Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.A new Labor Day tradition in the US has arrived: Disney finding itself in a messy contract dispute with another television titan, with each side trying to survive a new world order in entertainment.Disney’s contract with the satellite provider DirecTV expired last weekend with no renewal in place. As a consequence, DirecTV customers missed the start of the college football season as well as the middle rounds of US Open tennis.Such “carriage” disputes have become commonplace. Exactly a year ago Disney scuffled over a renewal with John Malone’s Charter Communications. But in the intervening year, linear television’s decline has only hastened. Worse for Disney, a recent legal setback may threaten its usual ability as the precious content provider to push distributors like DirecTV around.DirecTV was acquired in 2015 by AT&T at an aggregate value of $67bn. Three years ago, the telco divested majority control of DirecTV to the private equity group TPG at an enterprise value of just $16bn. Satellite TV has been bleeding subscribers for years but unlike cable TV providers, DirecTV has no broadband business as a counterbalance to changes in video consumption.With a shrinking television audience, Disney needs to charge as much as possible for each remaining subscriber to traditional linear pay TV. Its flagship ESPN, for example, has the highest affiliate fee at about $9 per subscriber. In its most recent quarter, affiliate fee revenue dropped 2 per cent as subscribers fell by 8 per cent even as its rates charged increased by 6 per cent.The current stand-off between DirecTV and Disney has somehow turned even more existential. As Lex discussed recently, a federal court halted a sports streaming joint venture created between Disney, Fox and Warner Bros Discovery. The judge said the bundling practices whereby distributors had to accept and pay for several channels as a package from Disney and content companies were likely illegal.In the wake of the decision, DirecTV has told Disney it does not wish to pay for everything thrown in the pot alongside ESPN — just what it thinks ESPN is worth standalone.Each side is digging in, accusing the other of being unreasonable and harming American consumers. The Labor Day timing for this now annual dust-up is ominous. The most important live television content by far is the National Football League which kicks off its ESPN schedule next Monday night. Last year that was enough to prompt a compromise just before Monday Night Football. This year do not be so [email protected]
