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DirecTV Stream users sue Disney over ESPN fees

The Alameda Avenue entrance to the Walt Disney Studios in Burbank, California as it appeared in 2016.
The Alameda Avenue entrance to the Walt Disney Studios in Burbank, California as it appeared in 2016. (Photo by Cool Ceasar via Wikimedia Commons, Graphic edited by The Desk)

A proposed class action lawsuit is targeting the Walt Disney Company over carriage fees that cable and satellite companies are forced to pay for sports network ESPN.

The lawsuit was filed in federal court this week on behalf of DirecTV Stream subscribers in California, Arizona, Indiana and Kentucky, with the lead plaintiffs accusing Disney of abusing its market power in a way that forced YouTube TV and other streaming cable TV alternative to raise their price.

The issue stems from Disney’s majority control of streaming service Hulu, which offers a live television service called Hulu with Live TV. Plaintiffs in the case say Disney often requires cable, satellite and streaming TV companies to include ESPN in its base package; Hulu with Live TV offers Disney as part of a comprehensive live TV package that includes dozens of other networks for $70 a month.

Plaintiffs complain that fee increases at Hulu with Live TV — like one that is set to go into effect next month — trigger price increases at other companies, including YouTube TV. The Google-backed service cost $35 a month in 2019 for a handful of channels, a price that now sits at $65 a month (though YouTube TV has also added networks over the past three years).

Plaintiffs accuse Disney of using price increases at Hulu to demand higher carriage fees for ESPN, of which it owns 80 percent (Hearst Television holds a 20 percent minority stake in the sports network). Disney also typically requires ESPN to be carried in a cable, satellite or streaming service’s base programming package; as Disney charges more for the channel, rate increases are imposed on subscribers, including those of YouTube TV.

The complaint says around 5 million customers are paying for ESPN, whether they want the channel or not. It noted that in 2021, YouTube TV offered to reduce its programming package by at least $15 a month if it could not reach a new agreement with Disney for ESPN and other Disney-owned channels.

The plaintiffs in the case want Disney to stop forcing DirecTV Stream, YouTube TV and other streaming cable television alternatives to include ESPN in base programming packages.

Editor’s note: An earlier version of this story incorrectly said the proposed class-action lawsuit was filed on behalf of YouTube TV subscribers. The plaintiffs in the case are current and former subscribers of DirecTV and other AT&T-owned pay television services.

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About the Author:

Matthew Keys

Matthew Keys is the publisher of The Desk and reports on the business and policy matters involving the broadcast television, streaming video and radio industries. He previously worked for Thomson Reuters, Disney-ABC, Tribune Broadcasting and McNaughton Newspapers. Matthew is based in Northern California, has won numerous awards in the field of journalism, and is a member of IRE (Investigative Reporters and Editors).