An ongoing programming-related dispute between the Walt Disney Company and pay television provider DirecTV has already provoked at least one politician to weigh in on the matter.
This week, North Carolina Governor Roy Cooper sent a letter to Disney CEO Bob Iger, ESPN Chairman and President Jimmy Pitaro and DirecTV CEO Bill Morrow to express contempt over the dispute that has kept millions of DirecTV and U-Verse subscribers from having access to channels like ESPN, FX and Disney since the start of the month.
The dispute has impacted customers who subscribe to DirecTV over satellite or streaming, as well as customers of U-Verse (formerly AT&T U-Verse). Satellite subscribers in eight major metropolitan areas have also lost access to Disney-owned ABC stations, while streaming and U-Verse customers everywhere are unable to watch their local ABC station or affiliate. One of the markets where Disney owns the local ABC station is in North Carolina, where WTVD (Channel 11) serves the Raleigh-Durham market.
Cooper said he and other constituents are frustrated by carriage disputes between broadcasters and distributors, which have increased over the years, leaving cable and satellite subscribers unable to watch the channels that they used to pay for.
“A troubling pattern has emerged in recent years of media companies that make little progress in these contract negotiations until their customers feel the real pain,” Cooper wrote. “That means the start of popular sporting events — particularly college football season — which leaves your customers in the lurch.”
Pro Access: Read the letter sent by Governor Cooper to DirecTV and Disney
DirecTV’s distribution agreement with DirecTV expired on September 1. After a very short-term extension, Disney exercised its right to have DirecTV pull its channels just before the start of a highly-anticipated college football game between Louisiana State University (LSU) and the University of Southern California (USC).
DirecTV and U-Verse subscribers who tuned in to watch the LSU Tigers take on the USC Trojans were instead greeted with a static image informing them that the company’s contract with DirecTV had expired.
“This is an unacceptable practice, and I encourage you to quickly resolve the dispute,” Cooper wrote. “At a time when the costs of everyday life are forcing harder budget decisions for a lot of families, many North Carolinians are choosing to spend their hard-earned money with your companies. Right now, you are not delivering.”
Cooper ended his letter by urging both sides to “work around the clock to resolve this dispute as quickly as possible.”
Related: Read the latest stories on the DirecTV-Disney dispute
A resolution seems unlikely to come anytime soon. While prior carriage disputes have centered around fees paid by cable and satellite companies to broadcasters for the rights to their channels — those fees have gone up over the past few years, spurring price increases and leading customers to cancel their service — DirecTV says it is willing to pay Disney whatever it wants for its channels in this instance.
DirecTV’s key issue at the moment appears to be how channels are sold to subscribers. The satellite company has proposed a novel arrangement by which it is able to bundle and sell Disney-owned channels based on genre.
Historically, Disney and other broadcasters have required cable and satellite companies to sell certain channels together. Disney typically forces pay TV companies to offer ESPN — one of the most-expensive channels to carry — and FX in base programming packages. DirecTV says that arrangement drives up the cost of pay TV service for everyone, even if they just want access to ESPN without entertainment networks, or if they only want entertainment channels and never watch sports.
Executives at DirecTV say Disney has indicated its willingness to sell sports-inclusive channels by themselves after the company said it was working with Fox Corporation and Warner Bros Discovery on a new streaming service called Venu Sports. The service, which was supposed to launch last month, was set to offer channels like ABC, Fox, ESPN, TBS and TNT without general entertainment and news channels that lack sports programming. An introductory price for the service clocked in at below $50 — far less than the cost of other services with sports channels.
Related: DirecTV offers bill credits, points customers to Sling TV, Fubo for ESPN
Over the past week, Disney executives have said DirecTV’s proposal for genre-based channel packages is untenable, though they have not explained their position beyond that. DirecTV’s Chief Programming Officer Rob Thun disagrees, saying Disney was willing to afford favorable distribution terms to its joint venture, and that it should be willing to do the same for third-party channel distributors.
“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 earlier this week. “They were willing to take up to two-thirds of the [subscriber] base. 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.”
Thun said subscribers typically like to sample across genres, and that they may ultimately build modular bundles that approach or eclipse today’s cable and satellite TV prices. But allowing customers to purchase a sports-inclusive bundle that includes ESPN without having to purchase channels like FX or Freeform could help sports fans save money, which would serve the broadcast and pay TV industry well, Thun proclaimed.
“We’re not trying to kill the cable channel model,” Thun affirmed, “but if the model doesn’t change, it’s going to kill us.”
