DIRECTV College Football Fans Sidelined by The Walt Disney Company on Opening Weekend to Force Them to Buy Other Disney Channels and Services

Rhea-AI Summary

DIRECTV customers have lost access to Walt Disney Co. (NYSE: DIS) programming, including ABC stations, Hulu, and ESPN, due to a dispute over licensing agreements. Disney demands DIRECTV customers pay for unwatched channels and streaming services, while also requiring DIRECTV to waive antitrust claims and limit legal venues.

Key issues include:

• Disney's demand for customers to pay for unused channels
• Forced bundling of streaming services
• Shifting of quality content to streaming platforms
• Potential double-charging for the same content
• Restrictions on legal accountability

DIRECTV seeks more flexible, consumer-friendly packages and pricing options. The dispute affects millions of customers and coincides with college football's opening weekend.

Positive

• None.

Negative

• Loss of access to Disney programming for DIRECTV customers
• Potential increase in costs for consumers due to forced bundling
• Shift of quality content from pay TV to streaming platforms
• Restriction of legal venues for potential antitrust claims
• Disruption of service during college football season

Insights

Legal Expert

Disney's demand for DIRECTV to waive antitrust claims and limit legal venues raises significant legal and competitive concerns. This move appears to be an attempt to circumvent potential antitrust scrutiny, particularly in light of Judge Garnett's recent ruling against Disney's Venu Sports venture. The insistence on California as the venue for future disputes suggests a strategic legal maneuver to avoid unfavorable jurisdictions.

From an antitrust perspective, Disney's actions could be seen as an attempt to leverage its market power across multiple platforms, potentially stifling competition and limiting consumer choice. The bundling of channels and services, combined with the shift of premium content to streaming platforms, may be viewed as anti-competitive practices by regulators. This situation could prompt increased scrutiny from the Department of Justice and other regulatory bodies, potentially leading to legal challenges against Disney's business practices in the media distribution landscape.

Media Industry Analyst

This dispute highlights the ongoing tension between traditional pay-TV distributors and content providers in the evolving media landscape. Disney's strategy of shifting premium content to its streaming services while maintaining high prices for linear channels reflects the company's prioritization of direct-to-consumer offerings. This approach, however, puts significant pressure on traditional distributors like DIRECTV.

The conflict underscores the changing dynamics of content distribution and consumption. As viewers increasingly migrate to streaming platforms, content providers are adapting their strategies, often at the expense of traditional distribution models. This trend is likely to accelerate, potentially leading to a restructuring of the pay-TV industry. For investors, this situation signals potential long-term challenges for traditional TV distributors and highlights the growing importance of streaming and direct-to-consumer models in the media industry's future.

Consumer Rights Advocate

This dispute raises significant consumer protection concerns. Disney's approach of forcing consumers to pay for unwanted channels and potentially double-paying for content across different platforms is detrimental to consumer choice and affordability. The loss of access to local ABC stations during election season is particularly concerning from a public interest perspective.

DIRECTV's push for more flexible, genre-specific bundles aligns with growing consumer demand for personalized content options. However, the current standoff leaves consumers caught in the middle, facing potential service disruptions and increased costs. This situation highlights the need for regulatory oversight in the media distribution landscape to ensure fair practices and protect consumer interests. As the dispute unfolds, it may prompt calls for policy interventions to address the power imbalances in content distribution negotiations and ensure equitable access to diverse programming.

Makes Any Licensing Agreement Fully Contingent on DIRECTV Waiving Future Challenge of Antitrust Actions; Seeks to Avoid Future Considerations by U.S. District Judge Margaret Garnett or Southern District of New York by Limiting Legal Venues Available to DIRECTV

Consumers at Risk for Paying for Disney Content Twice and Channels They Do Not Want, While ABC-Owned Stations Go Dark in Chicago, Houston, Los Angeles, New York, Philadelphia, Raleigh-Durham, San Francisco Bay Area, and Fresno-Visalia During Election Season

EL SEGUNDO, Calif., Sept. 1, 2024 /PRNewswire/ -- Today, millions of DIRECTV, DIRECTV STREAM, and U-verse customers lost access when Walt Disney Co. (NYSE: DIS) pulled its programming despite attempts by DIRECTV to reach new, multi-billion-dollar licensing agreements for a broad range of programming, including local ABC broadcast stations and affiliates, streaming content like Hulu, and Disney's ESPN suite of channels.

Exactly one year after a major outage with another subscription television service, Disney is again taking an anti-consumer approach, demanding that customers from DIRECTV and other TV distributors be forced to pay for channels they don't watch, and demanding DIRECTV customers pay for access to Disney-owned streaming services they either aren't interested in or may already possess.

Equally as troubling, 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.

"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."

"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 continued. "Disney's only magic is forcing prices to go up while simultaneously making its content disappear."

Disney's latest blackout and legal end-around comes on the heels of the recent court decision from Judge Garnett that blocked Disney from co-launching a sports-only streaming service with Fox Corp and Warner Bros. Discovery because the service would be anti-competitive by "granting a firm license to unbundle sports content" exclusively to its own group, Venu Sports, and not make it available to competing distributors. A proposed sports-only streaming service is exactly what consumers want and DIRECTV has sought from Disney, along with other genre-specific bundles such as kids, entertainment and news.

Instead of offering DIRECTV and other subscription TV customers the same flexibility, Disney is forcing consumers to pay for channels they don't watch. On average, only two-thirds of DIRECTV customers watch a combined three hours or more across the entire suite of 16 Disney channels, which includes local ABC stations. Yet the outgoing agreement obligates nearly all of  our customers to pay for the full slate of Disney channels that at least a third of our customers have shown little interest.

• Sports: Less than 40% of DIRECTV customers watch Disney sports content for at least three hours on average per month — the average length of a single game — combined across seven sports channels, but roughly 85% of all customers today have to pay for those channels.
• Entertainment: Roughly 40% of all DIRECTV customers watch Disney's general entertainment channels for a combined three hours or more on average per month but over 80% of customers must pay for those channels.
• Kids & Family: Only 10% of DIRECTV customers watch a combined three hours or more on average per month, but nearly 80% of customers are obligated to pay for those channels.

Additionally, Disney is making consumers pay multiple times for the same programming by shutting off pay TV customers' access to Disney-owned network apps like Watch ABC, DisneyNow, Freeform, FXNow, and Nat Geo TV, which was previously a benefit of a cable, satellite, or IPTV subscription. Disney is herding consumers away from its network websites and apps to generate far greater subscription revenue for Hulu, Disney+, ESPN+ and future streaming aspirations. Disney then moves marquee content from one service to another, creating incentives to bundle Disney-specific services, raises individual direct-to-consumer prices, inserts advertising, and reduces the number of people or devices able to share access.

At the same time, Disney's top studio producers and most innovative series are shifting exclusively to or preferentially appearing first on their streaming products as they take revenue from pay TV, one of its top revenue sources, to invest in quality programming that runs exclusively on its own platforms. For example, Disney's best programming, like "The Bear" and "Only Murders in the Building," are exclusive to Hulu, and "Shogun" runs first on Hulu instead of pay TV.

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.

DIRECTV has been seeking a new agreement with Disney that will return value to pay TV consumers by providing the same flexibility that Disney affords itself with access to quality content across both linear and direct-to-consumer. DIRECTV plans for lower-priced flexible packages that will include offerings beyond the sports genre that will group channels and direct-to-consumer services by entertainment, kids, and family content and more. This will allow DIRECTV customers to enjoy content from a wide variety of different sources based on the types of content they watch, as opposed to the specific studio that produces or licenses it.

In an open industry letter, Thun outlined a new, more collaborative, innovative way for top distributors like DIRECTV and programmers like Disney to meet rising consumer demand for more choice, control, customization, and value from their current video service options.

As DIRECTV has done for 30 years, the company will continue to find and deliver the best content from programmers and bring it all together for customers in a simple and seamless experience – linear alongside direct-to-consumer – to watch and discover the news, shows, sports they want to watch at the right value.

DIRECTV is assisting customers at TVPromise.com.

Stay up to date on the latest with DIRECTV and Disney at UnbundleDisney.com

About DIRECTV 

As a leader in sports and entertainment for 30 years, DIRECTV provides industry-leading content and an amazing user experience with or without a satellite. By reimagining what is possible, DIRECTV's mission is to aggregate, curate and deliver exceptional, innovative service to its customers. In 2023, DIRECTV elevated the customer experience by delivering Gemini, which can integrate customers' content from their third-party streaming services onto a single one-stop, digital experience. At DIRECTV, the sports season never ends, and customers are treated to broadcasts of several major sports, including the NFL, MLB, NBA, NHL, and multiple domestic and international soccer leagues. DIRECTV provides customers the choice of watching sports, movies, and TV shows on their TVs at home or their favorite mobile devices via the DIRECTV app.

For more information, contact:    

Jon Greer
Jon.greer@directv.com

Thomas Tyrer
ttyrer@directv.com

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SOURCE DIRECTV

FAQ

What channels are affected by the DIRECTV and Disney (DIS) dispute?

The dispute affects ABC broadcast stations and affiliates, Disney's ESPN suite of channels, and streaming content like Hulu for DIRECTV, DIRECTV STREAM, and U-verse customers.

Why did Disney (DIS) pull its programming from DIRECTV on September 1, 2024?

Disney pulled its programming due to a failure to reach new licensing agreements with DIRECTV. Disney is demanding customers pay for unwatched channels and streaming services, and requiring DIRECTV to waive antitrust claims.

How does the DIRECTV and Disney (DIS) dispute affect college football fans?

College football fans with DIRECTV are sidelined on the opening weekend due to the loss of access to Disney's ESPN suite of channels, which broadcast many college football games.

What is DIRECTV proposing to resolve the dispute with Disney (DIS)?

DIRECTV is seeking more flexible, lower-priced packages that group channels and direct-to-consumer services by content type (sports, entertainment, kids) rather than by studio, aiming to provide more choice and value to consumers.