Time Warner Cable, Disney Strike a ‘Long-Term, Wide-Ranging’ Deal

Mark Lennihan

The Time Warner building.

Less than a day after their contract expired, Time Warner Cable and Disney/ABC/ESPNstruck a new deal, and without subscribers ever losing a minute of programming. ess

The two companies describe the deal as "long term" and wide ranging," which means more content on more platforms. It also means more money for Disney, which for the first time secured payment from Time Warner Cable for its owned and operated local broadcast channels. (Read the full news release here)

This is Disney Media Network's "most expansive content agreement to date" thanks to new cable and digital content. What that means is that ESPN is on board for "TV Everywhere" — a key turning point for Time Warner Cable's authenticated online distribution.

Now Time Warner Cable subscribers will be able to access ESPN3.com, as well as access to a new service — like TV Everywhere — to watch ESPN, ESPN2 and ESPNU online through their broadband connection, as well as on mobile devices, like iPads . This is significant — it means that cable subscribers are getting more than just TV access, which is sure to be the trend for the future.

The deal also includes some new channels — like ESPN Goal Line, a highlight channel like "Red Zone" only for Time Warner Cable and Bright House Networks sports tier subscribers. Time Warner Cable subscribers will also get access to "Disney Junior," a new 24-hour basic cable channel

What's it worth?

Disney secured rate increases for ESPN which could add up to 10 percent compound annual growth, according to Ben Swinburne. All in, including the payment for broadcast retransmission, this adds up to 2 to 3 cents per share in EPS for Disney.

Time Warner Cable is paying an estimated $100 million plus in annual content fees thanks to this deal. But that should be worth it — they pass the costs along to their consumers with annual rate hikes and they've nailed down significant additional digital distribution rights.

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