US entertainment shares slide as Disney, Charter squabble over cable fees
By Chibuike Oguh and Bansari Mayur Kamdar
NEW YORK (Reuters) — Shares of several U.S. entertainment companies including Fox Corp and Warner Brothers Discovery (NASDAQ:WBD) Inc were dragged down on Friday by a dispute between media heavyweight Disney and cable provider Charter Communications (NASDAQ:CHTR) over television distribution fees.
Disney on Thursday night blocked its cable channels, including ESPN and ABC, from being shown on Charter's Spectrum network after the two companies failed to secure a distribution agreement. Spectrum is the second largest U.S. cable provider, serving 14.7 million homes across large markets such as New York and Los Angeles.
The dispute soured investor sentiment on the sector, which has also been grappling with the Hollywood writers and actors strike over wages and other issues which have raised doubts about whether companies will have enough content in coming months.
Shares of Disney dropped 2.65% to a three-year low while Charter lost 3.4%. Warner Brothers Discovery Inc fell 10%, Fox Corp shed 6%, Paramount Global dropped 8%, while Comcast Corp (NASDAQ:CMCSA), the largest U.S. cable provider, was down nearly 3%.
«The drop in Disney this morning looks to be tied to the company's ongoing contract negotiations with Charter Communications,» said Art Hogan, chief market strategist at B Riley Wealth. «Another source of concern sits with the ongoing strikes with both actors and writers in Hollywood.»
Charter said Disney rejected its proposal for a new distribution deal that takes into account the rise of competing low-cost streaming services, which has fueled cord-cutting among its customers. The cable provider said it pays Disney $2.2 billion in annual programming costs, excluding
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