By Dawn Chmielewski
(Reuters) – Walt Disney Co. and DirecTV announced on Saturday they have reached an agreement in principle, restoring college football and other programming to the satellite television provider's more than 11 million subscribers.
The deal offers satellite TV subscribers greater choice and flexibility, the companies said in a joint statement. DirecTV customers had lost access to ABC, ESPN and other Disney-owned networks on Sept. 1 after the two sides reached an impasse in renewal negotiations.
DirecTV will be able to offer programming packages across genres, including those focused on sports, entertainment, children's and family programming. The satellite TV provider has sought to change its offering to better meet consumer tastes in the era of streaming television.
Disney's streaming services Disney+, Hulu and ESPN+ will also be included in select DirecTV packages. The satellite TV provider also has the rights to distribute the streaming version of its flagship network ESPN, when it launches.
The entertainment giant received better financial terms under the new agreement, according to two sources familiar with the deal.
“DirecTV and Disney have a long history of connecting consumers to the best entertainment, and this agreement furthers that commitment by recognizing both the tremendous value of Disney content and the changing preferences of DIRECTV customers,” the companies said in a statement.
The dispute resulted in DirecTV subscribers losing access to coveted programming, including ESPN's broadcast of college football games and the U.S. Open tennis tournament. DirecTV subscribers also were unable to watch the U.S. presidential debate hosted by ABC News between Vice President Kamala Harris and Republican nominee Donald Trump on the ABC broadcast network.
Vince Torres, chief marketing officer for DirecTV, said the programming blackout was costing subscribers to the satellite television service, in comments made Thursday at the Goldman Sachs Communacopia+ technology Conference in San Francisco.
Disney and DirecTV reached an agreement ahead of Sunday's Emmy Awards on ABC, where the media giant appears poised to make historic gains thanks to three of the year's most nominated series, “Shogun,” “The Bear” and “Only Murders in the Building.”
Distributors like DirecTV and programmers like Disney have been wrangling over fees for decades as the cost of television packages has skyrocketed.
What has helped prop up the television industry is the decades-long practice of “bundling,” or requiring pay-TV distributors to pay for less-watched networks like Freeform in order to get access to ESPN’s prized programming. Contractual terms also specify how broadly a distributor makes this content available to its subscribers.
Historically, sports have served as a bulwark against the decline of the pay-TV industry, continuing to draw viewers even as cable and satellite distributors lose subscribers.
But as viewers migrate to streaming, so do sports. Major events, such as the just-concluded Olympics, have moved to streaming, along with professional sports competitions in the National Football League and the National Basketball Association.
Venu Sports, a live sports streaming service that brings together programming from joint venture partners Disney, Warner Bros Discovery (NASDAQ:) and Fox, threatens to further accelerate the decline of pay-TV. Venu’s launch has been delayed pending the outcome of an antitrust trial.
DirecTV has said it wants the opportunity to offer subscribers genre-based programming packages tailored to their viewing tastes, Venu-style, without forcing customers to pay for a large bundle of TV channels they don't watch.
“That's a genre offering that we believe is good for consumers and that we want to offer to consumers,” Torres said.
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