DirecTV Chief Financial Officer Ray Carpenter said the company will continue to fight “for as long as necessary” amid a streaming rights dispute with Disney that has resulted in many Disney channels, including ABC and ESPN, being unavailable to DirecTV customers.
Carpenter said on a conference call with media and analysts on Tuesday that the satellite TV company is pushing “simplified, genre-based” packages that allow customers to choose the type of content they want to pay for — organized by genres like news, family and sports — as well as give them more flexibility in choosing which channels to include in their packages and what direct-to-consumer content to include in their packages. DirecTV also said it is pushing “competitive pricing” for customers and giving them access to content as soon as it’s released, rather than waiting for it.
Both channels were taken offline on Sept. 1, in the middle of the U.S. Open tennis tournament and the upcoming LSU vs. USC college football game that day. When asked if DirecTV would “make concessions” ahead of the season’s first Monday Night Football game on Sept. 9 between the New York Jets and San Francisco 49ers, Carpenter said he has no plans to make concessions because he considers this a “survival” negotiation.
“This is not a run-of-the-mill dispute. This isn’t a dispute about negotiating a percentage of fees. This is really about changing the model in a way that gives everyone confidence that this industry can survive,” Carpenter said.
In a conference call packed with Disney vitriol, Carpenter blamed the media conglomerate for the show’s turmoil.
“We asked for the signal to be maintained, as it so often is when we find ourselves in situations like this, and unfortunately Disney was not going to comply. In fact, the timing of when they decided to remove the content was perfectly orchestrated to cause maximum distress and disruption to our customers,” he said.
In a statement on September 1, Disney Entertainment co-chairmen Dana Walden and Alan Bergman, along with ESPN Chairman Jimmy Pitaro, blamed DirecTV for the suspension and said Disney was willing to be flexible on the terms but would not accept any further discounts.
“As we enter the final week of the U.S. Open and prepare for the start of the college football and NFL seasons, DirecTV has chosen to deny millions of subscribers access to our content. We are open to offering DirecTV the flexibility and terms we have offered other distributors, but we will not enter into any agreement that undervalues our portfolio of television channels and programming,” the statement said.
The strategy, which includes media outreach, is similar to last year’s transportation dispute between Charter Spectrum and Disney.
During the dispute, Disney channels were unavailable to Charter Spectrum subscribers for two weeks as Charter positioned itself as to the future of pay TV. The two sides ultimately struck a deal that allowed Charter Spectrum subscribers to watch Disney+ and ESPN+ at no extra charge, but Disney also agreed to cancel some of its cable channels.
Carpenter noted the similarities but said the negotiations are more about survival because, unlike Charter, which also offers Internet access and cellphone service, DirecTV focuses only on video customers.
Asked how important it was for Charter to include the launch of Disney+, ESPN+ and eventually the flagship direct-to-consumer ESPN platform, as the deal with Charter does, Carpenter said he didn’t want a blanket deal where every customer would pay for it because he found that not every customer wanted that.
“There’s value there, but it’s important that it’s not a replication of the model that got us here in the first place, where 100% or a majority of the customer has to allocate and pay. And again, giving customers that flexibility and choice is critical for us,” he said.
Overall, Carpenter said DirecTV wants to give customers flexibility in programming options and tailor pricing to those packages, adding that the company is “happy to offer lower prices to our customers even if it means margins are squeezed a little bit.” He also highlighted the ease of content search. Carpenter said the overall value of pay-TV packages has decreased as more content has moved to direct-to-consumer services.
“We want to achieve unbundling, which has limited our ability to offer our customers as many production companies have tried to offer their content independently from distributors like us, and enable a more seamless experience in terms of accessing content, managing content and discovering new content, so that customers can get the full range of what they expect and deserve from a pay-TV service,” he said.