DIRECTV and Disney clash

On September 1, 2024, millions of DIRECTV, DIRECTV STREAM, and U-verse customers lost access to popular Disney-owned channels, including ESPN and ABC, due to a contract dispute between The Walt Disney Company and DIRECTV. This blackout occurred just as the college football season was set to begin, leaving sports fans scrambling for alternative viewing options. The timing of the dispute has raised questions about the future of content distribution in an increasingly fragmented media landscape.

According to a statement from Dana Walden and Alan Bergman, Co-Chairmen of Disney Entertainment, and Jimmy Pitaro, Chairman of ESPN, DIRECTV chose to deny its subscribers access to Disney content at a critical time in the sports calendar. The dispute affects not only college football fans but also viewers anticipating the final week of the US Open tennis tournament and the opening of the NFL season.

DIRECTV, for its part, argues that Disney is taking an anti-consumer approach by demanding that customers pay for channels they don't watch and forcing them to subscribe to Disney-owned streaming services. Rob Thun, chief content officer at DIRECTV, stated that Disney is refusing accountability to consumers, distribution partners, and the American judicial system.

The conflict between the two media giants highlights the ongoing struggle in the television industry as it adapts to changing viewer habits and the rise of streaming services. DIRECTV claims that, on average, only two-thirds of its customers watch a combined three hours or more across the entire suite of 16 Disney channels, which includes local ABC stations. Yet, under the previous agreement, nearly all customers were required to pay for the full slate of Disney channels.

This dispute comes at a time when the sports streaming landscape is already in flux. Just two weeks earlier, on August 16, 2024, streaming service Fubo won a preliminary injunction against the launch of Venu Sports, a joint venture between Disney, FOX Corp., and Warner Bros. Discovery. The court's decision halted the planned fall 2024 launch of Venu Sports, a service that aimed to offer thousands of live sports events from major professional leagues and top college conferences at a price point of $42.99 per month.

The Fubo lawsuit, filed on February 20, 2024, alleges that these vertically-integrated media companies have engaged in anticompetitive practices that harm both Fubo and consumers. The court's decision to grant the preliminary injunction suggests that these concerns warrant further examination.

As the dispute between DIRECTV and Disney continues, both companies are attempting to sway public opinion. Disney has launched a website, KeepMyESPN.com, to provide information and alternate ways for fans to access ESPN content. DIRECTV, meanwhile, is directing customers to TVPromise.com and UnbundleDisney.com for updates and assistance.

The impact of this blackout extends beyond sports fans. ABC-owned stations have gone dark in major markets including Chicago, Houston, Los Angeles, New York, Philadelphia, Raleigh-Durham, San Francisco Bay Area, and Fresno-Visalia. This loss of local ABC stations could potentially affect viewers' access to election coverage as the 2024 political season heats up.

DIRECTV argues that Disney is shifting its best producers, most innovative shows, and top sports content to their direct-to-consumer services while simultaneously raising prices for traditional pay-TV customers. The satellite provider claims that this strategy forces consumers to pay multiple times for the same content across different Disney platforms.

To illustrate this point, DIRECTV provided statistics on viewership patterns among its customer base:

• Less than 40% of DIRECTV customers watch Disney sports content for at least three hours on average per month across seven sports channels, yet roughly 85% of all customers have been paying for those channels.
• Approximately 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 have been obligated to pay for those channels.
• Only 10% of DIRECTV customers watch Disney's kids and family channels for a combined three hours or more on average per month, yet nearly 80% of customers have been required to pay for those channels.

DIRECTV is seeking a new agreement with Disney that would provide more flexibility and value to pay-TV consumers. The company envisions lower-priced flexible packages that would group channels and direct-to-consumer services by content type, such as entertainment, kids, and family content, rather than by the studio that produces or licenses it.

This dispute highlights the broader challenges facing the television industry as it grapples with the shift towards streaming and à la carte content consumption. Traditional cable and satellite providers are struggling to maintain their subscriber bases while content producers like Disney are increasingly focused on building their own direct-to-consumer platforms.

The situation is further complicated by antitrust concerns. The Fubo lawsuit and resulting injunction against Venu Sports have drawn attention from lawmakers and public interest groups. Senators Elizabeth Warren (D-MA) and Bernie Sanders (D-VT), along with Representative Joaquin Castro (D-TX), sent a letter on August 7, 2024, to the Department of Justice and Federal Communications Commission expressing their concerns about the joint venture. Additionally, Representative Jerry Nadler (D-NY), Ranking Member of the House Judiciary Committee, had previously sent letters to the CEOs of the joint venture partners citing concerns about potential anti-competitive behavior.

As the dispute continues, both DIRECTV and Disney face potential backlash from consumers. Sports fans, in particular, may find themselves scrambling to find alternative ways to watch their favorite teams and events. While ABC is available for free over-the-air in many markets, access to ESPN and other cable channels requires a pay-TV subscription or a separate streaming service.

The timing of this blackout is particularly problematic for college football fans. The first weekend of September traditionally marks the start of the college football season, with many high-profile games scheduled on ESPN and ABC. The loss of these channels could leave many fans unable to watch their favorite teams compete.

Key facts

• On September 1, 2024, Disney pulled its programming from DIRECTV platforms due to a contract dispute.
• The blackout affects millions of DIRECTV, DIRECTV STREAM, and U-verse customers.
• Major channels impacted include ESPN and ABC, just as the college football season begins.
• DIRECTV argues that Disney is forcing customers to pay for channels they don't watch and pushing them towards Disney-owned streaming services.
• Disney claims DIRECTV is undervaluing its portfolio of channels and programs.
• On August 16, 2024, Fubo won a preliminary injunction against the launch of Venu Sports, a joint venture between Disney, FOX, and Warner Bros. Discovery.
• The Fubo lawsuit, filed on February 20, 2024, alleges anticompetitive practices by major media companies.
• Lawmakers have expressed concerns about media consolidation and potential antitrust issues.
• The dispute highlights ongoing challenges in the television industry, including channel bundling, the high cost of sports rights, and the shift towards streaming platforms.