Disney and DirecTV are reporting they were unable to reach a new distribution deal. As a result of the dispute, Disney-owned stations, ESPN and other channels went dark on DirecTV, DirecTV Stream and U-verse at 7 p.m. ET, Sept. 1.
The services went dark just the featured USC vs. LSU primetime game on Sept. 1 and the presidential debate produced by ABC News approaches. It would leave subscribers without access to key college football contests in the upcoming weeks.
As is often the case in these disputes, both sides are blaming each other for failing to offer sensible terms that would allow both parties to grow their businesses. It leaves nearly 11 million households around the country without access to ESPN, Disney-owned ABC affiliates and other services.
Key sticking points seem to be the cost of programming, the inclusion of Disney streaming services in the agreement and the ability to drop channels and craft more flexible low-cost packages. These issues have become particularly thorny as pay TV operators continue to hemorrhage subscribers and consumers spend more time with streaming services. In Nielsen’s July snapshot of TV view, streaming captured a record 41.4% share of TV viewing outside mobile.
Dana Walden and Alan Bergman, co-chairmen, Disney Entertainment, and Jimmy Pitaro, chairman, ESPN issued this statement regarding the impasse: “DirecTV chose to deny millions of subscribers access to our content just as we head into the final week of the US Open and gear up for college football and the opening of the NFL season. While we’re open to offering DirecTV flexibility and terms which we’ve extended to other distributors, we will not enter into an agreement that undervalues our portfolio of television channels and programs. We invest significantly to deliver the No. 1 brands in entertainment, news and sports because that’s what our viewers expect and deserve. We urge DirecTV to do what’s in the best interest of their customers and finalize a deal that would immediately restore our programming.”
In response, DirecTV complained that Disney pulled all its content from DirecTV moments before the feature USC vs. LSU primetime game tonight and the presidential debate produced by ABC News approaches.
Disney is demanding that customers pay for channels they don’t watch and pony up for Disney’s streaming services, whether they want them or not, DirecTV said.
“The Walt Disney Co. is once again refusing any accountability to consumers, distribution partners, and now the American judicial system,” said Rob Thun, chief content officer at DirecTV. “Disney is in the business of creating alternate realities, but this is the real world where we believe you earn your way and must answer for your own actions. They want to continue to chase maximum profits and dominant control at the expense of consumers – making it harder for them to select the shows and sports they want at a reasonable price.”
In a press release regarding the dispute, DirecTV also alleged “just hours before today’s expiration, Disney demanded that to reach any licensing agreement or to extend access to its programming, DirecTV must agree to waive all claims that Disney’s behavior is anti-competitive. Moreover, any future lawsuits resulting from DirecTV/Disney licensing agreements would be adjudicated in California – and not New York – because – as Disney counsel specifically stated – SDNY Judge Garnett `didn’t understand the issues’ when granting a preliminary injunction against Disney’s Venu Sports. Disney’s last-minute demands to foreclose upon any legal accountability for its growing pattern of anti-competitive actions should be troubling to all pro-consumer advocacy groups, regulators, and Department of Justice attorneys alike. And even more frustrating and incredulous is that, earlier today, Disney demanded that to reach a deal, we must waive all future legal claims that its behavior is anti-competitive.”
The American Television Alliance (ATVA), an advocacy for pay-TV providers, lambasted Disney for its move.
“This is the third major blackout by Disney in recent years as they seek to raise rates and force distributors to carry an unwieldy ‘one-size fits all’ bundle of more than a dozen channels to the vast majority of their subscribers," said Michelle Bowling, ATVA spokesperson. "These ‘fat bundles’ force consumers to pay for programming they don’t watch and the resulting high prices cause many consumers to ‘cut the cord’ from linear pay-TV, hurting programmers and distributors. Ironically, Disney itself is trying to partner with two of its competitors to launch a skinny sports bundle, which was blocked by a federal judge because they don’t allow distributors to do the same.”
Bowling went on to accuse Disney of hypocrisy: “Disney claims that local broadcast is an essential service, but they have repeatedly blacked out local stations in the name of higher licensing fees and penetration rates,” she added. “This also comes at a time when many rely on broadcast news related to hurricane season, amidst record-high heat waves across the country and as we approach a highly contested presidential election.”
9/3/2024: This article was updated to add ATVA's response.
