ESPN and Disney go dark for millions of DirecTV customers amid contract dispute
ESPN, Disney, ABC stations and streaming services including Hulu went dark for millions of DirecTV customers on Sunday, with the networks pulled by network parent Walt Disney Co. over a contract dispute.
The services were pulled on a busy night for sports events, with the new college football season kicking off its first full weekend and ESPN airing the U.S. Open tennis tournament. Fourth-round matches were underway at the U.S. Open when ESPN's broadcast went off the air on DirecTV at 7:20 p.m. Eastern Time, angering many viewers who vented their displeasure on social media.
The blackout also happened 10 minutes before the start of the football game between No. 13 Louisiana State University and No. 23 University of Southern California.
DirecTV, a provider of satellite TV, internet and streaming services, has 11.3 million customers, according to Leichtman Research Group, making it the nation's third-largest pay TV provider.
As of Tuesday afternoon, it was unclear when the channels could be restored to DirecTV customers, with DirecTV chief financial officer Ray Carpenter telling analyst on a Tuesday conference call, "This is not a run-of-the-mill dispute."
Disney didn't immediately respond to a request for comment.
What the fight is about
It is the second straight year ESPN has gone off the air on TV during the U.S. Open. The dispute centers on the so-called carriage fees that DirecTV pays Disney to broadcast its programming.
Specifically, DirecTV said in a statement that Disney is "taking an anti-consumer approach" by demanding that a new deal include bundled services. For its part, DirecTV wants to allow customers to be able to pick smaller bundles of networks when subscribing, making it easier to lower their costs.
Carpenter, DirecTV's CFO, told analysts on Tuesday that Disney is pushing back on creating slimmed-down channel bundles that could provide some savings to DirecTV consumers. He estimated that the typical subscriber is paying about $270 a year for Disney's channels, after Disney in recent years has upped the fees it charges providers.
For instance, ESPN's monthly subscriber fee is now about $10, a 40% increase from its $7.19 per-subscriber cost in 2019, DirecTV said, citing third-party researchers.
Customers "are forced to buy these big, bloated packages to watch the Disney Channel. This leads to a higher cost and a lower value quotient," Carpenter said.
In the meantime, DirecTV is offering its customers a $20 credit due to the blackout. Subscribers should go to https://www.directv.com/tvpromise/ to sign up for the credit.
"We're pursuing every avenue to get your station back. To thank you for your patience, until the situation is resolved, we're offering you a bill credit," DirecTV notes.
Blackouts can last from days to years
Such disputes have led to numerous blackouts in recent years. Media companies have repeatedly clashed with pay-TV providers like DirecTV that distribute their content, including over how consumers can subscribe to and purchase channels and streaming services.
Historically, such blackouts typically can stretch from a few days to several weeks, such as the 10-day carriage dispute between Fox Corp. and Dish Network from Sept. 26, 2019 until Oct. 6, 2019, according to S&P Global. But occasionally they can stretch for years, such as a dispute between The Weather Channel and Verizon that caused a 1,567-day blackout for Verizon customers, S&P Global noted.
Distributors are also frustrated with production companies putting some of their premium programming on direct-to-consumer platforms before they show up on channels.
DirecTV cited the miniseries "Shogun" appearing on Hulu before FX. DirecTV also said Disney offered an extension to keep the channels on the air in exchange for DirecTV having to waive all future legal claims that its behavior is anti-competitive.
"The Walt Disney Co. is once again refusing any accountability to consumers, distribution partners, and now the American judicial system," said Rob Thun, DirecTV's chief content officer, in a statement.
Thun added that Disney's demands will make it more difficult for consumers "to select the shows and sports they want at a reasonable price."
In its own statement, Disney said it had extended "flexibility and terms" to DirecTV that it has offered other distributors. "We will not enter into an agreement that undervalues our portfolio of television channels and programs," the company said.