Charter: FAQ on Disney “Blackout”; “Not a Classic Carriage Dispute”

Company Update (CHTR US) (Buy)

Highlights

• What has happened? Where do Charter and Disney disagree?

• How important are Charter and Disney to each other?

• How will this directly and indirectly impact Charter?

• What happens next? What final outcome do we expect?

• Are Charter shares still attractive?

What has happened?

On Thursday (August 31) evening, Disney removed access to all its programming from Charter Video subscribers. The “blackout” affects 19 Disney channels, including ESPN, the Disney Channel and National Geographic, as well as ABC on-demand programming and 7 local ABC stations in New York, Los Angeles, Chicago, etc. Disney was acting on the expiry of its previous agreement with Charter, after the two sides failed to reach an agreement despite “months” of talks.

On Friday (September 1) morning, Charter held a conference call to discuss the matter. Their presentation title included the phrase “Moving Forward, Or Moving On”, and management repeatedly stated that this was not a typical carriage dispute as well as reference…