Disney Hit With Antitrust Lawsuit Over Streaming TV Prices – The Hollywood Reporter

A lawsuit has been filed against The Walt Disney Company in a case that points to the entertainment monolith’s dual role as a content provider and promoter of commercial enterprises.

Disney operates Hulu, the country’s second-largest pay TV provider, while controlling ESPN. The proposed action accuses Disney of running the businesses as a single entity, saying the company could negotiate anticompetitive agreements with competitors that raise the cost of television. live streamed online.

The lawsuit appeals to YouTube TV customers, who filed a lawsuit on Friday in California federal court, against Disney. They point out that the companies that provide the company with the ability to “set a price table” for the market and stimulate prices among the company by increasing the prices of its products itself.

“Since Disney acquired operating control over Hulu in May 2019, prices between the [streaming live pay television] The market, including YouTube TV, has doubled,” the complaint reads. “This increase in market price was driven by Disney’s own price increases for Hulu + Live TV.”

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The suit points to Disney’s contracts with live streaming pay TV competitors that require them to carry ESPN as the lowest package they offer. The term effectively limits the ability of Disney’s competitors to offer an option to leave ESPN, Disney’s most popular cable channel.

Despite this requirement, Disney cannot prevent competitors from selling so-called “skinny” bundles that offer consumers an unlimited supply of live TV channels, according to the complaint.

Cable TV providers have long criticized Disney’s affiliate fees for broadcasting ESPN and its affiliates as part of a cable group. Fees are widely believed to be the primary cause of cable price increases over the past decade. In 2015, ESPN’s affiliate fee was more than four times higher than TNT’s advertising fee, making it the second highest paid after ESPN.

ESPN’s leverage has been eroded with the advent of cord-cutting and viewers moving away from cable TV. Mostly, it’s because consumers refuse to pay for channels they don’t watch or like. They run low cost or free options.

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The first major volley came from cable and satellite TV providers that also controlled Internet service providers. For example, Verizon in 2015 began to offer so-called “skinny” packages, using ambiguity in contracts that did not cover the distribution of ESPN on the Internet, to cancel Disney’s long-standing orders on pay TV packages. Disney sued Verizon, saying that ESPN’s downgrade as an add-on was a violation of its license agreement. Verizon has finally done it.

The lawsuit also includes ESPN demanding that ESPN be included as part of the original cable channels and that as part of these agreements it is called “the most popular territories”, guaranteeing ESPN affiliate fees negotiated with any competitor. an overall price floor. This means that if Disney raises the price for Hulu with Live TV, which it will do, competitors will have to do it.

YouTube TV marketers say Google’s deal with Disney has increased subscriptions from $35 to $65 per month. In 2021, YouTube TV said it could offer a basic plan without ESPN at $15 before suing during the fight with Disney over a content.

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The lawsuit was filed days before Bob Iger returned to Disney to lead the company. Iger, who succeeded Michael Eisner as CEO in 2005, managed Disney during a period of rapid growth by pursuing mergers that enhanced its reputation as a powerhouse. world power. It acquired Pixar for $7.4 billion in 2006, Marvel for $4 billion in 2009, Lucasfilm for $4 billion in 2012 and Fox for $71.3 billion in 2019 as part of a deal that included with 20th Century Fox studios, Fox Searchlight and FX Networks.

Today, some of the achievements will be challenged by competitors who have turned their attention to integrating the media industry.

The lawsuit, which seeks to identify approximately five million YouTube TV subscribers who say they are paying inflated subscription fees, is alleged to be a violation of the Sherman Act.

Disney did not immediately respond to requests for comment.


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