because Charter makes the bulk of its revenue from selling broadband and mobile services. Pay TV bundles are just a customer loyalty tool, a “nice to have” addition that helps create stickiness.

So as long as the bundle they offer is something consumers want, then Charter could care less what’s in it.

Meaning that if a bundle of streaming services makes customers feel like their TV-viewing needs are being met—and if they keep on paying for high-speed broadband—then that is all Charter really needs to know.

Which is why getting wholesale prices on Disney’s streaming services was such a key part of the deal.

It lets Charter pass on those savings to their consumers as part of a streaming-only bundle that is going to look mighty tempting to a sizable percentage of their broadband subscribers. 

Why It Matters

Both Charter and Disney come out ahead from this deal.

Charter wins because it can now offer a discounted Disney bundle to consumers, helping it attract new broadband customers while keeping existing ones from straying.

Disney wins because they now have an ad supported tier to take care of. And the wholesale bundle means Disney can count on Charter to sell the ad-supported tiers for them while also locking viewers in for a year or two.

That latter point is particularly important for ad-supported tiers, as the high levels of streaming churn have advertisers concerned, and they want assurances that Disney will have the same number of subscribers in November 2024 as it does in April.

Charter to the rescue.

On a macro level, what we’re seeing is a shift away from cable and broadcast bundles to ones made up of subscription streaming services and FASTs. 

With other services likely thrown in too, everything from the somewhat related (Spotify, news site subscriptions) to the somewhat unrelated (discounts from certain stores, free delivery a la Amazon)

Because the reality is that the new bundles will need to add in whatever it takes to increase customer retention rates and attract new ones.

Even if that something is free Pepsi refills at McDonald’s.

One final note: all the streaming subscriptions in the world are not going to make up for Disney’s loss of the billions it makes in carriage and retrans fees. 

That doesn’t mean they won’t make any money any more or even that they won’t make a lot of money.

It just means they won’t make the outrageous sums of money they did during the 90s, 00s and 10s.

What You Need To Do About It

If you are the mainstream media, I get that overwrought cataclysmic headlines about the TV industry imploding gets clicks, but really. 

The reality is that they’re just replacing one bundle with another. Rearranging the deck chairs, if you will, but it’s more like a great big Royal Caribbean cruise ship than the Titanic.

How’s that for a metaphor.

If you’re Charter, make sure that your customers understand just how good a deal they’re getting on those Disney streaming services. Money you can make up by upselling them on broadband speeds.

If you’re Disney, help Charter out by sweetening their Disney deals and giving them ways to reinforce that Charter customers get treated right all across Disney, even the theme parks, hint, hint.

If you’re a Charter customer, this should work out well for you. Especially if you or your kids are big Disney fans.

2. MVPDs Are The Future Of Local

You may have noticed that we have a report out this week about local television’s move to streaming.

It’s got all manner of great research in it from Publishers Clearing House and a survey of 60K+ viewers. 

You’ll hear a lot about that over the next few weeks, but today we’re going to talk about one of the more interesting predictions in the report, something we heard from a number of people, which is that the MVPDs are going to be the likely home of local news, as well as local programming in general.

The genesis of this idea is the local 24-hour news channels that many MVPDs currently run—channels like NY1 and similar. 

These services have been around for decades now and have proven to be quite popular. What’s more, they have primed the MVPD’s audiences for local 24-hour news services and allowed the MVPDs to understand what is necessary to run them.

So take that, make hyperlocal editions of it, then throw in your own version of syndicated local programming—talk shows, game shows, judge shows—and you have the makings of a couple of FAST channels aimed at local audiences.

Why It Matters

As noted in the first story, the Charters of the world are going to need to start selling streaming bundles. And while they will no doubt include access to as many FAST services as possible with those bundles, it is also very much in their interest to take a page from LG, Samsung and VIZIO and set up a FAST service of their very own to serve as the home screen for their streaming app  

The one that will live on the white label dongle they provide to all those people who can’t figure out how to download an app on their own. And on the TV sets of all the people who can.

The MVPDs will be well-served by giving their subscribers a healthy dose of local news and local content, reinforcing the idea that they are a part of the community and not some big, national, 5G fixed-wireless-to-the-home-spewing behemoth.

It’s a way to create stickiness with existing customers and draw in new ones—your favorite local news and weather people, your favorite local talk show, all waiting for you on MVPD streaming.

It is very similar to what MVPDs (then still called “cable companies”) did back in the 70s and 80s, when they’d get exclusive rights to certain networks—local broadcasters and RSNs in particular—and use that as a way to draw in customers. 

Same trick, different decade.

The one issue, as with Disney, is that the retrans dollars won’t be there, but again, that does not mean that the setup will be unprofitable. Merely less wildly profitable.

And everyone wins, even consumers.

What You Need To Do About It.

If you are an MVPD and you have not started to plan out a streaming strategy, there’s no time like the present. You need to sell more than just broadband—you need to sell a whole online video experience. And if you throw in audio and newspaper subscriptions (local newspaper subscriptions, of course) that would work too.

If you are a local TV fan, despair not. Iger may talk about selling off the ABC stations, but Nexstar is already lining up to buy them and they’ll all wind up on the MVPDs anyway, where you can watch them for free.

Or for whatever a monthly broadband subscription costs you anyway.

Still a win.