DirecTV Fights to End the 'One Size Fits All' Streaming Bundle
Even the prospect of shedding customers ahead of Monday Night Football’s season-opening NFL game isn’t deterring DirecTV from doubling down versus Disney in the latest battle to convulse Pay TV. Its contract dispute with Walt Disney Company extends the blackout of channels like ESPN, ABC, FX, and Disney Channel into a fourth day for more than 11 million subscribers.
DirecTV CFO Ray Carpenter has said the company will continue to fight "as long as it needs to" and is painting the dispute quite literally as an “existential” one for the whole of cable TV. “This dispute is not a run-of-the-mill dispute,” Carpenter said in a call with analysts. “This is not the kind of dispute where we're haggling over percentage points on a rate. This is really about changing the model in a way that gives everyone confidence that this industry can survive."
At the heart of the dispute is a desire by DirecTV to sell “skinnied down” packages of programming tailored to various subscriber interests, rather than forcing customers to take channels they may not want or watch very often. Variety says DirecTV believes such a model would help retain subscribers, even if they were paying less.
Carpenter said there is also interest in helping customers find other content, even if it's not sold directly on the service. DirecTV backed up its claims the pay TV audience is now more segmented by releasing data indicating less than 40% of users regularly tuning into live sports, and less than 40% of the audience regularly watching pure entertainment channels. News and Kids are other niche segments.
Ars Technica quotes the American Television Alliance, condemning Disney for “seek[ing] to raise rates and force distributors to carry an unwieldy 'one-size fits all' bundle of more than a dozen channels to the vast majority of their subscribers.” The group said Disney's proposed terms would require TV companies to sell “fat bundles” that “force consumers to pay for programming they don't watch.”
Pouring oil on the flames, Disney declared, “DirecTV continues to push a narrative that they want to explore more flexible, 'skinnier' bundles and that Disney refuses to engage. This is blatantly false. Disney has been negotiating with them in good faith for weeks and has proposed a variety of flexible options, in addition to innovative ways to work together in making Disney's direct-to-consumer streaming services available to DirecTV's customers.”
Around the same time last year Disney was embroiled in a similar license dispute with Charter Spectrum. This was resolved after two weeks after Disney agreed to make Disney+ and ESPN+ available to Charter Spectrum subscribers at no extra cost, but also saw Disney agree to cut loose some of its cable channels. Disney of course plans to form a sports-specific streaming only joint venture with Warner Bros. Discovery and Fox called Venu Sports. The $43-a-month package could best be described as a skinny, genre-based bundle.
The launch of Venu has been delayed pending an antitrust suit filed by rival pay TV company Fubo. which obtained a preliminary injunction against it. Fubo had sought to stop the launch of Venu that it claims would have controlled 60%-80% of live broadcast sports content.
It argued in the suit that the JVs primary effect would be to limit competition, remove consumer choice, and ultimately lead to “steep price hikes for consumers and boosting profits for the partners." The suit, filed February 20, alleges that the vertically-integrated media companies have engaged in a years-long campaign to block Fubo’s attempt to build a sports-first streaming business “resulting in significant harm to both Fubo and consumers.”
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