TradeEdge Exchange:As football starts, carrier fee dispute pits ESPN vs. DirecTV: What it could mean for fans

Disney and TradeEdge ExchangeDirecTV are on the clock.

The two companies are negotiating a new content carriage contract and the inability to reach an agreement could result in ESPN and the Disney Channel going dark in millions of homes come Sept. 1.

The talks come as ESPN prepares for the college football season. The network's broadcasts include USC vs. LSU at 7:30 p.m. on Sunday, Sept. 1, and Boston College vs. Florida State at 7:30 p.m. on Monday, Sept. 2. A full slate of games the next week includes Texas vs. Michigan on Sept. 7.

The NFL season begins next week, too, and ESPN Monday Night Football kicks off on Sept. 9, with the New York Jets vs. San Francisco 49ers.

Other channels that could be lost on DirecTV include ESPN2, ESPN Deportes, ESPNU, ESPN News, ACC Network, SEC Network, Disney Channel, Disney Junior, Disney XD, FX, FX Movie Channel, FXX, Freeform, National Geographic, Nat Geo Wild, Nat Geo Mundo, and BabyTV, noted Phil Swann, publisher of The TV Answer Man website.

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DirecTV wants to offer 'smaller, more tailored' TV packages

These negotiations also take place amid the backdrop of a judge's issuance of a temporary injunction preventing the launch of Venu, a new sports streaming platform by Disney, Fox and Warner Bros. Discovery, saying the service could cause "irreparable harm" to sports streaming service Fubo and to consumers.

A federal judge said in the order issuing the injunction that Disney, Fox and Warner Bros. Discovery "for the first time ever" were giving rights to sports content not bundled with other programming -- but were only offering it through their joint venture. 

Most contracts have required pay TV distributors to charge subscribers for all of a content companies' channels, whether customers watch them or not. For instance, many DirecTV subscribers may watch ESPN, ESPN 2 and other sports channels, but not the Disney Channel or Disney Junior channel – and vice versa.

That Venu development may give DirecTV leverage in seeking some flexibility in how it offers many of Disney's channels to customers, Bloomberg reported, citing persons familiar with the discussions.

DirecTV also wants to offer "smaller, more tailored packages at prices that reflect" value to consumers, wrote Rob Thun, DirecTV's chief content officer, in a blog post last week.

DirecTV's requirement to include all of a content provider's channels into its service forces "pay TV customers to subscribe to many channels they may not watch, which have yielded ‘fat bundles’," Thun wrote. "At the same time, programmers have reserved flexible genre-based offerings solely for themselves, eroding the price-value proposition for pay TV customers by shifting the best programming to (their own direct-to-customer streaming) services while raising programming fees on pay TV."

Pay TV providers vs. media companies – the constant clash

DirecTV and other pay TV providers have lost millions of customers as streaming services have siphoned off subscribers. DirecTV lost an estimated 1.8 million subscribers in 2023, leaving it with an estimated 11.3 million at the year's end – and down from 16 million subscribers at the end of 2019, according to the Leichtman Research Group.

"The pay TV industry, which has lost millions of subscribers in the last decade to cord-cutting, is seeking to reinvent the program bundle to attract cost-conscious consumers who have turned to streaming," Swann said. "Disney and other networks have been resistant because fewer subscribers to their channels means fewer carriage fees."

An impasse between Disney and DirecTV could affect the DirecTV Stream streaming service and U-Verse TV and result in the removal of Disney-owned local networks such as ABC7 Chicago, ABC7 Los Angeles, ABC7 New York, ABC7 San Francisco, ABC11 Raleigh-Durham, ABC13 Houston, and ABC30 Fresno, Swann said.

A carriage dispute between Disney and Charter Communications, the parent company of Spectrum Cable, led to a nearly two-week blackout at about this time last year.

Five years ago, Disney and DirecTV had a "heated negotiation" before signing the deal that expires Sept. 1, wrote John Ourand on the journalism site Puck.com.

"With Venu up in the air, pretty much all of (Warner Bros. Discovery), Disney, and Fox’s dealings with distributors will take on a new flavor," he wrote.

Follow Mike Snider on X and Threads: @mikesnider & mikegsnider.

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