Disney‘s networks, including ABC and ESPN, have gone dark across DirecTV, beginning another major carriage impasse in the challenged pay-TV business.
The dispute between the companies had been intensifying in recent days despite the parties being at the table negotiating ahead of Sunday’s expiration of their current contract. DirecTV has shrunk in recent years, but it remains a leading operator, with about 11 million subscribers across traditional satellite, cable and the internet-delivered DirecTV Stream service.
“Our contract with Disney, the provider of this channel, has expired,” a message to viewers read on the affected networks. “We appreciate your patience while we negotiate to offer you greater choice, flexibility and value.”
Disney provided Deadline with a joint statement from its entertainment co-chairs Dana Walden and Alan Bergman as well as ESPN Chairman Jimmy Pitaro.
“DirecTV 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,” the execs said. “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 its statement, DirecTV charged Disney with opting out of a potential renewal moments before a prime-time college football game between USC and LSU. As the U.S. Open tennis tournament continues on ESPN and ABC, other marquee programming coming soon includes the kickoff of Monday Night Football on September 9 and the presidential debate hosted by ABC on September 12.
“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.”
Thun continued, “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 exactly one year ago had a 10-day blackout on Charter’s Spectrum systems, which caught the attention of the entire industry given the precarious state of the pay-TV bundle. That fight was resolved with an agreement that did not include carriage for several well-established Disney networks including Freeform, but it did ensure the integration of streaming services into Spectrum packages.
Cord-cutting by millions of Americans each year has continued to erode pay-TV revenue, presenting significant challenges to media players trying to nurture linear networks while also investing in streaming. For decades, programmers benefited from the fat profit margins of the dual revenue stream of distribution and advertising revenue. Today, changing consumer habit and advances by Netflix and other streamers have made a serious dent in the media business, with Paramount Global and Warner Bros. Discovery last month taking a combined $15 billion in write downs on their cable network assets.
DirecTV has expressed interest in exploring smaller, more accessibly priced bundles, including one focused on sports. However, Disney last week contended that DirecTV had “never meaningfully engaged” with its proposals for more curated bundles. Execs also noted private equity firm TPG’s 30% stake in DirecTV, which they argued makes the distributor less inclined to make investments in its platform even as it loses subscribers along with its peers.
Dominic Patten contributed to this report.
