A major disruption has hit television viewers as a result of a failed distribution agreement between Walt Disney Co. and DirecTV, owned by AT&T Inc. and TPG Capital. The disagreement has left over 11 million subscribers without access to popular channels like ESPN, ABC, and other Disney-owned networks.
The dispute arose as DirecTV sought to adapt its offerings in line with evolving consumer preferences in the streaming TV era. The company aimed to introduce smaller, lower-priced packages, including tiers that excluded ESPN for viewers not interested in sports. However, Disney countered these proposals, refusing to grant discounts or lower distribution thresholds.
“Disney wants 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,” commented Rob Thun, chief content officer at DirecTV.
In response, Disney executives Dana Walden, Alan Bergman, and Jimmy Pitaro, chairman of ESPN, stated in an emailed statement that they have offered DirecTV terms comparable to those provided to other distributors. They asserted that they wouldn’t agree to terms that they believe undervalue their programming portfolio. “We urge DirecTV to do what’s in the best interest of their customers and finalize a deal that would immediately restore our programming,” they added.
This dispute comes at a crucial time for both companies. DirecTV is undergoing a significant transformation into a streaming service, aiming to eliminate the need for satellite dishes. The company has been actively promoting its pay TV bundle that operates without a satellite dish. Meanwhile, Disney recently reported strong third-quarter earnings, with a 4% year-on-year revenue growth to $23.16 billion, driven by subscription revenue growth due to price increases and customer growth for Disney+ Core.
The blackout poses a significant inconvenience for viewers, especially considering the upcoming NFL season kickoff and the scheduled presidential debate on ABC News. The outcome of this dispute remains to be seen, and both companies face the challenge of finding a solution that satisfies both their business interests and the needs of their viewers.
