
DirecTV Gears Up for Existential Struggle with Disney
By Movieguide® Contributor
DirecTV’s contract with Disney expires this week, but the cable provider will hesitate to renew its relationship if industry-redefining changes do not occur.
The problem comes from Disney’s unwillingness to ungroup its channels requiring an all-or-nothing deal for TV providers. While Disney controls some of the most lucrative channels, such as ESPN or ABC, it also controls niche content like Nat Geo Wild. To cut costs, DirecTV would like to cut out these smaller channels, but Disney does not allow them to do so.
“We’ve hit a ceiling of price that customers are willing to pay, and the only way to try to adjust what people can pay, then, is to offer skinnier bundles,” said DirecTV’s Chief Content Officer, Rob Thun. “And that’s the one thing that is not allowed.”
“We absolutely have to find our way to offering something smaller and less expensive than what we have today,” he added.
While Disney is currently playing hardball and giving DirecTV no choice but to take all of its channels, the company has shown leniency in the past. Last year, after its dispute with Charter, it slimmed down its offerings, cutting out Freeform, Disney Junior, Disney XD, FXX and Nat Geo Wild from the provider’s coverage, while adding on Disney+ for free for Charter subscribers.
The inclusion of Disney+, however, has proven to be surprisingly uninteresting for Charter users with less than 10% taking advantage of their free account almost a year later.
“This seemed like the future: adding new streaming offerings desired by consumers and dropping lightly-watched linear TV channels,” LightShed Partners media analyst Rich Greenfield wrote in July. “Unfortunately, it does not appear to be working out that way for Charter.”
“That should reinforce to these programmers, ‘Holy moly, if I’m going to be on my own and this stuff’s available for free and I’m getting single-digit take rates, what are my prospects of not having pay TV to subsidize the model…’ we’re going to die,” Thun added.
Disney further revealed its willingness to split up its channels through its proposed sports streaming platform, Venu, which combines its sports media with Warner Bros. Discovery’s and Fox’s. Venu would single out sport-related Disney-owned channels rather than including everything the company owns.
This decision was part of the reason Venu’s creation was blocked by a judge earlier this summer, as Disney allowed itself to make this split without offering it to anyone else.
While it is unclear how this upcoming dispute between DirecTV and Disney will play out, it will almost certainly change the future of cable TV.
Movieguide® previously reported:
Disney, Fox and Warner Bros. Discovery are appealing a court ruling that temporarily blocked their new sports streaming venture, Venu Sports.
Sports streaming service FuboTV requested a preliminary injunction to block Venu’s launch, saying it will “irrevocably reduc[e] competition in the market and harm…consumers,” per Deadline.
Disney, Fox and Warner Bros. Discovery jointly filed to appeal the ruling.
“We believe that Fubo’s arguments are wrong on the facts and the law, and that Fubo has failed to prove it is legally entitled to a preliminary injunction,” the companies stated after the injunction. “Venu Sports is a pro-competitive option that aims to enhance consumer choice.”