Disney Being Sued Because Of Their Prices
YouTube TV subscribers are suing Disney, claiming the media giant is manipulating the price for live TV streaming with their ownership of ESPN and Hulu.
An antitrust lawsuit over rising streaming prices has been filed against The Walt Disney Company. The proposed class action, which was filed by a group of YouTube TV subscribers in the U.S. District Court in San Francisco, accuses the entertainment giant of managing Hulu and ESPN as a single entity in business dealings. This allows the company to “set a price floor” for the entire streaming market. So every time Disney raises its fees, prices across the industry are driven up.
YouTube TV subscribers say that Google’s deal with the entertainment giant has resulted in an increase in the base package from $35 to $65 per month. “Since Disney acquired operational control over Hulu in May 2019, prices across the streaming live pay television market, including for YouTube TV, have doubled,” the complaint reads. “This dramatic, market-wide price inflation has been led by Disney’s own price hikes for Hulu + Live TV.”
The suit also points to the company’s contract guidelines with live streaming pay TV competitors that require them to carry ESPN as part of the cheapest bundle they offer. These terms effectively restrict the ability of Disney’s competitors to provide an option that omits ESPN. Without the stipulation, the House of Mouse wouldn’t be able to prevent rivals from selling “skinny” bundles that offer a limited selection of live TV channels, The Hollywood Reporter says.
The plaintiffs, Heather Biddle of California, Jeffrey Kaplan of Arizona, Zachary Roberts of Indiana, and Joel Wilson of Kentucky, are seeking unspecified damages from the company and demanding a jury trial. With more than five million subscribers, YouTube TV is the largest provider of streaming live pay television services, Deadline reports. In 2021, Disney and YouTube TV reached a new agreement after a carriage dispute led to ESPN going dark on the streamer for two days.
The deal followed a distribution impasse between Roku and YouTube parent Google. It was also two months after a YouTube TV deal with NBCUniversal avoided a blackout of the Comcast channels. Long before the lawsuit, cable providers have been critical of Disney’s affiliate fees to broadcast ESPN and its sister networks as part of a package.
These fees have always been regarded as the primary driver of basic cable price hikes in the last 10 years. ESPN’s affiliate fee was almost four times as expensive as the fee to broadcast TNT in 2015, which had the second highest fee behind the sports channel. But the sports provider’s leverage was eroded as people opted for lower-cost alternatives.
The lawsuit against Disney was filed days before Bob Iger returned as the company’s Chief Executive Officer. After succeeding Michael Eisner in 2005, the 71-year-old led the House of Mouse through a period of massive expansion by pursuing mergers that expanded its reputation as a content powerhouse. He acquired Pixar for $7.4 billion, Marvel for $4 billion, and Lucasfilm for $4 billion.
The executive also snagged Fox for $71.3 billion, as part of a deal that included 20th Century Fox studio, Fox Searchlight, and FX Networks. It will be interesting to see how he approaches the antitrust lawsuit against Disney in the coming weeks.