DirecTV subscribers lose access to Disney networks after failure to reach deal

By Dawn Chmielewski and Lisa Richwine

(Reuters) -Walt Disney and satellite TV provider DirecTV failed to reach a new distribution deal for ESPN, ABC and other Disney-owned networks, the companies said on Sunday, resulting in more than 11 million DirecTV subscribers losing access to those networks.

The programming blackout at the expiry of the prior deal on Sunday took effect days before the National Football League kicks off its season on Thursday, and ahead of ABC News' scheduled presidential debate on Sept. 10.

When DirecTV viewers attempt to access a Disney-owned channel, they encounter a message that reads: "Our contract with Disney, the owner of this channel, has expired. We appreciate your patience while we negotiate to offer you greater flexibility, choice, and value."

Disney and DirecTV entered the Labor Day holiday weekend far apart in their negotiations, people with knowledge of the talks said. A DirecTV spokesman said it approached Disney about renewal talks in May.

DirecTV sought changes in its offerings to cater to consumer tastes in the streaming TV era as part of a new multi-billion dollar licensing agreement. It pressed Disney to allow it to sell smaller, lower-priced packages, including tiers without ESPN for customers who do not watch sports.

The deal that expired on Sunday was negotiated in 2019.

Disney wants "to continue to chase maximum profits and dominant control at the expense of consumers – making it harder for them to select the shows and sports they want at a reasonable price," said Rob Thun, chief content officer at DirecTV, in a statement on Sunday.

Disney balked at DirecTV's request for discounts and lower distribution thresholds, one person familiar with the negotiations said. Agreements typically contain minimum penetration requirements that specify the portion of subscribers to whom a distributor is required to make a network available.

"While we're open to offering DirecTV flexibility and terms which we've extended to other distributors, we will not enter into an agreement that undervalues our portfolio of television channels and programs," said Dana Walden and Alan Bergman, co-chairmen, Disney Entertainment, and Jimmy Pitaro, chairman, ESPN, in a statement on Sunday.

(Reporting by Dawn Chmielewski in Los Angeles, Urvi Dugar in Bengaluru, and Hannah Lang in New York; Editing by Cynthia Osterman and Jamie Freed)