Pay television service DirecTV has brought its fight with the Walt Disney Company to the Federal Communications Commission (FCC), filing a complaint against the entertainment giant over certain terms that have emerged through its ongoing programming dispute.
The complaint, filed with the FCC on Friday and sent to The Desk by a DirecTV spokesperson earlier this morning, accuses Disney of failing to adhere to federal rules regarding how broadcasters and distributors may negotiate toward new carriage agreements.
Under federal law, broadcasters like Disney are allowed to receive compensation from distributors like DirecTV in exchange for the rights to offer their channels to subscribers. But negotiations toward new contractual agreements must be made in good faith — they cannot include demands that may prevent one side from exercising their legal rights or otherwise corner them with unfavorable or illegal terms.
Related: Get the latest news on the DirecTV-Disney dispute
Disney-owned channels like ESPN, FX and Freeform have been unavailable to DirecTV and U-Verse (formerly AT&T U-Verse) subscribers since September 1. DirecTV via Satellite and DirecTV via Internet customers also lost access to eight ABC owned-and-operated stations on that day, while DirecTV Stream and U-Verse customers lost access to all ABC stations and affiliates.
Last week, DirecTV executives accused their counterparts at Disney of offering a new contract that, among other things, required DirecTV to waive their right to describe DirecTV’s carriage terms as monopolistic or anticompetitive.
The term appeared to be an attempt by Disney to prevent DirecTV from continuing to provide arms-length support to Fubo in its ongoing antitrust lawsuit over now-stalled sports streaming service Venu Sports. As The Desk first reported, DirecTV’s Chief Programming Officer Rob Thun filed an affidavit in support of Fubo’s effort to seek an injunction against Disney and two other broadcasters — Fox Corporation and Warner Bros Discovery (WBD) — arguing the distribution terms offered to Venu Sports were more favorable than what other cable and satellite companies enjoy.
On Friday, attorneys representing DirecTV said Disney’s requirement that the company waive their right to describe the entertainment company’s practices as monopolistic and anticompetitive was proof that they were not negotiating toward a new carriage agreement in good faith, as federal regulations require.
While the FCC generally does not wade into programming disputes involving cable channels like ESPN and FX, it has jurisdiction to weigh in on the matter involving Disney because licensed ABC stations and affiliates are among the channels unavailable to DirecTV and U-Verse subscribers.
The matter has some precedent. Last year, cable operator Hawaiian Telcom filed a pair of complaints against Nexstar Media Group. In its first filing, the cable operator accused Nexstar of not accepting a contract extension to keep two broadcast channels on its systems. It was followed by a complaint that accused Nexstar of forcing Hawaiian Telcom to withdraw its earlier filing as a condition of any new contract. While Nexstar later dropped the requirement, the FCC found against the broadcaster, saying the stipulation was proof that Nexstar was not negotiating in good faith. The FCC ultimately fined Nexstar $720,000 over the matter; Nexstar is appealing the fine.
DirecTV says the situation with Disney is basically the same.
“Disney has proposed ‘clean slate’ language that, by its terms, would foreclose DirecTV from filing good-faith complaints with the commission regarding the negotiations at issue here,” attorneys for the pay TV platform wrote in their brief. “Disney’s representatives have told DirecTV that this language is ‘critical,’ suggesting that Disey will not end its impasse if DirecTV will not agree to this language.”
Even if Disney drops the requirement, that alone likely won’t lead to a new agreement with DirecTV: The pay TV company is holding out for an arrangement that would allow it to sell channels to subscribers through genre-specific packages.
DirecTV says Disney was open to the idea through Venu Sports, which was set to offer sports-inclusive channels like ABC, ESPN, Fox, TBS, TNT and Tru TV, without entertainment or cable news channels. By comparison, cable and satellite companies have typically been forced to offer non-sports channels like FX, CNN and Fox News in base programming packages that also include ESPN.
Disney executives claim the arrangement is not feasible, but they have not elaborated further. In an interview with The Desk last Monday, DirecTV’s Thun accused broadcasters like Disney of “posturing,” saying the genre-based bundles made sense when it benefitted the entertainment companies, and calling on broadcasters to offer the same to cable and satellite platforms.
