Drama2014-02-06 19:30 – DirecTV customers have come up against the loss of accessible Disney-owned channels. The blackout, which kicked off moments before a key college football game and as ESPN was in the midst of covering the U.S. Open, is emblematic of protracted carriage negotiations between Disney and DirecTV for a new contract.
The Background
At issue is the renewal of their distribution deal. DirecTV lost Disney’s ESPN and other channels to a blackout After nearly a month-long high-stakes bidding battle, DirecTV gave his negotiation with Walt ran dry. The timing of this blackout hardly could have been more inconvenient: just before the evening’s biggest college football game and at a time with major tennis tournaments happening.
The Key Issues
A Negotiation Standoff: This has been going on for weeks between Disney and DirecTV. Disney says DirecTV won’t pay ‘fair market value’ for its channels and refuses to back Disney+ or Hulu. Leaders at Disney say they are willing to negotiate more flexible terms; however, no agreement will be reached if the deal would only undervalue Disney’s programming.
DirecTV’s Stance: In response, DirecTV said that Disney has been asking for too much money. In response, DirecTV chief content officer Rob Thun accused Disney of putting profit ahead of the consumer. He said Disney is making it increasingly difficult for consumers to get the shows and sports they want at a reasonable price.
The blackout and channels affected by it: The blackout impacts a wide variety of Disney channels. That includes ESPN (important for sports fans), ABC channels that have popular productions like “Jeopardy! and the other channels from ABC, “Good Morning America,” Freeform, FX, and National Geographic. As we sit on the front-end of the NFL season, it’s a terrible time for football coverage.
Disney, DirecTV Statements
Disney has justified the decision by highlighting how many billions of dollars it spends creating premium content across entertainment, news, and sports. “While this agreement reflects that our management team continues to manage content costs aggressively, it also demonstrates the meaningful value you have come to expect from Disney and ESPN,” said co-chairs Dana Walden (ABC Entertainment and Walt Disney Television) and Alan Bergman (The Walt Disney Studios), as well as Jimmy Pitaro (ESPN chairman).
And DirecTV contends that Disney is abusing its muscle. Thun went on to accuse Disney of seeking terms that would allow the company to escape accountability. “[Disney] is effectively asking us all to not just tie a noose… but make our own gallows and hang ourselves,” Thun wrote about his conversations with The Walt Disney Company [sic]. DirecTV also said Disney is using its best content—such as ESPN and the SEC Network—to drive audiences for associated streaming services, alienating traditional pay-TV subscribers.
The Bigger Picture
The fight is emblematic of a larger trend in the pay-TV business, where old-guard providers such as DirecTV are under pressure from surging costs and shrinking audiences for linear TV services. With consumers migrating towards streaming solutions, studios like Disney are making sure to focus on their d2c investments while threatening appliance channels.
A similar blackout between Disney and Charter Communications affected the same two networks temporarily in 2019, but a deal ending that dispute brought three new streaming channels—iincluding Disney+ and ESPN+ again—tto Spectrum subscribers while also losing some traditional cable channels from its lineup. The situation highlights the content providers versus distributor battle that still continues amidst changing media tides.
What lies ahead
How the disagreement might be resolved is less clear. The ongoing conversations will dictate the swiftness with which Disney channels return to DirecTV. Until then, the subscribers are in the lurch, and their favourite shows have been stopped, as well as some of those sporting events.
Viewers are left in limbo to see how this conflict of media titans plays out as the high-stakes continue their battle. And in the meantime, all sports fanatics as well as other viewers alike would have to find alternatives if they do not show their favourite shows and games, or hope for a quick settlement of this complex disagreement.
Both Disney and DirecTV have a lot to lose. At stake for Disney is what happens both in terms of a targeting companion to its homesick-making new streaming services and more broadly a delicate dance as the ESPN owner struggles with cord-cutters; meanwhile, DirecTV simply must make sure it does not keep losing subscribers like, well, everyone else seems. These are high-profile satellite TV powerhouses, but they’ve each been facing challenges—hence how bold AT&T can be at looking long-term, even though things may look kind of dire. The way this gets resolved could well become a blueprint for the negotiations between other content companies and distributors in what is an evolving media business.
