What, No Drama?

The seemingly simple and drama-free renewal of Paramount Global’s carriage deal with Comcast has raised some doubts that the landmark Charter-Disney deal in September really changed everything. Perhaps Charter’s tough approach was more the exception than the rule. After all, this is the first major deal signed since Charter and Disney slugged it out during a 10-
day disruption – and it just happened. 

No blackouts. No dueling press releases. No “we’re-not-going-to-take-it-anymore” pronouncements. Paramount’s large portfolio of secondary cable networks had prompted many to speculate that the company would face massive channel drops in its next deal in the wake of Charter-Disney. But that didn’t happen. Instead, we witnessed two companies keeping it copacetic as they shrugged their way into an agreement that reportedly just extended the current deal signed in 2022. The terms, of course, are secret. We outsiders don’t know what lies within the deal points. But if either side had radically altered the terms, we probably would have heard about it by now. By all accounts, this was a cookie-cutter carriage renewal. In the post Charter-Disney world, what gives?

It’s easy to look at the Comcast-Paramount renewal and draw premature conclusions. A couple factors are in play here. For one thing, Comcast’s business differs significantly from Charter’s because it owns NBCUniversal and views the world from a different lens at the corporate level. That’s not to say that Comcast Cable doesn’t operate with its own interests in mind. The cable arm remains just as willing to tow a hard line and fight for its customers as does any other distributor. It just means that the company has a different revenue mix and perhaps has a higher tolerance for the status quo when it comes to carriage arrangements. In addition, Paramount probably didn’t want to press its luck on the pricing side, considering that the entire company is on the block as Shari Redstone, who controls Paramount from her perch at National Amusements, has made it clear she wants to sell.

A nasty, public fight tends to turn off potential buyers (one of which might even be Comcast, flush with $8.6 billion-plus from Disney as it continues to sell back its Hulu stake). Buyers want stability. They want some clarity on the financials. And a status-quo carriage deal with the largest cable operator helps make that a reality. Plus, Paramount could very well get sold off for parts, with one entity getting the studio and that juicy intellectual property while most of the cable portfolio ends up in someone else’s hands. Many of Paramount’s cable networks remain at carriage risk, but they still generate billions in revenue despite accelerating cord cutting. They will likely generate cash for years to come, even as the numbers shrink in line with fewer linear TV subscribers who flee to streaming options. No one knows what a Paramount sale will look like, but executives likely had every incentive to get something locked in with Comcast to reduce distractions as its 2024 sale negotiations begin.

Next? The Comcast-Paramount deal doesn’t necessarily suggest that the Charter-Disney deal was a one-off. It’s more likely that it was the result of one traditionally low-drama company finding a compliant partner in a company anxious to keep its books clean as it prepares for a sale. The key test will be the next three or four major carriage deals involving Disney, as well as Warner Bros. Discovery. The Charter-Disney deal, which involves free access to ad-supported Disney+ and ESPN+ (and eventually the new live ESPN app when it launches) for subscribers of Charter’s premium linear TV packages, will remain on everyone’s minds during the next round of carriage negotiations. Don’t expect those upcoming deals to look exactly like Charter-Disney. Everyone has different goals and priorities. But the Charter-Disney deal truly changed the game for what’s possible, especially as distributors look for ways to stop the bleeding on cord cutting that has only gotten worse in recent quarters. Free access to streaming services as one benefit of subscribing to traditional TV packages could become a powerful and sticky deterrent. And while Charter reportedly paid around $5 per sub to access Disney’s streaming services for its subs, its most recent round of fee increases will likely more than make up for any extra money it forked over. As distributors add value to their video packages to reduce churn, they will likely emulate Charter with Disney and others. Each deal will look different. But they’ll wear the same clothes.

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