ESPN and other Disney-owned channels have gone dark on DirecTV after the edges failed to return to terms on a brand new carriage agreement, a business impasse that reflects the broader economic pain spreading throughout the pay TV sector.
The blackout, coming on an enormous weekend for faculty football and through ESPN’s coverage of the U.S. Open tennis tournament, affects most of DirecTV’s 11 million-plus subscribers within the U.S. DirecTV stated that Disney made the choice to tug the plug as negotiations were under way. Disney leaders argued they’d no selection as DirecTV has balked paying what it described as market rates for its channels.
“While we’re open to offering DirecTV flexibility and terms which we’ve prolonged to other distributors, we won’t 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 most effective interest of their customers and finalize a deal that will immediately restore our programming,” Disney said in an announcement attributed to Disney Entertainment co-chairs Dana Walden and Alan Bergman and ESPN chairman Jimmy Pitaro.
DirecTV put the onus on Disney for demanding higher prices that the satellite TV provider could have to pass right down to consumers.
“The Walt Disney Co. is once more refusing any accountability to consumers, distribution partners, and now the American judicial system,” said Rob Thun, chief content officer at DirecTV. “Disney is within the business of making alternate realities, but that is the actual world where we imagine you earn your way and must answer for your personal actions. They wish to proceed to chase maximum profits and dominant control on the expense of consumers – making it harder for them to pick the shows and sports they need at an affordable price.”
DirecTV also contends that Disney is using its corporate leverage in a heavy handed method to force DirecTV to waive future claims that “Disney’s behavior is anti-competitive.” That’s a regulatory buzzword designed to pique the interest of D.C. watchdogs on this now highly public business dispute. Disney and its two large partners within the Venu streaming sports bundle enterprise — Warner Bros. Discovery and Fox Corp. — are already within the thick of litigation over the proposed sports service. A judge earlier this month issued a short lived injunction blocking the service from launching amid antitrust claims made by independent sports outfit Fubo in a federal lawsuit filed in February.
In its lengthy press statement on Sunday, DirecTV flatly stated: “Disney demanded that to achieve any licensing agreement or to increase access to its programming, DirecTV must comply with waive all claims that Disney’s behavior is anti-competitive. Furthermore, any future lawsuits resulting from DirecTV/Disney licensing agreements could be adjudicated in California – and never Latest York – because – as Disney counsel specifically stated – SDNY Judge Garnett “didn’t understand the problems” 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 must be troubling to all pro-consumer advocacy groups, regulators, and Department of Justice attorneys alike.”
Disney and DirecTV have been in tense carriage renewal negotiations for months. Disney had hoped to implement a sales agreement with DirecTV to support the Disney+ and Hulu streaming bundle that’s the largest corporate priority at present for the Mouse House. Disney worked in such terms into its hard-fought pact that got here together this time last 12 months with Charter Communications after a 12-day blackout.
DirecTV, like other MVPDs, is facing slowing demand for video services as viewers shift to pure-play streaming and ad-supported free options for content which have proliferated in recent times. As such, DirecTV is taking a tough line on fee increases for channels which might be seeing declining linear viewership. Disney’s deal with launching a stand-alone streaming option for ESPN — one in all the longtime pillars of the cable TV bundle — next 12 months gives DirecTV little incentive to pay more for the service.
Unlike traditional cable operators, the satellite-delivered DirecTV is just not optimal for also providing subscribers with high-speed broadband service. With the Charter deal, Disney pays the cable giant a fee of some kind each time a subscriber signs up through the Charter Spectrum platform, where Disney+ and Hulu are featured as add-on options. DirecTV has far less incentive to assist Disney pitch its streaming bundle to subscribers.
DirecTV has pushed its programming partners for greater flexibility in creating smaller, lower-cost channel bundles. ESPN and other sports channels are amongst the largest drivers of annual programming cost increases for MVPDs equivalent to DirecTV. Disney counters that the fee of sports rights are going up, not down (see: last month’s 11-year, $76 billion NBA TV rights deal) and that it has been open to latest options, apropos of the deal that ended the Charter Communications standoff.
DirecTV’s Thun directly cited Disney’s strategic shift to direct-to-consumer platforms as a think about the negotiations. “Consumer frustration is at an all-time high as Disney shifts its best producers, most progressive shows, top teams, conferences, and whole leagues to their direct-to-consumer services while making customers pay greater than once for a similar programming on multiple Disney platforms,” Thun asserted in an announcement.
DirecTV’s statement also cited the trend that Wall Street media industry analysts call “leakage,” or the rerouting of high-end content to Disney+ and Hulu that after went exclusively to ABC and linear cable channels.
“Disney’s top studio producers and most progressive series are shifting exclusively to or preferentially appearing first on their streaming products as they take revenue from pay TV, one in all its top revenue sources, to take a position in quality programming that runs exclusively by itself platforms. For instance, Disney’s best programming, like “The Bear” and “Only Murders within the Constructing,” are exclusive to Hulu, and “Shogun” runs first on Hulu as an alternative of pay TV,” DirecTV stated. “Meanwhile, Disney fills its ABC broadcast network airtime with cheap-to-produce primetime gameshows, unscripted spinoffs, old former ABC hits, or simulcast content from other Disney-owned channels like ESPN while demanding ever-increasing prices from distributors and ultimately consumers.”
The blackout got here around 4 p.m. PT Sunday, just as ESPN was about to air a highly anticipated 2024 season kickoff college football game between the USC Trojans and Louisiana State University Tigers.
