Following a roughly two-week blackout, Disney channels including ESPN and ABC have been restored to DirecTV pay TV systems after the two sides reached an agreement in principle for carriage.
The announcement, made September 14, doesn’t mean a deal is done just yet, but the sides have agreed on key terms. But DirecTV customers across satellite, DirecTV Stream and U-Verse that saw Disney channels go dark on September 1 just before kickoff of a college football matchup and the start of NFL season, regained access over the weekend as the two companies continue to negotiate finalized specific details of a new multi-year contract.
DirecTV’s CFO previously suggested the contract impasse with Disney was not a typical carriage dispute and expressed a willingness to hold strong in its demands and not cave even in the face of the return of Monday Night Football. However, two weeks in and consumers and the companies had a desire to get channel access restored.
DirecTV was already looking to keep and get Disney channels back as the two try to reach a deal, and related to the dispute filed a complaint with the FCC accusing the programmer of negotiating in bad faith. Restoring channels could also help stem any further exit of subscribers leaving because they can’t access Disney programming, including ESPN. DirecTV Chief Marketing Officer Vince Torres said at an investor conference last week that the pay TV company was losing “not an immaterial amount of customers” amid the Disney blackout.
In announcing restoration of the channels and deal in principle, the two outlined some of the core elements that DirecTV and Disney have agreed on, including continued carriage of linear networks, options for more genre-based TV packages and the inclusion of streaming service apps at not extra cost to pay TV customers.
Specifically, the sides have agreed on continued carriage “at market-based terms” of Disney’s portfolio of linear networks including ABC owned TV stations, ESPN networks, Disney-branded channels, Freeform, FX networks and National Geographic channels.
Notably, DirecTV said it will have the opportunity to offer “multiple genre-specific options – sports, entertainment, kids & family – inclusive of Disney’s linear networks along with Disney+, Hulu and ESPN+.”
One of the major points DirecTV made as it advocated for its vision of the evolution of the pay TV model, was a desire and need to be able to offer more affordable and flexible TV package channel lineups to consumers, including through genre and interest-based TV packages.
DirecTV pushed back against programmers like Disney requiring distributors meet minimum subscriber penetration guarantees for certain networks and bundle pricey sports networks with less popular entertainment networks that it argued leads to expensive, bloated pay TV packages that consumers don’t necessarily want. A skinnier unbundled sports lineup is somewhat what Disney’s Venu Sports streaming service joint venture with Warner Bros. Discovery and Fox aimed to deliver. However, Venu was temporarily blocked from launch as a New York district judge this summer granted an injunction in vMVPD Fubo’s antitrust lawsuit against the entities, with a trial scheduled for October.
Whether or how much Disney is willing to budge on so-called channel bundling or minimum penetration requirements with DirecTV wasn’t disclosed, and exactly what those genre-based package options look like remain to be seen. A DirecTV spokesperson didn’t immediately respond to inquiry from StreamTV Insider.
Also notable is that Disney’s direct-to-consumer streaming services, Disney+, Hulu and ESPN+ will be included in certain DirecTV packages under a wholesale agreement and will also be made available on an a la carte basis. The sides also agreed DirecTV can distribute Disney’s forthcoming flagship ESPN DTC product once it launches (expected in 2025) at no extra cost to customers.
Disney similar struck a carriage deal last year, following a separate channel blackout, with cable operator Charter that involved inclusion of the media company’s DTC apps in pay TV packages at no extra cost to consumers. It’s a model Charter’s since successfully pursued with other programmers in subsequent carriage renewals.
“Through this first-of-its-kind collaboration, DirecTV and Disney are giving customers the ability to tailor their video experience through more flexible options. DirecTV and Disney have a long-standing history of connecting consumers to the best entertainment, and this agreement furthers that commitment by recognizing both the tremendous value of Disney’s content and the evolving preferences of DirecTV’s customers,” the companies said in a joint statement. “We’d like to thank all affected viewers for their patience and are pleased to restore Disney’s entire portfolio of networks in time for college football and the Emmy Awards this weekend.”
DirecTV, Dish tie-up?
As Disney and DirecTV get closer to finalizing a new agreement, long-time notions of a tie-up between DirecTV and EchoStar’s Dish Network – the two largest satellite TV providers – have resurfaced.
Bloomberg, citing sources familiar with the matter, reported that AT&T and TPG are in talks to combine DirecTV and Dish in a merger that would create the largest U.S. pay TV provider with about 20 million customers.
In a Monday note to investors New Street Research analysts outlined changes in the marketplace since regulatory and government opposition in 2002 squashed the idea of a merger between DBS satellite providers at the time over concerns about competition. The firm thinks changes since then, including the addition of telcos and streaming services in the ecosystem, new market definitions, more areas getting access to broadband, and FCC changes in terms of the agency’s view of effective competition, among other factors, all help nudge the odds for a deal between Dish and DirecTV in favor of government approval.
“While the transaction is not a slam dunk, would require a ‘second request,’ and would likely be subject to some conditions, we believe the changes in the market are sufficient to give a new DBS merger a better than even chance of government approval regardless of the outcome of the election,” wrote New Street Research TMT Policy Analyst Blair Levin in a September 16 note.