ESPN, ABC, Disney Channel Go Dark on DirecTV Amid Contract Dispute

ESPN and other Disney-owned channels have gone dark on DirecTV following a failure to agree on a new carriage deal, illustrating wider financial difficulties spreading throughout the pay TV sector.

The blackout, which coincides with a major college football weekend and ESPN’s coverage of the U.S. Open tennis tournament, impacts the majority of DirecTV’s over 11 million U.S. subscribers. DirecTV asserts that Disney opted to cut off the feed amid ongoing negotiations. Disney, on the other hand, argues it had to act as DirecTV refused to pay what it deemed fair market rates for its channels.

“While we’re open to offering DirecTV flexibility and terms similar to those provided to other distributors, we will not agree to a deal that undervalues our portfolio of television channels and programs,” Disney stated. “We invest significantly to deliver top brands in entertainment, news, and sports because that’s what our viewers expect and deserve. We urge DirecTV to finalize a deal that will immediately restore our programming,” said Disney Entertainment co-chairs Dana Walden and Alan Bergman, alongside ESPN chairman Jimmy Pitaro.

DirecTV places the blame on Disney for demanding higher prices that the satellite TV provider would need to pass on to consumers.

“The Walt Disney Co. continues to show no accountability to consumers, distribution partners, and the American judicial system,” said Rob Thun, chief content officer at DirecTV. “Disney engages in creating alternate realities, but this is the real world. We believe in earning our way and being accountable for our actions. They focus on chasing maximum profits and dominant control at the expense of consumers, making it more challenging to choose shows and sports at a reasonable price.”

Disney and DirecTV have been locked in tense carriage renewal negotiations for months. Disney aimed to secure a sales agreement with DirecTV to bolster the Disney+ and Hulu streaming bundle, currently the top corporate priority. Disney included similar terms in its pact with Charter Communications, achieved last year after a 12-day blackout.

DirecTV, facing dwindling demand for traditional video services as more viewers switch to streaming and ad-supported options, is taking a strong stance against fee increases for channels experiencing declining viewership. With Disney planning to launch a standalone streaming option for ESPN next year, a key part of the cable TV bundle, DirecTV sees little reason to pay more.

Unlike traditional cable operators, DirecTV, being a satellite service, is not geared towards offering high-speed broadband. With the Charter deal, Disney pays Charter a fee whenever a subscriber signs up through the Charter Spectrum platform, where Disney+ and Hulu are offered as add-ons. DirecTV has less incentive to help Disney promote its streaming bundle.

DirecTV’s Thun noted Disney’s strategic shift to direct-to-consumer platforms as influencing negotiations. “Consumer frustration is at an all-time high as Disney moves its best producers, innovative shows, top teams, conferences, and entire leagues to direct-to-consumer services while making customers pay multiple times for the same content across various Disney platforms,” Thun said in a statement.

The blackout began around 4 p.m. PT Sunday, just as ESPN was set to broadcast a highly anticipated college football game between the USC Trojans and LSU Tigers for the 2024 season kickoff.

DirecTV has advocated for more flexibility from its content partners in creating smaller, lower-cost channel bundles. ESPN and other sports channels significantly contribute to the annual programming cost increases for MVPDs like DirecTV. Disney counters that sports rights costs are rising, not falling, as seen with last month’s 11-year, $76 billion NBA TV deal. Disney claims it has been open to new options, referencing the deal that resolved the Charter Communications standoff.

Source: Variety