DirecTV and Disney have reached an agreement that allows Disney's ESPN and other channels to once again be available to customers of the pay-TV provider after a roughly two-week blackout.
The deal comes just in time for college football airing Saturday on ABC, ESPN, SEC Network and ACC Network, as well as the Emmy Awards airing on ABC. CNBC previously reported that a deal could be reached as early as Saturday.
Disney Networks ceased operations on September 1 after the two sides failed to come to an agreement on fees and package structures. The dispute left DirecTV's more than 11 million customers without access to the U.S. Open, college football and the season opener, “Monday Night Football.”
DirecTV executives began calling for the possibility of offering cheaper, genre-specific packages to customers in the weeks leading up to the dispute, and again after the Disney networks ceased operations. Disney had said DirecTV’s offerings did not reflect the value its networks offer.
On Saturday, DirecTV and Disney said they had reached an agreement that provided for “market-based terms” on pricing.
The deal also gives DirecTV the opportunity to offer multiple genre-specific options, such as sports, entertainment, and kids and families, including Disney’s traditional television networks, along with its streaming services, Disney+, Hulu, and ESPN+.
DirecTV will be able to offer Disney’s streaming services in its packages and on an on-demand basis, the company said in a statement Saturday. DirecTV also obtained the rights to distribute Disney’s upcoming direct-to-consumer streaming service, ESPN, which is set to launch in the fall of 2025, at no additional cost to its subscribers.
The inclusion of Disney's streaming services and ESPN's future flagship service echoes the streaming deal struck between Letter Communications and Disney last year after a similar blackout. Charter and Disney had reached an agreement in time for the first week of “Monday Night Football.”
In a joint statement, DirecTV and Disney called the collaboration “the first of its kind” as it offers “customers the ability to personalize their video experience through more flexible options.”
The blackout highlighted how valuable live sports are to both the media companies that own the rights to broadcast the games and the pay-TV providers that want to show them.
Since Sept. 1, both sides have accused each other of holding up a deal. DirecTV has called Disney anti-consumer and ESPN president Jimmy Pitaro has called DirecTV's responses to Disney's offers “basically hypothetical.”
Because of the blackout, businesses, their customers and other business owners appear to have lost out.
“We never want to be left without information. It's not good for either party. It's not good for the client, of course. We did everything we could,” ESPN's Pitaro said on CNBC last week.
The number of customers DirecTV lost during the dispute was not “immaterial,” DirecTV Chief Marketing Officer Vince Torres said at the Goldman Sachs Communacopia & Technology Conference on Thursday.
DirecTV offered its customers a $30 credit, funded by suspending payments to Disney as soon as the blackout began, Torres said.
During the dispute, many small business owners were also unable to offer the full sports programming they typically offer. Many bars and restaurants rely on DirecTV as a commercial distributor of the NFL's “Sunday Ticket” package with out-of-market games (which was not affected by the blackout) and therefore use the pay-TV provider for the rest of their television content, including ESPN.
Beyond sports, the blackout also occurred during Tuesday's presidential debate, leaving customers in certain markets without access to Disney's ABC broadcast network.
Disney had tried to temporarily allow DirecTV to offer ABC to its customers that night, but the pay-TV provider refused. DirecTV called it a public relations move and said it didn't think it was necessary to open up ABC since the debate was also being broadcast on several other news networks.
Antitrust laws in the media have come under close scrutiny in recent weeks after Venu, the live streaming joint venture between Warner Bros. Discovery, Fox Corporation. and Disney, was temporarily blocked by a judge on antitrust grounds. Fubo Television Initially the lawsuit was filed by DirecTV and Echo starDish has supported this service ever since.
Last week, DirecTV said it had filed a complaint with the Federal Communications Commission alleging that Disney had failed to negotiate in good faith. The FCC has rules requiring broadcast owners to do so. Saturday's statement did not indicate the status of the complaint, but sources told CNBC that it is “still active.”
In recent years, the entire pay-TV package has been completely upended, as customers have opted for streaming services and other forms of entertainment over the traditional structure. The shift has fragmented the media ecosystem, with live sports (especially Disney’s ESPN) seen as the linchpin that holds the package together due to its high viewership.
DirecTV is in the midst of an advertising campaign to remind consumers that it's more than just a satellite TV company: It also has a streaming package.
