Deutsche sees Disney, Charter reaching mutually beneficial agreement

Deutsche Bank analyst Bryan Kraft believes Disney (DIS) and Charter Communications (CHTR) will reach a mutually beneficial agreement for Charter to distribute Disney’s streaming apps through Xumo, the Charter and Comcast owned streaming app platform that Charter plans to commercially launch later this year. The firm expects Disney to concede its demand for increased carriage minimums and potentially its demand for a longer duration agreement. In exchange, it expects Charter to pay Disney’s asking price per subscriber and concede its demand for Disney’s streaming apps to be included for free to Charter customers subscribing to packages that contain Disney’s linear networks. A permanent end to Charter’s distribution of Disney’s channels would be a more negative outcome for Disney than for Charter in that it would accelerate Disney’s linear revenue decline and make future distribution renewals even more challenging and critical, while leaving the vast majority of Charter’s broadband business intact, contends Deutsche.