Disney and DirecTV remain at the bargaining table, trying to reach a renewal of their current distribution agreement, which expires Sunday.
While the customary warnings to viewers about a potential blackout, delivered via on-screen crawls, social media messages and so on has not yet begun, they could be activated as soon as Friday night, a person familiar with the talks tells Deadline. Along with U.S. Open tennis, Disney-owned ESPN is also going to be presenting Week 1 of the college football season Saturday amid robust ratings for the sport in recent years. Studio show College GameDay and live game telecasts would be a direct route to millions of viewers unaware of the situation.
The current 5-year deal between Disney and DirecTV, which has about 11 million subscribers across satellite, legacy cable and its internet-based DirecTV Stream service, was reached in a decidedly different media era. Disney+ had not yet launched and the flock of other streamers chasing Netflix had not yet materialized. The pay-TV bundle also had several million more subscribers in it. The pact expires late in the day on Sunday and talks are expected to continue right down to the wire.
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Reps for Disney and DirecTV referred to their prior statements on the situation and declined to offer updated statements to Deadline.
DirecTV Chief Content Officer Rob Thun says Disney has rejected his company’s proposals for smaller, more thematically focused bundles, including one focused on sports. Programmers like Disney, he says, have “continued to impose and enforce strict bundling requirements” across a wide swath of channels, forcing operators to carry less-viewed channels in order to get access to top-shelf offerings like ESPN.
Disney has pushed back on the claim it has resisted the notion of smaller packages and maintains that, on the contrary, DirecTV has been the reluctant party. “They have not engaged in earnest on proposals we’ve made to them” for more streamlined packages of channels, President of Disney Platform Distribution Justin Connolly told Deadline in an interview this week. “They’re trying to lay the blame for their lack of investment in their platform at the feet of programmers.”
Connolly also pointed to the private equity ownership structure of DirecTV, which in 2021 was spun out from AT&T and into a new entity in which P.E. firm TPG has a 30% stake. That setup has limited the company’s ability to keep up with technology changes and deliver innovation expected by subscribers.
The showdown is coming on the same exact holiday weekend as a memorable battle between Disney and Spectrum TV owner Charter Communications last year. That Labor Day fight resulted in a 10-day blackout in the middle of the U.S. Open tennis tournament on ESPN and at the start of college football season. It was resolved on the day when Monday Night Football kicked off, and the start of the NFL season on ESPN (on September 9) is likely to help spur some movement in the talks if there is an extended impasse.
Thun penned a blog post on August 21 titled “Looking Toward a Brighter TV Future,” not addressing Disney by name but foreshadowing the conflict to come. “Instead of allowing distributors like DirecTV to also develop smaller, more tailored packages at prices that reflect the value they get from the content, programmers have continued to impose and enforce strict bundling requirements through exorbitant minimum penetration rates – the minimum proportion of a distributor’s subscribers required to access a channel,” he wrote. “These antiquated requirements force pay TV customers to subscribe to many channels they may not watch, which have yielded ‘fat bundles.’ At the same time, programmers have reserved flexible genre-based offerings solely for themselves, eroding the price-value proposition for pay TV customers by shifting the best programming to DTC services while raising programming fees on pay TV.”
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