An antitrust lawsuit was filed against walt disney company A case targeting the dual role of entertainment monoliths as content suppliers and distributors in commerce.
Operated by Disney Huluis the second largest paid live streaming provider in the country, ESPNThe proposed class action lawsuit accuses Disney of controlling the business as a single entity, and the arrangement puts the company in conflict with competitors who inflated the cost of live television streamed over the Internet. It claims to be able to negotiate competitive contracts.
The lawsuit is against Disney and YouTube TV subscribers who filed a lawsuit in California federal court on Friday. They point to a commerce that effectively grants companies the ability to “set a price floor” on the market and raise prices for their own products, thereby pushing up prices for the industry as a whole.
“Since Disney acquired operating control of Hulu in May 2019, [streaming live pay television] The market has doubled, including YouTube TV,” reads the complaint. “This dramatic market-wide price increase was driven by Disney’s own price hike for Hulu + Live TV.”
The lawsuit sets out guidelines for contracts with live-streaming pay-TV competitors that require them to carry ESPN as part of the cheapest bundle Disney offers. The term effectively limits the ability of Disney rivals to offer the option of omitting ESPN, the most expensive channel on Disney-owned cable.
Without this requirement, Disney would not be able to prevent competitors from selling so-called “skinny” bundles that offer subscribers exclusive live TV channel offerings, according to the complaint.
Cable TV providers have long criticized Disney’s affiliate fees for broadcasting ESPN and its sister networks as part of cable packages. Such charges are widely believed to be a major factor in the rise in underlying cable prices over the past decade. In 2015, ESPN’s affiliate fee was as much as four times his fee to broadcast TNT, which was his second highest fee after ESPN.
ESPN’s clout has eroded with the advent of cord cutting and viewers avoiding cable TV. This is largely due to consumer aversion to having to pay for channels they don’t watch or want. They flocked to low-cost or free alternatives.
The first mass attacks came from traditional cable and satellite TV providers who also controlled Internet service providers. For example, in 2015 he said that Verizon began offering so-called “skinny” bundles. This takes advantage of the ambiguity of the contract, which does not explicitly cover ESPN’s distribution on the Internet, to end Disney’s long-running obligations on pay-TV packages. Disney sued her Verizon, claiming that downgrading ESPN as an add-on tier violated the company’s contract of carriage. Verizon eventually surrendered.
The lawsuit also takes aim at ESPN by contractually requiring it to be included as part of every basic cable package and imposing so-called “most favored nation” clauses as part of these contracts. increase. Lowest price in the industry. This means that if Disney-run Hulu with Live TV raises prices, its competitors will have to do the same.
According to YouTube TV subscribers, a deal between Google and Disney has increased the price of the base package from $35 to $65 per month. In 2021, YouTube TV said it could offer an ESPN-free basic plan for $15 less than it was charging during its feud with Disney over a content deal.
The lawsuit was filed days before Bob Iger back to disney lead the company. His Iger, who succeeded Michael Eisner as CEO in 2005, spearheaded Disney during a period of massive growth, largely by pursuing mergers, resulting in it becoming a global content powerhouse. has grown in popularity. In 2006 he acquired Pixar for $7.4 billion, Marvel for $4 billion in 2009, and Marvel for $4 billion in 2012, as part of a deal involving his 20th Century Fox Studios, Fox Searchlight and FX Networks. Lucasfilm for $71.3 billion and in 2019 he bought Fox for $71.3 billion.
Today, some acquisitions can be challenged by competitive enforcers. turned their attention To the consolidation of the media industry.
A lawsuit seeking to defend nearly five million YouTube TV subscribers who claim they are paying inflated subscription fees alleges they violate the Sherman Act.
Disney did not immediately respond to a request for comment.