The Walt Disney Company’s renewed distribution arrangement with pay television provider DirecTV allows the satellite and streaming TV service to sell its channels through three genre-based bundles, a Disney executive confirmed in a recent interview.
Those three bundles are baked into a new distribution agreement between Disney and DirecTV that helped bring a nearly two weeks-long programming blackout on DirecTV and U-Verse to an end last weekend.
The packages include one focused on sports networks like ESPN, another with general entertainment networks like FX and Freeform, and a third that consists of Disney’s kid- and family-friendly channels.
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The bundles were first described in a joint press release issued last Saturday that announced the restoration of Disney-owned channels like ABC, ESPN, FX and Freeform to DirecTV and U-Verse, though the companies did not specifically say that the agreement was only for three bundles of channels.
That detail was revealed in a wide-ranging interview with Bloomberg earlier this week, during which Disney Entertainment co-chair Dana Walden affirmed DirecTV originally wanted six genre-based bundles, but was eventually convinced to whittle that down to just three.
“We want to help them stay relevant with their customers,” Walden said. “Those are viewers of our channels and will be subscribers to our services.”
DirecTV and U-Verse customers who have access to Disney-owned broadcast and cable channels will also be able to watch content through Disney Plus, Hulu and ESPN Plus as part of their pay TV subscription. The arrangement is similar to a deal that Disney struck with Charter Communications last year, through which Charter agreed to purchase subscriptions to Disney-owned streaming platforms at a wholesale price.
The arrangement with DirecTV will also see that pay TV company purchase access to Disney-owned subscriptions at a wholesale price, too, though financial terms of the arrangement were not disclosed.
Walden seemed to agree that the distribution agreements with DirecTV and Charter represented a turning point in the pay TV business, at a time when most customers are ditching expensive cable and satellite plans for cheaper online-only offerings.
Cable and satellite bills have risen over the last few years in large part because broadcasters and network owners like Disney have demanded more money from distributors like Charter and DirecTV for the right to redistribute their channels to subscribers.
Charter drew a line in the sand last year, opting to pull Disney-owned channels for about a week after complaining that the entertainment giant was siphoning highly-valued content from its broadcast and cable networks for its own streaming services. If Disney wanted more money for their channels, they should also make sure pay TV providers are able to give customers access to their streaming services, where shows like “Dancing with the Stars” and “The Bear” now live, they said. (The dispute was settled about a week later.)
DirecTV’s position was similar, but the biggest issue had to do with Disney’s participation in Venu Sports, a streaming-focused joint venture with Fox Corporation and Warner Bros Discovery (WBD) that sought to offer access to sports-inclusive TV networks without other channels that carry entertainment, movies and news.
The arrangement is substantially different from what cable and satellite companies have typically been forced into, where they must take channels like CNN, Cartoon Network, FX and Fox News as a condition of carrying sports-inclusive networks like ABC, Fox, ESPN, TBS, TNT and Fox Sports 1. (Venu Sports has been put on an indefinite pause while Disney and the other joint venture participants battle a legal challenge brought by streaming service Fubo; DirecTV provided indirect support to Fubo during the early stages of the lawsuit.)
As DirecTV executives put it, if Disney was willing to siphon off its sports channels for a streaming service it owns, it should allow pay TV companies to sell channels through similar genre-based bundles. After the dispute began, DirecTV also took issue with a proposal made by Disney that required the company to waive any right to characterize its distribution terms as anticompetitive and monopolistic. The matter was settled last weekend, with both sides ceding ground on those two points.
