Editor’s Note: This story has been updated to include a statement from Disney executives.
A failed distribution agreement between Walt Disney Co. (NYSE:DIS) and pay-TV provider, DirecTV, owned by AT&T Inc. (NYSE:T) and TPG Capital, has led to more than 11 million subscribers losing access.
What Happened: On Sunday, the companies announced the failed distribution deal for ESPN, ABC, and other Disney-owned networks, which has resulted in a programming blackout, reported Reuters.
This has affected over 11 million DirecTV subscribers, just days before the National Football League’s season kickoff and ABC News’ scheduled presidential debate on Sept. 10.
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In its bid to align with consumer preferences in the streaming TV era, DirecTV sought to modify its offerings as part of a new multi-billion dollar licensing agreement.
The company proposed smaller, lower-priced packages, including tiers without ESPN for non-sports viewers. However, Disney resisted DirecTV’s request for discounts and lower distribution thresholds.
“[Disney] want to continue to chase maximum profits and dominant control at the expense of consumers – making it harder for them to select the shows and sports they want at a reasonable price,” said Rob Thun, chief content officer at DirecTV.
Disney executives, Dana Walden and Alan Bergman, and Jimmy Pitaro, chairman of ESPN, also addressed DirecTV's decision to remove Disney content from its service in an emailed statement.
The executives said they have offered DirecTV terms similar to those provided to other distributors, and would not agree to terms they believe undervalue their portfolio.
“We urge DirecTV to do what's in the best interest of their customers and finalize a deal that would immediately restore our programming,” they stated.
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Why It Matters: This development comes on the heels of DirecTV’s transformation into a streaming service, eliminating the need for a satellite dish to access its content.
The company had been promoting its pay TV bundle which doesn't require a satellite dish.
Meanwhile, last month, Disney reported strong third-quarter earnings, with a 4% year-on-year revenue growth to $23.16 billion, driven by subscription revenue growth due to price increases and customer growth for Disney+ Core.
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