This weekend saw a number of networks owned by Disney, including ABC and ESPN, being dropped by DirecTV. With this being an active dispute, and one that has now led to a channel blackout, many will be wondering who is to blame? The answer to that question depends on who you believe.
As is so often the case with carriage disputes, both sides are very firmly placing the blame on each other. While the issue primarily comes down to agreeing a fee – likely that you, the customer, will ultimately end up paying – there are some additional aspects here, with both sides accusing each other of trying to devalue their stance.
It’s Disney’s Fault – Why DirecTV Blames Disney For The Dispute
According to DirecTV, the whole reason for the dispute and lost channels is Disney’s greed. While DirecTV hasn’t used that exact word, that’s the takeaway.
DirecTV has accused Disney of taking an “anti-consumer approach” that includes demanding customers pay for channels they don’t watch. General speaking, this is not uncommon and why many networks from the same owner are typically included in the same live TV package, forcing customers to pay for all of the channels instead of just the ones they want.
However, with the changing nature of live TV, companies like DirecTV are now looking to offer more flexible plans that appeal to those wanting a live TV plan for a specific reason. For example, sports. The problem is that, to be able to offer ‘skinnier’ or more niche packages, channels would need to be unbundled from each other. This is what DirecTV says it is ultimately trying to achieve with the current negotiations.
On top of continuing to force consumers to pay for all of its networks, DirecTV also says Disney wants DirecTV customers to pay extra for “access to Disney-owned streaming services they either aren’t interested in or may already possess.” Similar to the argument made last year by Charter, this amounts to paying twice for a lot of the same/similar content.
For more information on DirecTV’s argument, check out DirecTV’s UnbundleDisney.com.
It’s DirecTV’s Fault – Why Disney Blames DirecTV For The Dispute
Disney’s argument for why it is DirecTV’s fault is far more simple – DirecTV is trying to underpay for the channels/services and Disney is not willing to agree to a deal at a lower price.
According to Disney, DirecTV declined a “fair, marketplace-based agreement” for the networks and services it offers. On the topic of flexibility, Disney also says it offered “flexibility and terms which we’ve extended to other distributors.” This included “a variety of flexible options” and “innovative ways” to make Disney’s direct-to-consumer streaming services available to DirecTV’s customers. Again, options that were declined by DirecTV.
Instead of agreeing to any of the proposed solutions, Disney argues that DirecTV is attempting to get Disney to agree to terms that undervalue its portfolio of television channels and programs.
Put simply, Disney says DirecTV won’t pay what Disney considers to be the going rate for its networks and content. A rate that’s not only based on what others already pay, and the marketplace as a whole, but also the investment Disney makes in its channels and content.
For more information on Disney’s argument, check out Disney’s KeepMyNetworks.com.
The Venu Sports Factor
An added, and interesting, caveat of the negotiations is that DirecTV says Disney made a last-minute request that Disney would need to “agree to waive all claims that Disney’s behavior is anti-competitive.”
This appears to be in relation to the anti-competitive sentiment and accusations surrounding Venu Sports, the sports-streaming service owned by Disney, Fox and Warner Bros. Discover. This is also the service that was recently blocked from launching over anti-competitive concerns raised by Fubo.
Following confirmation of the temporary injunction against the service, DirecTV publicly weighed in on the situation. DirecTV explained how it disagreed “with Venu’s anti-competitive strategy” and that TV distributors should have the same opportunity to offer packages that are as flexible as those being offered directly to consumers. In this case, Venu Sports.
According to DirecTV, Disney’s last-minute injected agreement caveat is another example of a “growing pattern of anti-competitive actions” by Disney, and something DirecTV was unwilling to agree to.
Compared to other carriage disputes, this would seem to be a far more unique aspect to fall out over. With the importance of Venu Sports to Disney, Fox and WBD, as well as its potentially significance impact on live TV providers, this could also be something Disney and DirecTV never agree on.
So Who Is To Blame?
As mentioned, who is to blame ultimately depends on who you believe. While DirecTV argues that Disney is trying to maximize profits by bundling networks together and getting customers to pay twice for same/similar content, Disney argues it has offered DirecTV fair market value rates and additional options that provide more flexibility.
In many ways, the real culprit here is what these companies perceive to be the value of Disney channels and programming to the consumer. The issue is not so much that DirecTV doesn’t want to pay more or that Disney won’t accept less, but more an issue of them viewing the value of Disney content differently.
According to Disney, more than 90% of DirecTV households watched Disney’s linear programming every month last year, totaling more than five billion hours viewed in a single year. In Disney’s eyes, its programming is high value.
According to DirecTV, less than 40% of customers watch Disney sports content for at least three hours on average per month, 40% watch Disney’s general entertainment channels for a combined three hours or more on average per month, and only 10% watch a combined three hours or more on average per month of Disney’s kids programming.
The takeaway here is that DirecTV argues 80%+ of customers shouldn’t have to pay for Disney’s sports, entertainment and kids networks, while Disney argues the value of its portfolio “is indisputable.”
As most of these arguments are based on what the companies think the consumer is thinking, who is ultimately right depends on how indisputable you think the value of Disney content is? And whether you think all subscribers should be forced to pay for that content?
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