As the college football season has commenced and the NFL around the corner, The Walt Disney Company and DirecTV were unable to come to terms on a new carriage agreement. The expiration of the agreement prompted Disney to pull its networks from the satellite television service, leaving more than 11 million subscribers in the dark ahead of an eventual upset of the LSU Tigers by the USC Trojans.
The third-largest pay television provider in the country affected the distribution of networks such as ESPN and ABC, along with non-sports channels such as FX and National Geographic. This dispute is approximately one year to the day of when Disney channels went dark on Charter Communications platforms, a stalemate that was resolved hours before kickoff of Monday Night Football approximately a week-and-a-half later.
Disney emphasized that DirecTV had sought to attain “unreasonable” discounts for its portfolio of networks. Conversely, DirecTV alleged that Disney demanded that the company would need to waive all future legal claims pertaining to anticompetitive behavior. Disney is currently appealing a lawsuit of Venu Sports brought forth by Fubo, a joint streaming venture it was preparing to launch in collaboration with the FOX Corporation and Warner Bros. Discovery.
The companies are unable to launch the streaming service due to a preliminary injunction issued by a federal judge, which stated that it was likely that Fubo could prove that the platform would violate antitrust laws during a trial. Moreover, the preliminary injunction stated that Fubo and consumers would “face irreparable harm” if the project reached the marketplace, thus resulting in its current interruption.
“The Walt Disney Co. is once again refusing any accountability to consumers, distribution partners, and now the American judicial system,” Rob Thun, chief content officer at DirecTV, said in a statement. “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.
“Consumer frustration is at an all-time high as Disney shifts its best producers, most innovative shows, top teams, conferences, and entire leagues to their direct-to-consumer services while making customers pay more than once for the same programming on multiple Disney platforms. Disney’s only magic is forcing prices to go up while simultaneously making its content disappear.”
The halt of distributing Disney networks on the platform is the current outcome of the expiration of the carriage agreement, which was originally signed in 2019. DirecTV explained that it is planning for lower-priced and flexible packages that allows consumers to group channels with offerings that go beyond the sports genre. As a result, consumers would presumably be afforded more choices to subscribe to the content they want to watch.
The company shared that an average of two-thirds of DirecTV customers watch a combined three hours or more across the suite of 16 Disney channels, including local ABC stations. Moreover, less than 40% of DirecTV customers are said to watch Disney sports content for at least three hours on average per month; however, about 85% of all customers have to pay for those channels.
Recent data from Nielsen Media Research exhibits that ESPN reaches approximately 66.5 million homes, evident of a continued decline on linear television from its peak of about 100 million homes over a decade ago. The Walt Disney Company garnered $23.2 billion in revenue last quarter and also turned a profit in its combined streaming business for the first time with segment operating income of $4.225 billion.
ESPN generated $4.28 billion in revenue, indicative of a 5% year-over-year increase, and also secured several viewership milestones across broadcast properties such as the NBA, WNBA and NHL. The company also reached an 11-year media rights deal with the National Basketball Association for a reported $2.62 billion per year that includes rights to the NBA Finals, one of two Conference Finals for 10 of 11 seasons and several regular-season broadcast windows.
“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,” Dana Walden and Alan Bergman, co-chairmen of Disney Entertainment, and Jimmy Pitaro, chairman of ESPN, said in a statement. “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.”
