Disney, Altice Seal Deal to Prevent ESPN Blackout

Walt Disney Co., a diversified multinational mass media and entertainment company, and Altice U.S.A, New York cable television provider, reached a tentative programming deal that ensures uninterrupted access to ABC, ESPN, and the Disney Channel for nearly 2.6 million subscribers in the New York area, the companies said in a statement.

The high-stakes showdown went down to the wire as Disney and Altice, which operates the Optimum cable service, hammered out an agreement on major terms at 5 p.m. ET deadline. The previous deal expired on Saturday night, but the two companies had agreed to an extension because of the Jewish holiday.

The two companies have been in dispute over how much Altice would pay to continue carrying ESPN, ABC, and other channels on its Optimum cable service. Both parties are under pressure from cord cutting or dropping of pay-TV service, as audiences opt for cheaper streaming services.

“We have reached an agreement in principle and have extended the deadline accordingly to try and finalize the terms,” Bethpage-based Altice and Disney of Burbank, California said in a joint statement.

Both companies did not disclose any details regarding the tentative deal.

The last-minute deal came Sunday as Disney was preparing to take its networks out of Optimum. In fact, Altice and Disney had been brawling for more than a week over contract talks. The cable operator accused the Burbank entertainment giant of demanding huge increases for networks, particularly for ESPN, which has been struggling with losses of subscribers and declines of ratings.

Disney maintained that it has been able to reach deals with virtually every other MVPD, including the new wave of digital upstarts.

The contract at issue includes Altice U.S.A subscribers in the New York area that came with the company’s 2016 acquisition of Cablevision. Altice has a reputation for driving hard bargains with programmers at its video services in Europe and elsewhere.

With a tentative deal in place, millions of sports that subscribe to Altice’s Optimum cable service will still be able to watch “Monday Night Football” and an essential New York Yankees wildcard playoff game on ESPN on Tuesday. ABC’s broadcasts of local news, “Good Morning America,” “Jeopardy,” “Wheel of Fortune”, and “Dancing With the Stars” also will be available.

“We believe both sides have financial and reputation risk should Optimum lose access to the programming,” an analyst wrote in a recent report.

Altice U.S.A ranks as the nation’s fourth-largest cable operator, behind Comcast, Charter, and Cox, with about 4.9 million subscribers across 21 states. The acquisition of Cablevision brought the company into the high-end markets in New York and Connecticut. In June, the U.S. arm of the French media and telecom group headed by Patrick Drahi raised about $1.9 billion in an IPO.

Meanwhile, Disney has been under pressure to increase revenue at ESPN because it is on the hook to pay huge increases in sports rights fees. ESPN pays the NFL $1.9 billion a year for “Monday Night Football.” And its NBA contract, which kicked in last year, costs an estimated $1.4 billion a year, more than double the amount of the previous basketball contract.

According to a consulting firm, ESPN is the most expensive basic cable channel in the industry, costing distributors about $7.50 a month per subscriber home.

Disney is a key source of programming. Its channels attract about 14% of the primetime viewing of Altice’s Optimum customers, according to an analysis.

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