As DirecTV remains locked in a heated carriage dispute with Disney that has left ABC and ESPN dark on the service for the last 11 days, the satellite TV giant has revealed its base of over 11 million subscribers has started to shrink.
“We have seen customer defections. I would say it’s not an immaterial amount of customers,” DirecTV chief marketing officer Vince Torres told an investor conference hosted by Goldman Sachs on Thursday. “Anytime you have something like this, the annoyance factor is very high and I understand it as both a consumer and an executive at the company. We’re trying to minimize it over the long term.”
At the heart of the dispute is DirecTV’s desire to offer its customers greater flexibility through skinny, genre-based packages. Disney has argued that the proposal lacks specifics and that it has offered various options, such as a sports-centric bundle option featuring ESPN networks and ABC, an entertainment-based option featuring Disney’s entertainment networks and linear offerings paired with Disney’s direct-to-consumer subscription services like the deal with Charter Communications struck last year. But DirecTV has said Disney’s proposal is “laced” with minimum penetration requirements that limit the scope and reach of what it’s looking to offer.
“The choice and flexibility that we’re fighting for, I think, opens the market up much more significantly. If we did this deal and we were just stuck with the same rights and the same ability, I would say it’s a net loss for the company, because we wouldn’t have the ability to differentiate an offering in the marketplace to claw back the losses that we’re experiencing right now,” Torres explained. “I fundamentally believe that we’re making progress in getting this choice and flexibility, and over the mid and long term, we will be able to claw back these short term losses.”
According to Nielsen, more than 90% of DirecTV households watched Disney’s linear programming every month last year — amounting to more than 5 billion hours viewed in a single year. But on average, DirecTV argues, only two-thirds of its customers watch a combined three hours or more across Disney’s 16 available channels, which includes local ABC stations.
Less than 40% of DirecTV customers watch Disney sports content for at least three hours per month across seven available channels — and about 85% of its customers have to pay for those channels. The same holds for Disney’s entertainment channels, where 40% of DirecTV customers watch for a combined three hours or more on average per month, DirecTV says. But again, over 80% of its customers pay for those Disney channels and only 10% watch kids and family programming for a combined three hours or more on average per month — but nearly 80% of DirecTV customers are obligated to pay for them.
“That’s not a sustainable model. That’s the ruin of that business and we believe that we’re short sighted right now, the programmers are bit short sighted, and Disney’s a bit short sighted in terms of how we can better serve customers together,” Torres said. “There’s room for both of us profitably, and we’ve got to get back to what customers want and serving them, and that’s what we’re fighting for.”
The programming blackout began on Sept. 1 moments before the USC vs. LSU game and has since disrupted the U.S. Open and the 2024 season opener for “Monday Night Football.”
It also extended into the first presidential debate between Vice President Kamala Harris and former President Donald Trump hosted by ABC on Tuesday evening, though DirecTV subscribers could watch it on Hulu, Disney+, ABC News Live and over the air. Additionally, it was simulcast on other broadcast and cable news networks.
Disney offered to give impacted DirecTV customers a three-hour ABC News live feed to watch the debate, but that was rejected by DirecTV, who argued it would’ve caused customer confusion. It countered with an offer to return Disney owned-networks through Sept. 16 at 11:59 p.m. ET to allow subscribers to watch the debate, Sunday’s Primetime Emmy Awards and college and professional football games on ABC and ESPN, ACC or SEC networks, but said that solution was also rejected.
“They wanted to sell in a very self-serving manner, draw attention and eyeballs to their ABC broadcast for three hours, then turn it back off, but not solve the customer problem that they’re creating around sports and Saturday football. And we didn’t think that was right for our customers. We thought it would create confusion,” Torres said. “The debate was available for our customers to watch on a number of different channels, so we didn’t believe there was a customer need. This is purely a self-serving offer that they used as a PR ploy as part of this negotiation.”
It remains to be seen if the two parties can reach a deal before ABC’s telecast of Sunday’s Emmy Awards. In the meantime, impacted DirecTV subscribers can request a $20 credit for the disruption and receive $30 credits for subscriptions to Hulu + Live TV, Fubo or Sling TV. Disney’s channels are also available via YouTube TV, Dish Network, Verizon Fios, Comcast’s Xfinity or Charter Communications’ Spectrum. Additionally, ABC is available free over the air.
