Disney, DirecTV Agree to Terms on Carriage Agreement

DirecTV and the Walt Disney Co. have reached an agreement in principle to restore channels owned by the ESPN parent company on the No. 3 U.S. pay-TV distributor, ending a particularly bitter two-week impasse. 

The deal arrives after ESPN and other Disney channels went dark on the satellite TV company beginning Sept. 1, ultimately impacting the season opener for Monday Night Football and last Tuesday’s U.S. presidential debate. But after continued negotiations between DirecTV and Disney, the sides achieved a breakthrough that gives the distributor the flexibility it sought to offer consumers genre-specific programming bundles, including in sports, while providing Disney some fee increases for carriage of its channels.  

“Through this first-of-its kind collaboration, DirecTV and Disney are giving customers the ability to tailor their video experience through more flexible options,” the companies said Saturday morning in a joint statement. “DirecTV and Disney have a long-standing history of connecting consumers to the best entertainment, and this agreement furthers that commitment by recognizing both the tremendous value of Disney’s content and the evolving preferences of DirecTV’s customers.

Disney channels, including ESPN, will be restored in time for a new slate of college football games on Saturday, and in turn, the upcoming Week 2 MNF game involving the Falcons and Eagles. 

Key Terms

Somewhat recalling the new programming options central to the Disney-Charter distribution agreement struck a year ago, the contract reached with DirecTV seeks to adapt to a rapidly changing pay-TV market. Among the critical components in the pact:

• An ability for DirecTV to offer consumers multiple genre-specific “skinny bundles,” including in sports.
• A packaging of DirecTV subscriptions with Disney’s direct-to-consumer streaming services, including ESPN+
• Rights for DirecTV to offer its customers ESPN’s forthcoming flagship streaming service at no additional cost. 
• Continued carriage for Disney channels on DirecTV at “market-based terms.”

DirecTV has more than 11 million U.S. subscribers, and had called the situation with Disney “not a run-of-the-mill dispute,” and one about “changing the model.” On Thursday, DirecTV CMO Vince Torres said in a Goldman Sachs conference that the company had lost “not an immaterial amount of customers” during the Disney dispute. During the two-week blackout, the situation frequently grew tense and even involved DirecTV making a complaint to the Federal Communications Commission accusing Disney of not negotiating in good faith.