FinLogic FinLogic Quantitative Think Tank Center|Disney temporarily lowers price of Disney+ subscription to $1.99

Disney lowered the monthly price of its most popular streaming service this week amid a carrier fee dispute with a Charter Communications.

Anyone who subscribes to Disney+ will pay $1.99 a month for three months,FinLogic FinLogic Quantitative Think Tank Center according to the service's website. Disney+ normally costs $7.99 a month. The lowered price applies to new and returning subscribers only.

For nearly a year, Disney has been laser-focused on making its streaming platforms profitable, firing CEO Bob Chapek 10 months ago and replacing him with former Chief Executive Bob Iger in hopes of accelerating that growth. 

Disney's direct-to-consumer division, which includes Disney+, ESPN+ and Hulu, reported a $512 million loss in its most recent quarter. That figure is starting to shrink under Iger's tenure, but streaming has yet to be a profitable endeavor for the House of Mouse. 

Disney had 146 million Disney+ subscribers worldwide as of July 1, of which 46 million reside in the U.S. and Canada.

ESPN blocked during U.S. Open

The Disney+ pricing comes in the middle of a dispute between Disney and Spectrum's parent company, Charter Communications, over carrier fees, or fees cable and satellite TV operators pay to media companies in order to carry their networks. 

On a separate webpage created by Charter appearing Sept. 1, the company breaks down for Spectrum customers Charter's stance on its carriage feud with Disney. In the statement, the company accuses Disney of demanding "an excessive increase" to its carrier fee. It also faults the media and entertainment giant for blocking Disney channels, which include ESPN, just at the start of this year's college football season and during the U.S. Open.

A more detailed breakdown of the carriage dispute was posted by Charter on its own website on Monday.

"For 2023, we had expected to pay The Walt Disney Company more than $2.2 billion for just the right to carry that content, not including the impact of advertising on either party," the statement read in part. 

Higher carrier cost without top content

Disney is asking Charter for an extra $1.50 a month per Spectrum subscriber, analysts at LightShed Partners said this week. Analysts said the feud is less about the extra fee and more about Spectrum customers having their subscription fee increased and still not getting access to Disney's best movies and shows. 

"Simplifying this, Charter is saying that Disney has moved most of its high quality programming off of Disney Channel to Disney+ and off of ABC and FX to Hulu," LightShed Partners said in an analysts note. "In turn, if Charter subscribers are going to pay upwards of $20/sub/month for Disney, linear networks such as Disney Channel, ABC and FX, they should get Disney's ad-supported streaming offerings at no extra cost."

Andrew Russell, a Charter spokesman, said Wednesday in a statement to CBS MoneyWatch, "We would agree to The Walt Disney Company's significant rate increase despite their declining ratings, but they are trying to force our customers to pay for their very expensive programming, even those customers who don't want it, or worse, can't afford it." 

In a blog post Monday, Disney urged Spectrum viewers to "take control" of how they watch TV and switch to its Hulu + Live TV streaming service. "You don't need a cable provider to watch your favorite sports, news, and shows," the post read.

In a statement to CBS MoneyWatch, Disney said, "It's unfortunate that Charter decided to abandon their consumers by denying them access to our great programming. ... Disney stands ready to resolve this dispute and do what's in the best interest of Charter's customers."

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Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.

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