Disney Asks FCC to Dismiss DirecTV Complaint Alleging Bad Faith Negotiations During Carriage Dispute

Disney has asked the Federal Communications Commission to dismiss DirecTV’s complaint against the entertainment giant after the satellite TV operator accused it of negotiating in bad faith during its latest round of carriage negotiations that prompted a 13-day blackout of ABC and ESPN.

At the time, a DirecTV spokesperson told TheWrap that negotiations with Disney stalled because it insisted on bundling and penetration requirements that were found to be unlawful, anticompetitive and “bad for consumers” during the legal battle between Venu Sports and Fubo.

“Disney wants to force DIRECTV to carry a ‘fat bundle’ including less desirable Disney programming — while itself offering cheaper, ‘skinnier’ bundles of programming that consumers want,” the company wrote in the complaint. “The Commission has never considered a good faith complaint in these circumstances, and DIRECTV may well wish to bring one in the future concerning Disney’s conduct,” the complaint states.”

DirecTV also argues that Disney was insisting that it agree to a “clean slate provision” and covenant not to sue, which it claimed were intended to prevent it from taking any legal action in the future, including filing good faith complaints with the FCC.

In its response , Disney said it was “surprised and disappointed” to receive the complaint and that DirecTV “misunderstood the scope of its clean slate proposal,” which it says was never intended to preclude either party from filing a complaint with the FCC.

The complaint states that the two sides began discussing and negotiating the business and legal terms of a renewal of its carriage agreement in January. During those talks, both parties proposed including a “mutual litigation-focused” clean slate provision as part of the renewal. It specifically cited an Aug. 31 conversation in which the Disney negotiating team emailed DirecTV an issues list with “over 100 open points of negotiation, one of which was a clean slate proposal.”

The parties would fail to reach an agreement by the carriage deal’s Sept. 1 expiration, but Disney said that negotiations continued to resolve outstanding issues and reach a tentative agreement to restore programming as quickly as possible.

“While the parties continued to exchange counterproposals, including on
the topic of a clean slate agreement, that specific proposal was not the focus of negotiations during this period,” Disney said. “Much to the Company’s surprise, on the afternoon of Saturday, September 7, 2024, it received DIRECTV’s instant Complaint alleging that the Company had breached the requirement to negotiate in good faith for retransmission consent. The next day, Sunday September 8, 2024, the Company emailed its counterproposal to DIRECTV’s September 7 proposal and confirmed that the Company had never intended the clean slate provision to curtail DIRECTV’s ability to file a complaint with the FCC.”

The two parties would reach an agreement in principle on Sept. 14, which Disney says includes a “general clean slate release that, for clarity, will exclude this and any other FCC proceedings.”

Disney says that DirecTV has misconstrued FCC precedent and mischaracterized the company’s actions during the negotiations, while “embellishing its argument with collateral and immaterial issues.”

It noted that the Aug. 31 issue list made “no reference whatsoever to the filing of complaints before regulatory authorities, including the FCC” and pointed out that the agency does not resolve claims concerning breaches of privately negotiated contractual agreements. Instead, it resolves claims about whether a party has breached its duty to negotiate in good faith under its own rules. The company argues that a review of the full record of negotiations would “lead any rational fact finder to conclude that Disney has more than met that duty.”

“DIRECTV is a sophisticated company with which Disney has a long history of
negotiating complex distribution agreements covering a wealth of Disney’s content on all of DIRECTV’s platforms. As with any commercial negotiation, the parties sometimes have sincere disagreements and take positions at odds to the other’s interests,” the complaint concluded. “But, as explained herein, at no
time during the course of this negotiation did Disney act in bad faith, nor has DIRECTV alleged facts that demonstrate a breach of the duty to negotiate in good faith. Therefore, its Complaint should be dismissed without further consideration.”

Representatives for DirecTV did not immediately return TheWrap’s request for comment.

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