Charter starts to bundle in Disney+

Charter Communications has begun to reap some of the streaming bundling benefits that have come by way of its new carriage agreement with The Walt Disney Company.

Charter said today it is now making Disney+ Basic – the ad-supported tier of the popular streaming service – available for no added cost to pay-TV subscribers who take any of Charter's Spectrum TV Select packages. As a standalone, Disney+ Basic sells for $7.99 per month; the ad-free Disney+ Premium tier fetches $13.99 per month and also allows downloads.

Charter ended Q3 2023 with 14.49 million video subs. The company does not specifically break out how many of them are on its Spectrum TV Select packages, other than to note in a press release that it has "millions" of Spectrum TV Select customers.

Eligible Charter video customers can access Disney+ Basic via the new Xumo Stream Box that Charter is offering to new video subscribers or via other streaming devices that support the Disney+ app. Charter has created a website to explain how customers can activate their Disney+ Basic subscriptions.

Charter's new deal with Disney also paves the way for the operator to bundle ESPN+ with Spectrum TV Select Plus (Charter's new sports tier) for no added cost. Access to ESPN+, a service that regularly sells for $10.99 per month or $109.99 per year, will become available to eligible Charter video customers in the "coming months," Charter said.

In exchange for bundling in certain direct-to-consumer streaming services from Disney, Charter agreed to some undisclosed rate increases. Additionally, Charter is dropping a few Disney networks, including Baby TV, Disney Junior, Disney XD, Freeform, and FXM, under the new agreement.

But the bigger idea behind the deal, at least from Charter's perspective, is to start integrating streaming services into the pay-TV packages and help ensure that video subs aren't being forced to pay twice for some content.

Pay-TV losses accelerate

That trend is also taking shape as cable operators and other traditional pay-TV service providers seek out ways to stem subscriber losses.

The US pay-TV industry lost about 900,000 subscribers in Q3 2023, leaving the sector shrinking at a record pace of 7.3%, according to the latest estimate from MoffettNathanson. Traditional pay-TV providers (satellite, cable and telco) shed 1.97 million subs in the period.

And while the Charter-Disney deal is considered a good step toward ongoing "rebundling" efforts, some industry watchers believe much more needs to be done in order to make a difference in the troubled pay-TV world.

"[A] truly serious effort would require more than just one or two participants defending the model," said MoffettNathanson analyst Craig Moffett. "It would require all participants defending the model."