Lawsuit alleged Disney inflated market prices by making carriers include ESPN.
The Walt Disney Company has agreed to pay $50 million to subscribers of YouTube TV and DirecTV’s live TV streaming services to settle a lawsuit that claimed that Disney forced these services to raise their prices.
In November 2022, four YouTube TV subscribers filed a class action complaint (PDF) against Disney in the US District Court for the Northern District of California. They accused Disney of entering “anticompetitive agreements with YouTube TV” and other companies that provide access to broadcast channels via the Internet.
The complaint argued that Disney forced over-the-top (OTT) live TV services to cost more by requiring distributors to include ESPN, which Disney owns, with their base packages.
Additionally, by raising prices for ESPN and for Hulu + Live TV, (Disney’s own OTT live TV service that includes ESPN), Disney drove up prices across the industry, the complaint argued.
The filing claimed that Disney had “pricing power over the entire” streaming live pay TV (SLPTV) market for two main reasons:
… these carriage agreement mandates—which now cover all of Disney’s leading competitors in the SLPTV Market—allow Disney to use ESPN and Hulu to set a price floor in the SLPTV Market and to inflate prices marketwide by raising the prices of its own products. And this is exactly what Disney has done in the past three years, since it took operational control of Hulu.
The complaint pointed out that YouTube TV’s base package increased from $35 to $65 after adding Disney-owned channels. It also noted that during YouTube TV and Disney’s 2021 carrier dispute, YouTube TV said that its base plan would be $15 cheaper without Disney-owned channels.
The complaint sought class action certification and a jury trial. Instead, the parties reached a settlement agreement in March (PDF). The court preliminarily approved the agreement later that month. A final approval hearing is scheduled for January 14, as first reported this week by local Alabama news outlet AL.com.
Under the terms of the settlement agreement, Disney agreed to pay a settlement amount of $50 million. Customers eligible to receive part of the settlement purchased a YouTube TV, DirecTV Stream, DirecTV Now, and/or AT&T TV Now subscription between April 1, 2019 and March 31, 2026.
Disney admits no wrongdoing under the agreement. It also agreed to “consider” offering distributors that it’s negotiating with the option to offer their subscribers fewer Disney-owned channels, including ESPN, for three years after the final approval of the settlement.
Still, per the agreement’s language, Disney doesn’t seem required to provide more affordable or skinnier bundles of its channels. Also, Disney can easily afford the $50 million settlement amount, considering it made $4.6 billion in total segment operating income in its most recent fiscal quarter. Still, for affected streaming users who feel slighted by Disney’s practices, the settlement agreement may provide some feeling of justice.
Disney didn’t respond to Ars Technica’s request for comment in time for publication.
Source: Ars Technica
