DirecTV CFO Ray Carpenter said the company will continue to fight “as long as it needs to” amid a carriage dispute with Disney, which has caused a number of Disney channels including ABC and ESPN to go dark for DirecTV customers.
On a call with media and analysts Tuesday, Carpenter said the satellite TV company is pushing for “skinny, genre-based” packages, where customers can choose the kind of content they want to pay for, bundled around genres including news, family and sports, in addition to more flexible choice on what channels would be included and what direct-to-consumer content they may want included in the packages. DirecTV also says it is pushing for “competitive pricing” for its customers and allowing customers access to content once its released, rather than waiting.
The channels went dark Sept. 1, amid the U.S. Open tennis tournament and ahead of the LSU-USC college football game that day. Asked whether DirecTV would “cave” on its position ahead of the first Monday Night Football game of the season between the New York Jets and the San Francisco 49ers, on Sept. 9, Carpenter said the company would not back down, because it views this as an “existential” negotiation.
“This dispute is not a run-of-the-mill dispute. This is not the kind of dispute where we’re haggling over percentage points on a rate. This is really about changing the model in a way that gives everyone confidence that this industry can survive,” Carpenter said.
In a call filled with barbs against Disney, Carpenter blamed the disruption of the programming on the media conglomerate.
‘We were asking to keep the signal up, and that’s usually the case when we run into these situations. And unfortunately, Disney was not willing to entertain that. In fact, the timing of when they decided to pull the content was absolutely orchestrated to put the most pain and disruption on our customers,” he said.
In a statement on Sept. 1, Dana Walden and Alan Bergman, co-chairmen of Disney Entertainment, and Jimmy Pitaro, chairman of ESPN, had, in turn, blamed the blackout on DirecTV and said Disney was willing to be flexible on terms, but not at a more discounted rate.
“DirecTV chose to deny millions of subscribers access to our content just as we head into the final week of the U.S. Open and gear up for college football and the opening of the NFL season. 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,” the statement read.
The playbook, including the reach out to media, is similar to last year’s carriage dispute between Charter Spectrum and Disney.
During the dispute, Disney’s channels went dark for two weeks for Charter Spectrum subscribers, as Charter framed their position as being about the future of pay TV. In the end, the two sides cut a deal that made Disney+ and ESPN+ available to Charter Spectrum subscribers at no extra cost, but also saw Disney agree to cut loose some of its cable channels.
Carpenter noted the parallels, but said that unlike Charter, which also includes internet access, mobile phone service and more, DirecTV is solely focused on its video customers, making the negotiation even more existential.
Asked how important it is for Charter to include Disney+, ESPN+ and eventually the launch of the coming flagship direct-to-consumer ESPN platform for its customers, as with the Charter deal, Carpenter said the company has found that not every customer would want it, so he would not want a blanket deal that sees every customer paying for that.
“There is value in that. But what’s important is that it’s not a replica of the model that got us here in the first place, where it has to be distributed and paid for by 100% or a large percentage of the customers. And so again, making sure that customers have that flexibility and choice is what’s critical for us,” he said.
Overall, Carpenter said DirecTV would like to offer customers more flexibility in their programming options and tailor the price to those packages, adding that the company “would be pleased to offer our customers a lower price point, even if that puts some compression on our margins.” He also pushed for more ease of use in finding content. This comes as the overall value of paid TV packages has declined, according to Carpenter, due to more content being moved to direct to consumer services.
“We want to see the unbundling that many of these programmers are trying to offer independent of distributors like us, but are restricting our ability to offer it to our customers, and then, to allow for something that’s more seamless as it relates to accessing the content, managing the content and discovering new content, so that they can get the most of what they expect and deserve as it relates to a pay TV service,” he said.