Disney (DIS) stock fell as much as 2.6% on Friday after the company pulled its owned and operated channels, including sports network ESPN and ABC, off Charter Spectrum (CHTR) cable systems late Thursday as the pair's contract dispute reached a stalemate.
Charter stock fell as much as 3.4% on the news.
The conflict stems from Charter alleging Disney has insisted on higher rates and limited flexibility, arguing the media giant's proposal would lead to "unsustainable price hikes" for consumers and would force users to pay for channels they might not want or can't afford.
"[Disney] wants to require customers to pay twice to get content apps with the linear video they have already paid for," the telecommunications giant said. "This is not a typical carriage dispute. It is significant for Charter, and we think it is even more significant for programmers and the broader video ecosystem."
In a separate presentation on Friday, Charter said it proposed a model "that creates a better value for consumers and the industry" but that Disney declined the proposal, which led to the media giant pulling its video channels from Charter on Thursday.
Following the blackout, the US Open said it was "very disappointed" the dispute could not be resolved as angry fans unable to view the matches expressed their frustrations.
ESPN typically has the highest carriage fees, or fees pay-TV providers pay to network owners to carry their channels. According to an estimate from SNL Kagan, ESPN charges pay-TV operators $8-$9 per subscriber.
"Disney Entertainment has successful deals in place with pay TV providers of all types and sizes across the country, and the rates and terms we are seeking in this renewal are driven by the marketplace," Disney said in a statement to the Associated Press. "We’re committed to reaching a mutually agreed upon resolution with Charter and we urge them to work with us to minimize the disruption to their customers."
The company did not immediately respond to Yahoo Finance's request for comment.
In addition to ESPN, other Disney Entertainment channels affected included the Disney Channel, Freeform, National Geographic, and local news stations on the ABC network.
Carriage fee issues have mounted in recent years amid the steep declines in linear television viewership as more subscribers cut the cord and opt for streaming services.
According to the latest data from Nielsen released last month, linear TV viewership fell below 50% in July for the first time. Broadcast and cable each hit a new low of 20% and 29.6% of total TV usage, respectively, to combine for a linear television total of 49.6%.
"Linear TV [is] past the point of no return," Macquarie analyst Tim Nollen wrote in a note to clients at the time, adding the revenue line for cable and satellite operators is "probably permanently negative" as pricing fails to drive upside while TV advertising growth stalls.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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