Just before a second Saturday where the possibility of disenfranchised college football fans suddenly becoming more tech-savvy by necessity unfolded, this relief of a press release from my one-time client hit my inbox:
DIRECTV and The Walt Disney Company today announced an agreement in principle that provides greater choice, value, and flexibility to their mutual customers. As a result, Disney’s full linear suite of networks has been restored to DIRECTV, DIRECTV STREAM and U-verse customers while both parties work to finalize a new, multi-year contract.
Give DIRECTV credit; they actually had the huevos to extend this standoff through not only a Monday Night Football debut featuring Aaron Rodgers, which Charter did not, but it also denied major market viewers the ability to see Ryan Seacrest’s debut as the host of WHEEL OF FORTUNE. But as the LOS ANGELES TIMES’ Meg James reported yesterday, there were even bigger motivators for both sides than merely games of any kind:
The nearly two-week battle has been costly. Thousands of subscribers canceled their service during the blackout, DirecTV acknowledged earlier this week. The satellite TV giant wanted to stop the bleeding. Both companies were motivated to reach a deal before the kickoff of another weekend of ESPN and ABC college football, ABC’s telecast of the 76th Emmy Awards on Sunday and the second week of ESPN’s “Monday Night Football,” featuring a game between the Philadelphia Eagles and Atlanta Falcons. ABC’s new primetime season also begins later this month.
With all due respect to football passionistas, methinks the looming possibility of a massive victory lap for FX and Hulu being unable to be seen in Los Angeles, particularly since it will play out tonight on their sister broadcast network, was much more likely to have resulted in mandated phone calls and accelerated compromises. And, after all, Dana Walden has friends in high places.
And as James further detailed, both companies are apparently accepting that they will share both blame and burden with consumers going forward:
After marathon negotiations, the companies said they reached an “agreement in principle,” which contains hikes in the fees DirecTV pays for Disney programming. Earlier this week, DirecTV alerted subscribers that it planned to raise prices on some bundles next month due to higher programming costs.
But poring through the details of yesterday’s press release, at least for we football passionistas there may be some truly good news and, possibly, a way for those cost increases to be negated:
- Continued carriage at market-based terms of Disney’s entertainment, sports and news programming from its comprehensive linear portfolio, which includes the ABC Owned Television Stations, the ESPN networks, the Disney-branded channels, Freeform, the FX networks and the National Geographic channels.
- The opportunity to offer multiple genre-specific options — sports, entertainment, kids & family — inclusive of Disney’s linear networks along with Disney+, Hulu and ESPN+.
- Disney’s direct-to-consumer streaming services (Disney+, Hulu, ESPN+) to be included in select DIRECTV packages under a wholesale agreement, and also to be made available on an a la carte basis.
- The rights to distribute Disney’s upcoming ESPN flagship direct-to-consumer service upon its launch at no additional cost to DIRECTV customers.
What apparently unlocked the stalemate was Disney’s concession on not only which specific channels are offered where but how much of DIRECTV’s subscriber base will be expected to carry it. Again, per James:
Another sticking point was Disney’s requirement that its channels be available in most of the DirecTV and U-Verse homes. Disney has long demanded that its channels reach about 90% of DirecTV’s subscriber base. ESPN’s minimum threshold is around 82%.
Pay-TV companies such as DirecTV must pay penalties if they fail to meet that “minimum penetration.” DirecTV executives argued that it was unsustainable to force customers to buy a “bloated bundle” filled with expensive channels they don’t watch. Most consumers watch fewer than 30 channels, they said.
Actually, if one applies a threshold of a minimal number of hours per month to the equation, at least per Nielsen, that number of channels consumers watch dips to the mid-teens, and that’s pretty much been the case since satellite TV began roughly three decades ago. The number of channel choices expanded exponentially, but people basically have a finite amount of time to devote to them. Your 15-20 significant options are undoubtedly unique to mine, and the fractionalization of measurable audience began long before cord-cutting accelerated it. So assuming DIRECTV accurately constructs bundles based on hard data, which like a streaming service they have tons of, they will be able to satisfy one of the burning issues that has confounded consumers, and that streamers as a whole have to date been reluctant to address.
As for minimum thresholds–overall coverage areas have shrunk dramatically thanks to cord-cutting. No single channel or platform reaches 80-90% of all U.S. households; heck, as of 2021 even ESPN only reached 76 million households via pay TV–out of a total universe of 121 million. So why should any single MVPD be expected to offer anything north of 63%?
And per Statista, ESPN+ is only reaching a little under 25 million subscribers through 2Q24–with a significant amount of those subscribers overlapping with pay TV HHs. That’s the kind of household I live in. So I’m actually excited to potentially be able to access ESPN+ through DIRECTV, as that may indeed eliminate the need for a separate subscription to satisfy my rabid appetite for sports.
Having had DIRECTV and streaming navigation side by side for a while, I see every day yet another advantage that I hope DIRECTV chooses to exploit. Pure and simple, when I turn on my DIRECTV remote, the channel appears, the guide pops up quickly, and I’m able to move seamlessly from option to option, not merely the channels within a walled garden. That, besides personal loyalty, has kept our household from joining the ranks of those that have bid farewell of late.
ESPN+ is merely a more robust and evolved version of add-on packages which DIRECTV offered in their “700s” for years–the cluster where sports subscriptions have been housed since its inception. DIRECTV now has expanded those channel clusters to four-digit options where on-demand and audio packages currently reside. While they are pushing out a new IP-based remote interface called Gemini to its subscribers, my personal experience with it recently was frustrating and ultimately fruitless. We had our first visit from an actual DIRECTV employee in years this week, and even he strongly suggested we keep things the way they were.
I’d offer that DIRECTV use their legacy advantage and that unused channel capacity to offer its expanded games, and possibly a package of their most popular titles on their streaming services, via their superior interface. After all, consumer surveys consistently show that customers value convenience and navigation as highly as they do expanded choice. ADVANCED TELEVISION recently reported this conclusively:
Ease of navigation and favourite show availability drive consumers’ TV default decisions—and will in large part determine the success of both new and existing services.
- Two factors have the strongest impact on the source consumers choose as their TV default: ease of finding something to watch and access to favourite shows.
There’s your playbook, folks. Now go do a better job executing it that, say, Florida, Florida State and Georgia did yesterday.
Until next time…