More than 11 million DirecTV subscribers looking to access programming from Disney’s linear networks ABC and ESPN will be left in the dark after the two parties failed to come to a new carriage agreement ahead of the current pact’s expiration on Sunday.
The programming blackout, which took place just moments before the USC vs. LSU college football game was set to air in Sunday primetime, comes ahead of a busy month for the House of Mouse, including the start of the college football and NFL seasons on ESPN and the telecasts of the first presidential debate between Kamala Harris and Donald Trump, as well as the 2024 Emmys, on ABC.
DirecTV recently supported Fubo in its legal fight against Venu Sports, Disney’s sports streaming joint venture with Warner Bros. Discovery and Fox, over antitrust concerns surrounding the launch of the offering. A judge has since granted a preliminary injunction temporarily blocking Venu’s launch, with the three media giants appealing the decision and a pretrial conference set for Sept. 12.
“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,” DirecTV said in a statement. “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.”
In addition to Venu, Disney is looking to launch a fully direct-to-consumer version of ESPN — internally codenamed “Flagship” — in 2025.
In a blog post earlier this month, DirecTV chief content officer Robert Thun called on Disney and other programmers to collaborate on more flexible packages with genre-based programming instead of requiring customers to have channels that they don’t want. He slammed programmers for imposing and enforcing strict bundling requirements through “exorbitant minimum penetration rates” – the minimum proportion of a distributor’s subscribers required to access a channel.
At the time, Thun added that price points should be closer to those offered by direct-to-consumer services and the ability to watch and pay for that programming should be available through one aggregated platform, rather than “numerous disjointed entry points.”
“The Walt Disney Co. is once again refusing any accountability to consumers, distribution partners, and now the American judicial system,” Thun said in a statement Sunday. “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,” Thun added. “Disney’s only magic is forcing prices to go up while simultaneously making its content disappear.”
In a statement, Disney Entertainment co-chairs Dana Walden and Alan Bergman and ESPN chairman Jimmy Pitaro fired back at DirecTV, arguing that the pay TV giant “chose to deny millions of subscribers access to our content just as we head into the final week of the U.S. 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,” the executives added. “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.”
The entertainment giant said that it offered various options to DirecTV to give its customers more flexibility. These included a bundle of its linear networks and its direct-to-consumer services similar to its deal with Charter Communications struck last year, merging a selection of its linear channels with a more targeted DTC offer for a subset of DirecTV’s customers and the opportunity to launch a sports-centric package that includes ESPN networks and ABC.
According to Nielsen, more than 90% of DirecTV households watched Disney’s linear programming every month last year — amounting to more than 5 billion hours viewed in a single year. But DirecTV argues that, on average, only two-thirds of its customers watch a combined three hours or more across Disney’s 16 available channels, which includes local ABC stations.
They noted that less than 40% of DirecTV customers watch Disney sports content for at least three hours per month across seven available channels, but that roughly 85% of its customers have to pay for those channels. Meanwhile, roughly 40% of DirecTV customers watch Disney’s entertainment channels for a combined three hours or more on average per month, but over 80% of its customers pay for those channels. Additionally, it said only 10% of DirecTV customers watch kids & family programming for a combined three hours or more on average per month, but nearly 80% of customers are obligated to pay for those channels.
The blackout with DirecTV comes about a year after Disney and Charter Communications entered a similar carriage dispute, which was resolved after 11 days. The two parties ended up reaching a first-of-its-kind agreement that would bundle Disney+ and ESPN+ with Spectrum TV Select packages.
While Spectrum continues to carry ABC-owned local stations, Disney Channel, FX, the Nat Geo Channel and the full suite of ESPN networks, the carriage agreement allowed Charter to drop Baby TV, Disney Junior, Disney XD, Freeform, FXM, FXX, Nat Geo Wild and Nat Geo Mundo from its Spectrum TV video packages.
Though DirecTV has expressed an openness to an agreement with Disney similar to the Charter deal, it has pointed to analyst estimates that less than 10% of Charter customers have activated Disney+ and that less than 4% have used ESPN+.
In addition to local ABC affiliates, Disney-owned networks normally available on DirecTV include ESPN, ESPN2, ESPN Deportes, ESPNU, ESPN News, SEC Network, ACC Network, FX, FX Movie Channel, FXX, Freeform, National Geographic, Nat Geo Wild, Nat Geo Mundo, Disney Channel, Disney Junior, Disney XD and BabyTV.
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