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Disney withdraws ABC, ESPN and other channels in dispute with DirecTV
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Disney withdraws ABC, ESPN and other channels in dispute with DirecTV


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CNN

Disney on Sunday pulled its ABC channels, ESPN and other cable networks from DirecTV’s lineup as the two companies failed to agree on a new distribution deal, leaving millions of sports fans in the dark as the college football and NFL seasons get underway.

The expiration of an agreement between the two companies caused Disney-owned networks to go dark for more than 11 million satellite subscribers ahead of Sunday night’s kickoff between the USC Trojans and LSU Tigers, in the midst of the U.S. Open tennis tournament and days before the NFL’s season opener.

“The Walt Disney Co. is once again abdicating any responsibility to consumers, distributors and now the American justice system,” said Rob Thun, chief content officer at DirecTV, in a statement. “Disney is in the business of creating alternate realities, but this is the real world where you have to make a living and answer for your own actions. They want to continue to pursue maximum profits and dominant control at the expense of consumers – making it harder for them to choose the shows and sports they want at a reasonable price.”

The standoff not only pushed ESPN and Disney-owned ABC affiliates out of the country’s third-largest pay-TV provider, but also forced other networks, including FX, National Geographic and Freeform, to cease service.

“DirecTV has decided to deny millions of subscribers access to our content just as we move into the final week of the U.S. Open and prepare for college football and the start of the NFL season,” Disney Entertainment chiefs Dana Walden and Alan Bergman and ESPN chairman Jimmy Pitaro said in a statement. “While we are open to offering DirecTV the flexibility and terms we have provided to other distributors, we will not enter into an agreement that undervalues ​​our portfolio of television channels and programs. We urge DirecTV to do what is in the best interest of its customers and enter into a deal that would immediately restore our programming.”

As negotiations between the two parties dragged on, Disney offered DirecTV a sports-focused package that included ESPN’s networks and ABC sports broadcasts, as well as a selection of Disney’s linear channels paired with some of the entertainment giant’s direct-to-consumer services, a person familiar with the matter told CNN.

Disney stressed that the prices DirecTV is asking for are in line with other providers and reflect the value of its entertainment portfolio. A Disney spokesman said DirecTV was asking for “unreasonable” discounts. However, DirecTV said that in order to reach a deal, Disney had required the carrier to waive any future legal claims that its conduct was anticompetitive.

The breakdown of the talks came at a time when satellite and cable providers are demanding slimmer and more flexible packages from their programming providers that could offer cheaper options to consumers who want a smaller selection of channels.

“Unfortunately, while (direct-to-consumer) offerings have evolved, pay-TV packages have remained largely unchanged,” Thun said in an open letter before the deal fell through. “Instead of allowing providers like DirecTV to develop even smaller, tailored packages at prices that reflect the value they get from the content, programmers have continued to impose and enforce strict bundling requirements through exorbitant minimum penetration rates – the minimum proportion of a provider’s subscribers required to access a channel.”

The stalemate comes as media giants look to bolster their streaming divisions. Disney, Warner Bros. Discovery (CNN’s parent company), Paramount and others are increasingly broadcasting premium shows on their own digital services, foregoing traditional cable and satellite distribution with their tens of millions of subscribers.

“Consumer frustration is at an all-time high as Disney moves its best producers, most innovative shows, top teams, conferences and entire leagues to its direct-to-consumer services while making customers pay more than once for the same programming on multiple Disney platforms,” ​​Thun said in his statement Sunday. “Disney’s only magic is to drive up prices while making its content disappear.”

Last year, Disney renewed a distribution deal with Charter, avoiding a last-minute blackout of “Monday Night Football” after the cable provider demanded more flexibility in its packages and access to Disney’s streaming services. While the showdown briefly led to Disney-owned channels being removed from Charter’s Spectrum service over Labor Day weekend, Disney ultimately agreed to a deal that gave Charter subscribers access to its Disney+ and ESPN+ services.

Established media companies have been working for years to break away from reliance on traditional cable and move to streaming services as millions of consumers cancel their cable every year. This shift is being spurred by the rapid rise of Netflix. Earlier this month, a federal judge temporarily blocked the launch of a planned joint streaming venture between Disney, Warner Bros. Discovery and Fox Corporation focused on sports, dealing the effort a major blow.

The decision came after Fubo, a smaller rival sports streaming service, filed a lawsuit alleging that the trio was trying to exploit its sports media rights to outcompete rivals and monopolize the market with a single, anti-competitive package.

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