Disney’s networks, including ABC and ESPN, have been pulled across DirecTV, marking the start of another major impasse in its struggling pay-TV business.
The fight between the two companies has intensified in recent days, even as they sat down to negotiate ahead of a Sunday deadline for an existing contract. DirecTV has shrunk in recent years but remains a major operator, with about 11 million subscribers across its traditional satellite, cable and internet-based DirecTV Stream service.
“Our contract with Disney, the provider of this channel, has expired,” a message to viewers on the affected networks read. “Please be patient while we negotiate to give you more choice, flexibility and value.”
Disney provided Deadline with a joint statement from the company’s entertainment co-chairmen Dana Walden and Alan Bergman, along with ESPN chairman Jimmy Pitaro.
“With the U.S. Open approaching its final week and preparing for the start of the college football and NFL seasons, DirecTV has chosen to deny millions of subscribers access to our content,” the executives said. “We are open to providing DirecTV the flexibility and terms we have offered other distributors, but we will not enter into a deal that undervalues our portfolio of television channels and programming. We invest heavily in delivering the No. 1 brand in entertainment, news and sports because that’s what our viewers expect and deserve. We urge DirecTV to do what’s best for our customers and enter into a deal that will immediately restore our programming.”
DirecTV, in a statement, accused Disney of turning down a potential contract renewal just before a primetime college football match between USC and LSU. The U.S. Open tennis tournament continues on ESPN and ABC, and other high-profile programming is scheduled for the upcoming broadcast, including the kickoff of Monday Night Football on Sept. 9 and the ABC-hosted presidential debate on Sept. 12.
“The Walt Disney Company is once again refusing to be accountable to consumers, their distribution partners and now the American justice system,” said Rob Sun, DirecTV’s chief content officer. “Disney is in the business of creating alternate realities, but this is the real world and we believe people must earn their own income and be held accountable for their actions. They will continue to pursue maximum profits and control at the expense of consumers, making it harder for consumers to choose the programming and sports they want to watch at an affordable price.”
Toon added, “As Disney moves the best producers, most innovative programming, top teams, conferences and entire leagues to its own direct-to-consumer services and asks customers to watch the same programming multiple times across multiple Disney platforms, consumer frustration has never been higher.”
Just a year ago, Disney suspended Charter’s Spectrum system for 10 days, drawing industry-wide attention given the precarious state of pay-TV bundles. The dispute was resolved with an agreement that did not include distribution to several of Disney’s established networks, including Freeform, but guaranteed the integration of streaming services into the Spectrum package.
With millions of Americans cutting cable every year, pay-TV revenues continue to decline, presenting a major challenge for media companies trying to grow their linear networks while investing in streaming. For decades, programming companies have benefited from large profit margins derived from dual revenue streams: distribution and advertising. Today, changing consumer habits and the rise of Netflix and other streaming companies are severely hurting the media business, leading Paramount Global and Warner Bros. Discovery to take combined write-downs of $15 billion in cable network assets last month.
DirecTV has expressed interest in exploring smaller, more affordable bundles, such as one focused on sports, but Disney claimed last week that DirecTV has “never meaningfully engaged” in proposing more curated bundles. Executives also pointed to private equity firm TPG’s 30% stake in DirecTV, arguing that distributors have been reluctant to invest in the platform as it, like its peers, loses subscribers.
Dominic Patten contributed to this report.