Although Charter Communications Inc.'s recent carriage deals enabled it to offer major programmers’ direct-to-consumer services, it will not begin marketing these offerings until the middle of 2025 as it works out technological and platform integration kinks.
Speaking at the UBS Global Media and Communications Conference, Charter President and CEO Christopher Winfrey said he is "impatient" to get the apps to market. That being said, Winfrey acknowledged getting these things right takes time. "We just got done with the first one of these that set the stage, which was Walt Disney Co. just a little over a year ago."
After a 12-day blackout, Charter and Disney struck a deal in September 2023 under which Disney+'s ad-supported service would be provided to Charter Spectrum TV Select customers at a wholesale rate, while ESPN+ will be provided to Spectrum TV Select Plus subscribers. ESPN (US)'s upcoming full DTC offering will be made available to Spectrum TV Select subscribers when it launches next year. Disney scored price increases for its major linear offerings, while Charter was able to cull more niche channels from its lineup.
Since that first watershed deal, Charter has struck similar linear/streaming hybrid deals for Warner Bros. Discovery Inc.'s Max and Discovery+, Paramount Global's Paramount+ and BET+, AMC Networks Inc.'s AMC+, TelevisaUnivision Inc.'s ViX, and more recently NBCUniversal Media LLC's Peacock.
Announced in early October, NBCU's distribution renewal covers the programmer's portfolio of broadcast and cable networks and allows Peacock to be offered to Spectrum TV Select's video customers at no extra cost. Additionally, Charter's video customers can upgrade to Peacock's ad-free tier, Peacock Premium+, and make both Peacock products available to broadband-only customers in 2025.
Checking it twice
Winfrey said the first order of business is getting all of the apps ready, and Charter is "getting closer" as it is currently in the process of launching Max.
The second step involves making sure the services' ad-free versions are available to customers who might want to upgrade. Programmer authentication and credentialing is a complicated process where Charter is still making adjustments. "We’re working with the programmers to do that,” he said.
The third step involves ensuring that Charter can launch the DTC entries to its broadband customers. He called the accessibility of these products to Charter’s non-video customers "a really exciting space.”
Once complete, Charter will create a video store of sorts in which both video and broadband customers can manage all of their services. “In a single place that is easy to find, easy to use,” subscribers can opt for DTC services, decide on ad-free upgrades or tack-on skinny packages.
Winfrey said the store will open in the first half of the coming year, and that is when the parties will really "lean in" on marketing.
In working on the DTC process over the past year, Winfrey said the programming community "understands that we are fighting for video in a way that almost nobody else is and that we have an interest in a product that needs to be profitable for everybody." For Charter itself, the DTC services drive broadband acquisition and retention.
"We're trying to create value for customers, which ultimately is better for them in the long term," he said. " I think there's an 'aha' moment here in terms of distributors and programmers really finding a way to work together to evolve the product in a way that makes sense for customers, but it also preserves the economics inside of this ecosystem."
Programmers, according to Winfrey, are also interested in tapping into Charter’s sales and distribution capabilities for broadband. The company has 25,000 in-house sales associates across its channels who have the ability to sell the DTC apps to those customers, either a la carte or as part of a package.
Comcast's DTC positioning
In the wake of Charter's DTC deals, Comcast Corp. Cable President and CEO Dave Watson was asked at the UBS event whether his company will follow a similar strategy. Comcast recently struck a new carriage deal with WBD that includes Max.
“I think for the right segment, what Charter is doing is very smart, and we have the flexibility to do that," said Watson. "Our strategy is a little different in that we segment the marketplace. And for certain packages, we will include apps now and in the future where it makes sense.”
Watson emphasized, though, that would not be the case across every video tier. As an example, he pointed to NOW TV, a $20-a-month offering featuring a limited number of linear and free ad-supported TV channels.
"As we reimagine video for the streaming world ... you're going to need unique value propositions to compete," he said. "From our standpoint, we'd rather do something new and unique in terms of segmentation versus doing one size fits all. But for the high-end segment, it could make a lot of sense. And the important point is, for this particular deal, we have all the flexibility that we need."