The Walt Disney Company has agreed to pay $50 million to settle a class action lawsuit alleging that its pricing demands led to higher prices for other live TV streaming services like YouTube TV and DirecTV Stream.
Disney is accused of pushing ESPN and other Disney-owned channels, which drove up pricing across the board.
The lawsuit
The class action lawsuit was filed by four YouTube subscribers back in November 2022. They filed with the U.S. District Court for the Northern District of California, alleging Disney’s carriage agreements with streaming television providers violated federal antitrust laws by requiring distributors to include Disney-owned channels like ESPN be in the base packages, making them cost more.
Of course, Disney has denied any wrongdoing as part of the settlement. Which they almost always do.
Lawsuit Challenged Disney’s Distribution Agreements
The suit argued that Disney pushed carriage agreements with streaming live pay TV providers, effectively preventing services from offering lower-cost packages that didn’t include ESPN and other Disney-owned networks. This drove up the price on base packages across the industry, and providers were forced into a “pricing floor” that made it hard to offer less expensive alternatives.
It was also argued that Disney’s controlling ownership of Hulu + Live TV (including ESPN) gave Disney the power to influence the pricing of the live streaming TV market. Prices have gone up considerably for Hulu’s live TV option since Disney took control. We saw our costs jumped more than 2X from what it was only a few years ago.
Pricing for YouTube TV’s base package jumped up from $35 to $65 after the Disney-owned channels were added.
YouTube TV publicly stated in 2021 that without Disney programming, the price would have been $15 less.
The lawsuit alleged that Disney used ESPN and Hulu to establish what it described as a “price floor” for streaming live television services, making it more difficult for competitors to offer less expensive alternatives.
Who Is Eligible For Part of the Financial Compensation?
The proposed settlement covers customers who subscribed to YouTube TV, DirecTV Stream, DirecTV Now, and AT&T TV Now between April 1, 2019, and March 31, 2026.
The settlement agreement received preliminary approval back in March. But the final approval hearing is scheduled for January 14.
If the settlement receives final approval, eligible subscribers will be able to file claims for a portion of the settlement fund. The amount individual class members receive has not yet been determined.
Business Practice Changes
Along with the settlement, Disney has agreed to make limited changes to how it negotiates future carriage agreements.
For a period of three years following final approval, Disney will consider proposals from distributors that would allow them to offer subscribers packages containing fewer Disney-owned channels, including ESPN. Of course, considering is not the same as doing, and they are not required to offer lower-priced bundles.
When the mouse owns the best cheddar, they are going to leverage it to get as much as they can. Especially when YouTube TV has become one of the most-watched television services.
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