The Bundle Awakens

Happy Friday, and welcome to a slightly-later-than usual edition of Buffering. Been a busy week in TV land, what with all the Drew Barrymore drama and the news that Donald Trump was returning to network TV via Meet the Press. The biggest story of the week, however, came Monday when Disney and Charter announced they’d kissed and made up, resolving the carriage dispute which had threatened to deprive 15 million cable homes of some of the fall’s biggest events: The new season of Dancing With the Stars, the premiere of The Golden Bachelor and, oh yeah, Monday Night Football. Our special guest to help break down what happened: Disney Entertainment chief Dana Walden. As always, thanks for reading. –Joe Adalian

Reach Joe on Twitter @tvmojoe or email [email protected].


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The epic battle between Disney and cable giant Charter that was supposed to bring chaos to both companies ended peacefully this week, just in time for the start of Monday Night Football on ABC and ESPN. The nightmare scenarios that some wags worried would push the already-crumbling linear ecosystem even further into the abyss didn’t come to pass: Most of Disney’s biggest channels will still be offered to Charter customers, Charter didn’t pull out of the video business, and Disney hasn’t been forced to devalue all of its streaming apps by giving them away to Charter customers. But the final pact still represents a fundamental shift in the relationship between program providers and program distributors — and one which could end up being a net positive for the many millions of consumers who still pay for linear TV.

By now, the details of the agreement have been widely reported, but if you’re not up to speed on what went down, Ryan Faughnder over at the Los Angeles Times’ Wide Shot newsletter wrote up a great summary of the particulars earlier in the week. I’d also suggest checking out Ben Thompson’s dissection of the winners and losers, in no small part because I agree with his take that this really was a win-win-win deal for Disney, Charter, and the folks out there in TV land who keep both companies funded with our ever-increasing subscription dollars. That’s because Charter finally got a big video provider like Disney to ‘fess up and admit that, for the last five years or so, they’ve been double dipping by making people still in the cable ecosystem pay more to access less and less original content on linear TV, even as they stuck out their hand and demanded more dollars to watch the content they used to get on cable via their new streaming services. We saw this play out when Disney decided many (though not all) of the best shows made by FX would only be available on … Hulu. Anyone who wanted the full John Landgraf experience needed to pay twice.

This new agreement doesn’t totally solve this problem. While Charter customers will now get Disney+ and, in some cases, ESPN+ included with their monthly bills, Hulu — and those FX on Hulu shows — aren’t part of the deal (for now). But Charter chipped away at the wall that content companies have built between their linear and digital offerings, and it’s not hard to see a world in a few years where, when you sign up for a $100 cable package, you get access to all the major streamers which also have TV networks. And yet while Disney didn’t immediately embrace this idea, it does have benefits for the company, as Thompson points out. Cable customers historically cancel service much more slowly than streaming viewers, in part because it’s such a pain in the butt to do so. Now, however, about 10 million Charter customers will become Disney+ subscribers by default, and they’re locked in for years. About 90% of them are expected to be new customers as well. And Disney isn’t giving Disney+ access to Charter for free: Charter will “pay” (though subscriber fees) for D+, but just at a much lower rate than what you or I would have to shell out. Despite all the drama, one source I spoke with suggested the overall money flowing to Disney through this deal won’t take a hit and could actually increase. (Disney and Charter don’t comment on such matters, and given the deep spin from both sides, it could be years before we know the real picture via quarterly reports.)

Don’t get me wrong: Disney didn’t get what it wanted, which was more money for the status quo. But Charter didn’t get its stated objective, either, to include all of Disney’s streaming apps in its bundles for no extra charge. Where customers could win is that this deal will make it easier for audiences to get access to cheaper bundles of streaming services through cable providers, while those who don’t want to subsidize sports (via ESPN) will be able to pay less for bundles that don’t include it. I’m sure eventually companies will find a way to make us all pay a lot more, but for now, this looks like some progress toward a more perfect streaming model.

One of the key players in making this deal happen was Dana Walden, who in February was promoted to co-chair (with Alan Bergman) of Disney Entertainment, making her one of Bob Iger’s chief lieutenants. I spoke with her briefly this week about some of the major elements of the agreement and what it means for the future of pay TV. Here’s an edited version of our conversation:

The day you announced the new agreement with Charter, you were quoted saying you didn’t consider this agreement a template for future deals. But other cable and virtual cable providers are obviously going to want to use this as a jumping-off point for renegotiations. And there are some things in here that might actually end up providing a benefit to Disney, like locking in a big number of new Disney+ subscribers for multiple years, albeit at a discounted rate.

Yes, we are supercharging Disney+ Basic — our ad tier — which is great for revenue, subscriber growth and our advertising business. Additionally, having those subs locked in means there will be significantly less churn. I guess I reject the notion of a template because that seems rigid. What we are learning is that with our portfolio of channels and streaming services, we have the ability to be flexible and to come to the table in any negotiation with a variety of options for how we can find value. To say, “The model is now this” won’t hold true when we’re sitting across from a satellite provider or when we’re negotiating with a cable-only operator.

It is in our best interest to be flexible and experiment with various models. In our direct-to-consumer retail strategy, we use a mix of models: ad-supported tiers and premium tiers; you can buy a single Disney+ subscription, or bundle it with Hulu; we have wholesale arrangements. I’m just trying to demonstrate the value of exploring many models. But this is all new territory, and so what works for Charter may not be what works for our negotiation with the next distributor.

It does seem likely other providers will now want what Charter got, i.e., a way of including Disney+ and ESPN in their bundles, though.

Potentially, yes. I do anticipate that this deal will open new conversations. I just can’t commit to you that we’ll make this exact deal. If the value proposition is there, we’re prepared to discuss an exchange in value.

So this deal was negotiated against the backdrop of many industry observers writing off linear TV as a viable business, or questioning its future — including your boss. But this agreement shows that at least in the medium-term, you and Charter both see value in linear. What’s your take on where linear TV goes next?

There will always be an audience that is interested in live programming, local news, and national news, and those forms of programming are connected to broadcast networks and linear channels. And, there is an audience that is interested in a lean-back experience, where shows and films can be eventized, the way Freeform programs for Halloween and Christmas. What happens to the full linear entertainment ecosystem? I think it’s really too soon to tell.

A big chunk of Charter subscribers will now get access to Disney+, and another group will also be given ESPN+. What about those folks who want Hulu? Will it be easy for them to upgrade?

Charter will be distributing all of our streaming services to their broadband subscribers on an a la carte basis. Then, when the combined app launches, for those select subscribers — the expanded basic Charter subscriber — when you are in Disney+ Basic, you’ll have the opportunity to add Hulu.

OK, so if they’re using the Disney+ app, the one-app experience you’re planning will let you them unlock Hulu within the Disney+ app. And they’ll get the bundle discounted rate that you offer to all customers, even those who aren’t with Charter?

Correct. We’ve already announced this, but it’ll be more comparable [to Disney Duo]. We believe there’s a benefit to providing consumers opportunities to bundle our services — in this case Disney+ and Hulu — while also making it easier for them to access that content in a single destination.

When this deal was announced, there was a lot of attention paid to the fact that Freeform wasn’t going to be included in Charter’s slimmed-down packages. It’s the biggest network of yours being cut. Am I wrong to wonder about the future of that channel as a stand-alone service vs. just a brand which sometimes shows up on Hulu?

Freeform still brings great value to many consumers. For the most part, the consumption of Freeform originals is happening disproportionately on Hulu. But its holiday programming blocks — 31 Nights of Halloween, 25 Days of Christmas — deliver strong and consistent audiences on Freeform during those windows. So it’s a very symbiotic relationship in our ecosystem with our streaming services. It just is about how people want to watch.

Does the outcome of this deal suggest that Charter had a valid point when it argued that, because companies such as Disney have shifted so many resources from broadcast and cable to streaming, the basic framework of carriage agreements should change?

I think that audiences have demonstrated that they like consuming great stories in a variety of ways, through different distribution models. There is no one size fits all, and habits continue to evolve.

Hulu is finally getting into the numbers game — but on its own terms. Vulture has learned that the Disney-owned streamer is launching a variation on the most-watched titles lists which have become a staple on Netflix and several other major platforms. Dubbed “Top 15 Today,” Hulu’s twist on the idea will begin appearing as a new content row on all TV and mobile devices starting Thursday afternoon, and will include both television shows and movies from across the platform. But while the new metric will take into account popularity, it will be more than simply a list of the most-watched titles on the service.

According to a Hulu insider familiar with the project, Top 15 Today will be based on an algorithmic formula which takes into consideration several factors, including how many people start playing the title (i.e., watch at least two minutes) and its relative popularity on the platform. Hulu is thinking of its top 15 as less a Nielsen-like ratings chart and more of a compilation of titles trending on any given day. So while the rankings will reflect viewership, they’ll also be swayed by variables such as a show experiencing a sudden surge in popularity or debuting a new episode and quadrupling tune-in. Per the insider, the point of top 15 is not to present a historical record of each day’s most-watched title but rather to offer users another way of discovering new content beyond relying on the Hulu algorithm or its various themed collections. Knowing what shows are generating viewership and buzz could help some subscribers discover new movies and shows to watch.

As for the nuts and bolts behind the data, Hulu will pull its top 15 from all titles on the platform — new or old, original or acquired. In theory that means The Golden Girls and Only Murders in the Building both have a shot at appearing on the list. However, for shows with deep libraries or which drop multiple new episodes in a week, Hulu won’t allow multiple episodes of a show to appear in the top 15; only the top-ranked one will count when determining its position in the list. The daily Top 15 will be updated seven days a week, with rankings changing between 2 and 3 p.m. Eastern time. In recent days, internal test versions of the list have included everything from big tent poles (Only Murders) and classic movies (The Devil Wears Prada) to next-day episodes of ABC series such as General Hospital and 20/20.

Hulu’s decision to begin posting a daily snapshot of usage of the site has been in active development for the better part of a year and was quietly tested with a group of two million users back in February, per our insider. It is now the fifth major streamer — after Netflix, Amazon’s Prime Video, Apple TV+, and Max — to offer such a tool. That could grow to six some point soon, though: Paramount+ has been quietly testing a top 10 with a few subscribers and may roll one out formally at some point, a source tells Vulture. Peacock currently doesn’t have a top titles list, though a source at the streamer says new product features are always being considered, leaving open the possibility it could join the metrics party.

Of course, it’s worth remembering that none of these top shows and movies lists are verified by third parties, and Hulu’s top 15 is very much not being offered as a straight-ahead ranking of consumption. That will disappoint anyone hoping for more transparency in streaming data, but for what it’s worth, Hulu owner Disney has started putting some numbers behind its tune-in boasts. It recently said the first episode of the new Star Wars series Ahsoka generated 14 million global views (number of total minutes streamed divided by total run time) during its first week on Disney+. Company insiders select Disney+ and Hulu will both release more such data in the future, though not yet with any sort of regular cadence.

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