On Saturday, former CNN media reporter Oliver Darcy found himself at Hudson Yards, an upscale shopping destination in New York City.
The venue, located in the city’s “New West Side,” has for weeks promoted itself as a designated watch party for the U.S. Open tennis tournament, which started last week.
Hundreds of tennis fans have flocked to Hudson Yards to take in the tournament, watching on giant screens located throughout the venue and giving the retail center significant exposure and encouraging shoppers to spend big at its stores and restaurants.
That changed on Sunday, when the tournament became unavailable to visitors at Hudson Yards. The reason? The venue had been using satellite service DirecTV to pull in ESPN, one of several Disney-owned channels that suddenly disappeared from the service over the Labor Day weekend.
Darcy, who is now the publisher of his own media-centric newsletter, posted a photo to Threads showing DirecTV’s message to subscriber that “our contract with Disney, the owner of this channel, has expired,” which sported a QR code for those who wanted more information about the situation.
“The Disney-DirecTV blackout has hit Hudson Yards in New York, where people had gathered to watch the U.S. Open on the giant screen,” Darcy wrote. At least one other photo that accompanied his post showed mostly empty chairs at the venue.
Post by @oliverdarcyView on Threads
The scene that played out at Hudson Yards repeated itself at tens of thousands of bars, restaurants, hotels and other public venues that subscribe to DirecTV for Business, a version of the satellite pay TV platform that offers many of the same entertainment, news and sports channels as what customers might find at home, but with public performance royalties and other licensing fees rolled into the monthly subscription cost.
For nearly three decades, DirecTV was the preferred pay television platform of choice for most businesses, especially bars and restaurants. Until recently, DirecTV was the exclusive home of NFL Sunday Ticket, which offered access to all games played on CBS and Fox, including those beyond a viewer’s home location, giving it a major edge over Dish Network and regional cable TV providers.
DirecTV lost the NFL Sunday Ticket to Google-owned YouTube two years ago, but it continued to provide access to the package through DirecTV for Business through last football season. It also distributes live games that are offered on streaming platforms like Peacock, Apple TV Plus and Amazon’s Prime Video to enterprise customers, allowing them to continue using their satellite TV equipment to screen high-value sports events in their businesses while they transition over to streaming.
Putting streaming-only sports on DirecTV for Business bought bars, restaurants and other establishments a little more time to prepare for the inevitability that they will need a connected TV solution to offer those games in the future. (The National Football League, NFL, is working with EverPass Media to accelerate that proposition for its Sunday Ticket package.) But that does not mean things have been smooth for public venues over the past few years, as programming-related blackouts have increased the disruptions they face in pulling in broadcast and cable channels that have high-value sports programming.
Such was the case last summer, when a programming-related dispute between DirecTV and Nexstar Media Group resulted in the loss of nearly 200 local broadcast stations. That dispute centered around fees that broadcasters like Nexstar may collect from distributors like DirecTV in exchange for the rights to provide their subscribers with access to channels. In that case, DirecTV said Nexstar wanted more money for its local ABC, CBS, Fox and NBC-affiliated stations, plus cable channel NewsNation.
The situation lasted for two months before the DirecTV and Nexstar came to terms on a new deal. The channels were restored just before the start of the NFL’s regular season, and while the satellite company didn’t affirm its willingness to pay Nexstar more for the channels, it implemented a fee hike within a few weeks that strongly suggested that was the case.
DirecTV wanted to avoid a repeat of that situation last November, when it warned that it might have to pull around 60 local broadcast stations owned by TEGNA over a similar request for more money. In that instance, DirecTV said it was willing to pay TEGNA whatever it felt the channels were worth, as long as it could decouple the channels from base programming packages and sell them à la carte to subscribers. TEGNA balked at the premise, and the channels were dropped on December 1.
The dispute between TEGNA and DirecTV came toward the end of the NFL season, which meant bars and restaurants couldn’t screen football games that were available on TEGNA-owned CBS, Fox and NBC stations. To counteract this, DirecTV offered to install thousands of over-the-air antennas at businesses, so they could continue to receive local stations via broadcast signals. Buffalo Wild Wings and Chill’s restaurants were among the DirecTV for Business clients that benefitted from the offer.
The antennas won’t help this time around. While ABC will simulcast the first “Monday Night Football” game from ESPN on September 9, Disney won’t be repeating its strategy of putting most Monday Night Football games on the broadcast network — it only did so last year in order to offset the pain caused by dual Hollywood strikes that impacted its prime-time schedule and that of other networks. In May, reports indicated Disney will simulcast no more than six regular-season games on ABC this year, meaning most will air on ESPN.
Related: Fewer “Monday Night Football” games to air on ABC this season
That is a problem for customers of DirecTV for Business, as executives say the current dispute with Disney is not like ones with other programmers in the past. This time around, executives say Disney’s willingness to break out its sports networks from news and entertainment channels through Venu Sports means the company is willing to embrace genre-based channel bundles — and DirecTV wants in on that action.
Historically, programmers have forced cable and satellite companies to group sports, entertainment, news and broadcast channels in certain programming packages. Disney, for instance, typically requires ESPN and FX to be placed in base cable tiers — meaning customers who subscribe to cable or satellite almost always pay for ESPN, even if they never watch sports. ESPN is one of the most-expensive networks to carry, with SNL Kagan estimating Disney charges $8 to $9 per subscriber.
Disney’s willingness to isolate sports channels for its own pay TV package didn’t just trigger an antitrust lawsuit from one of its distribution partners — it also convinced pay TV platforms like DirecTV that Disney sees bundling and selling channels are genres to be a viable business model.
The problem is, Disney executives continue to say publicly that the model they were willing to embrace for Venu Sports doesn’t work for cable and satellite, but won’t explain why.
“It just feels like a tactic to distract from the real issues in negotiation,” Justin Connolly, the President of Platform Distribution at Disney, told the Hollywood Reporter in an interview. “They just continue to sort of spin, both publicly but also in the room, a little bit on these ideas that don’t have a lot of specificity to them, and, you know, from our perspective, don’t feel like they can be executed easily and that continues to be a challenge.”
In an interview with The Desk last Monday, DirecTV’s Chief Programming Officer Rob Thun accused Disney executives of “posturing,” saying the company was willing to siphon off pay TV subscribers for Venu Sports because they stood to benefit from the arrangement.
“They claim to have been terrified of the cannibalization, yet their own documents suggest they weren’t so terrified of it,” Thun told The Desk on Monday, referring to evidence made public in Fubo’s antitrust lawsuit against Disney, which is still ongoing.
“They were willing to take up to two-thirds of the [subscriber] base,” Thun continued. “They were going to have Venu, and they were going to be cannibalistic to pay TV. So, let’s stop with the posturing. Your own internal documents suggested that you’re not that afraid of it.”
On Tuesday, DirecTV’s Chief Financial Officer Ray Carpenter said DirecTV subscribers — including business customers — should prepare for a prolonged battle that may keep ABC, ESPN and other Disney-owned channels off their service for a while.
“This is not a run-of-the-mill dispute,” Carpenter said. “We’re not playing a short-term game. We need something that is going to work for the long-term sustainability of our video customers. The resolve is there.”
Caught in the middle are residential and business customers who feel like they aren’t getting what they pay for. While consumers have numerous streaming options for getting ESPN — including Sling TV, Fubo and Disney-owned Hulu with Live TV — businesses may not have the time or financial resources to suddenly switch many of their public screens and TVs to another service simply to get access to a few missing channels.
It isn’t clear how DirecTV is helping its business customers this time around. A spokesperson for DirecTV did not return an after-hours email from The Desk seeking clarification on the matter.
Related: DirecTV for Business customers get antennas during TEGNA dispute
Business subscribers are not the only ones who may suffer. When the September 11 terrorist attack hit the nation two decades ago, then-President George W. Bush and members of his cabinet found it difficult to get reliable information on what was going on that day because he was traveling on board Air Force One, which was only equipped with TV antennas. Within weeks of the attack, Bush ordered the White House to have DirecTV installed on board the aircraft. The Department of Homeland Security is one of DirecTV’s biggest government clients, according to a government source who spoke on background.
They are not alone. DirecTV’s coast-to-coast availability, coupled with its hundreds of local, national and interational channels, have made it the preferred pay TV platform for other local, state and federal government agencies. In California, DirecTV’s satellite dishes are commonly seen atop county and state mobile crisis centers, and is utilized by the California Office of Emergency Services to stay on top of emergencies like earthquakes, floods and fires.
Each programming dispute has the potential to harm DirecTV’s reputation for reliability, particularly during emergencies. This revealed itself last year when a devastating wildfire swept through the island of Maui; Hawaiians with DirecTV couldn’t watch local news coverage from two Nexstar-owned stations — KHON (Channel 2, Fox) and KHII (Channel 9) — because they were among the 200-plus broadcast outlets that DirecTV was forced to black out. According to a source, DirecTV asked Nexstar for a waiver that would allow it to offer news from the channels, which Nexstar declined. The situation meant Hawaiian residents and government agencies with DirecTV had fewer options for local news during the wildfire, which became one of the deadliest in American history.
