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Disney and Charter Spectrum end cable blackout of channels like ESPN

Disney and Charter Communications announced that the companies struck an agreement to end a closely watched carriage dispute, a move that will restore access to channels like ESPN and ABC to the nation’s second largest cable television provider’s nearly 15 million subscribers./Erica Denhoff/Icon Sportswire/Getty Images/FILE

(CNN) — Disney and Charter Communications announced on Monday that the companies had struck a “transformative agreement” to end a closely watched carriage dispute, a move that will restore access to channels like ESPN and ABC to the nation’s second-largest cable television provider’s nearly 15 million subscribers.

As part of the agreement, Disney will in the coming weeks provide the advertiser-supported offering of Disney+ to select Charter television packages. ESPN+ will be included for more premium subscriptions, as will ESPN’s forthcoming direct-to-consumer service.

The deal could signal more such deals to come, with cable and satellite television providers demanding content companies such as Disney provide their subscribers with access to their alluring streaming services often loaded with premium original shows and films.

The agreement between Disney and Charter came in the nick of time, just hours before the premiere of “Monday Night Football” on ESPN, giving relief to the millions of households who subscribe to Charter and otherwise would not have had access to the NFL game.

The brawl between Disney and Charter, which erupted into view with the U.S. Open taking place and the NFL season getting underway, laying bare the strained relations between distributors and content providers that has simmered beneath the surface for years.

The showdown resulted in major Disney-owned channels being yanked off the air for Charter’s Spectrum subscribers over Labor Day weekend, angering viewers and raising existential questions for the traditional cable business as it quickly became clear it was not the usual carriage battle. A carriage deal is a distribution agreement.

Charter had demanded Disney offer greater bundling flexibility and provide its subscribers access to its direct-to-consumer services, which the Magic Kingdom had resisted. The cable company, which does most of its business offering broadband internet, had threatened to exit the television business altogether if such a deal could not be struck.

Ultimately, Disney agreed to a historic deal, offering Charter’s subscribers access to services such as Disney+. The two companies said in their joint press release that Disney would provide Disney+ to Charter as part of a “wholesale arrangement,” but they did not elaborate on the specific terms.

“Our collective goal has always been to build an innovative model for the future,” Bob Iger, Disney’s chief executive, and Chris Winfrey, Charter’s chief executive, said in a joint statement. “This deal recognizes both the continued value of linear television and the growing popularity of streaming services while addressing the evolving needs of our consumers.”

The deal, however, did result in Charter dropping a number of lesser-watched channels from its lineup. Those channels are Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo.

Disney’s (DIS) stock price jumped after initial reports that a deal had been struck but fell sharpy after details of the agreement were made public. Other content companies also saw their stocks sink after details about the accord were released. Warner Bros. Discovery (WBD) and Paramount (PARA) both saw their share prices fall.

Charter’s (CHTR) stock price, which also jumped on news of a deal, however, maintained its surge after details were released.