DirecTV Brings Bad-Faith Negotiating Complaint Against Disney

Disney's demand for a "clean slate" provision and a covenant not to sue in its retransmission consent negotiations should be declared bad-faith negotiating, DirecTV told the FCC in a complaint filed Sunday. DirecTV also indicated another complaint, about Disney's bundling demands, could follow.

The DirecTV/Disney retrans agreement expired Sept. 1. Since then, DirecTV subscribers have lost access to Disney's cable programming and Disney-owned-and-operated ABC local stations in Los Angeles, New York, Chicago, Houston, Philadelphia, San Francisco, Fresno and Raleigh, DirecTV said in its complaint. Additionally, its streaming service subscribers have lost ABC-affiliated stations that ABC does not own, it added.

DirecTV said retrans talks stalled over Disney's insistence on bundling and penetration requirements, but the complaint centers on Disney supposedly insisting on "clean slate" language. Such language would preclude DirecTV from bringing good-faith complaints at the FCC about the negotiations. DirecTV complained that Disney also is pushing language that would have DirecTV release any claims and agree not to sue for released claims.

Much of the 13-page complaint focuses on Disney's bundling demands, which have DirecTV carrying a fat bundle of Disney programming, while Disney will eventually offer its programming directly to consumers in skinny bundles via the proposed Venu sports streaming joint venture and its planned ESPN streaming service. Pointing to the temporary injunction against Venu (see 2408160040), DirecTV said the FCC has never considered a good-faith complaint about such bundling practices, but that a future DirecTV complaint could be forthcoming.

Disney emailed that it "continue[s] to negotiate with DirecTV to restore access to our content as quickly as possible. We urge DirecTV to stop creating diversions and instead prioritize their customers by finalizing a deal that would allow their subscribers to watch our strong upcoming lineup of sports, news and entertainment programming, starting with the return of Monday Night Football.”

Pay-TV carriage disputes are common, "but they're getting more desperate as cord-cutting now leads to double-digit subscriber declines, and a lot more sports is becoming available on streaming services," Macquarie's Tim Nollen noted Monday. He said DirecTV, lacking a broadband business, must come up with skinnier channel packages or the necessary revenues. The first Monday Night Football game on ESPN "could mark capitulation, or the point of no return."

The American TV Alliance supported DirecTV's complaint. "There is anticompetitive activity at the heart of this case," it said in a statement. Disney, it said, wants multichannel video programming distributors like DirecTV "to carry and pay for all its networks -- even the less popular ones -- or face financial penalties. MVPD customers are thus forced to pay for the ‘fat bundle’ with no say over what they want or do not want. However, Disney itself will offer its most popular sports programming at cheaper rates, without unwanted networks. That’s wrong -- and the courts and regulators should do something about it.”

Since the Sept. 1 blackout, DirecTV has promoted options to its subscribers that include Dish Network's Sling streaming service, with a $30 credit from DirecTV, and fuboTV, which got the preliminary injunction as part of its legal fight against the Disney/Fox/Warner Bros. Discovery Venu partnership.

North Carolina Gov. Roy Cooper (D) last week urged the programmer and distributor to come to an agreement before the state's sports fans are further stymied in trying to watch such content as college football.