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Optimum customers in the New York tri-state area may lose programming from Walt Disney Co. at the end of this week, including ESPN, Disney Channel, and ABC, if the media company can’t reach a carriage agreement with cable operator Altice USA.

Altice serves about 4.9 million residential and business customers across 21 states through its Optimum and Suddenlink brands.

In a blog, Richard Greenfield, a media research analyst with BTIG Research, says he thinks the current negotiations involve carriage rights for Disney’s cable network portfolio and retransmission for ABC’s owned and operated stations.

“We believe negotiations between the two sides have deteriorated and the odds of a carriage interruption are growing quickly,” he writes.  

According to media reports, the contract expires Sept. 30 and Disney has warned customers its channels will go dark Oct. 1 if a new agreement is not reached.

Altice for its part has been appealing to customers, saying Disney is attempting to force the cable operator to pay significantly more for channels with declining ratings.

“We have already offered to carry ESPN, ABC, and Disney Channel at fair market rates, however their owner has rejected our offer unless we agree to pay hundreds of millions more in programming fees, even though they all have declining ratings,” Altice’s Optimum division wrote to customers on a website set up to describe the Disney situation.

Disney put out its own statement regarding the Altice dispute, saying: “Our contract with Altice is due to expire soon, so we have a responsibility to make our viewers aware of the potential loss of our programming. We remain fully committed to reaching a deal and are hopeful we can do so. Our company has never had a disruption of service for our family of networks and there is no reason that should change now.”

BTIG Research analyst Greenfield contends that Disney, and in particular the company’s Chairman and CEO Bob Iger, is not taking the right approach with legacy negotiation tactics based on threatening distributors and gouging customers.

“Disney, under Iger’s leadership, is attempting to fleece consumers for upwards of $15/sub/month for their suite of broadcast and cable networks (including regional college sports networks that virtually no consumers want),” Greenfield writes.

He notes ESPN’s ratings have declined around 30 percent in the past three years, and that it’s now easy to replace cable networks with vMVPDs such as Sling for as little as $20 per month. 

Disney also announced in August that it would be launching a streaming sports service in early 2018, meaning distributors like Altice are provider customers with less content, but ESPN wants higher fees from Altice, according to Greenfield.  

Also, there appears to be decreased customer interest. A BTIG Research survey from January 2016 found 56 percent of cable subscribers would drop ESPN/ESPN2 to save $8 per month on their bill.

“Despite their early aggressive tactics, we believe Disney has little choice but to fold,” Greenfield asserts.

If the channels go dark at the beginning of October and Optimum customers see their bill drop by at least $12 per month, it would not look good for Disney, Greenfield indicates.

“Does Disney really want consumers all across the country to understand just how much they have been overcharging them for years?” Greenfield says. “We suspect a very small fraction of Altice’s subscribers actually want to pay $15/month for Disney’s suite of channels.”

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