By Joe Flint

Disney and DirecTV agreed to terms on a new distribution deal and returned the entertainment giant's popular channels, including ESPN and ABC, to the satellite broadcaster's 11.3 million subscribers Saturday morning.

The pact ends a nearly two-week stalemate between the companies that turned particularly nasty -- with DirecTV accusing Disney of negotiating in bad faith. Subscribers were caught in the middle and missed popular sports programming including college football and the first week of "Monday Night Football."

Under the terms of the deal, Disney receives increases in the fees it charges DirecTV to carry its networks and local ABC television stations, the companies said, while DirecTV has more flexibility in how it sells Disney's channels to customers, which was a key sticking point in the deal.

"DirecTV and Disney are giving customers the ability to tailor their video experience through more flexible options," the companies said in a joint statement. The companies said DirecTV will be able to bundle and sell Disney channels by genres such as sports, entertainment, and children and family content.

The ability to sell Disney's channels via genre means DirecTV customers that don't want costly sports programming won't be forced to subscribe to those channels.

As part of the agreement, DirecTV will be able to include Disney streaming services Disney+, ESPN+ and Hulu in select packages to its subscribers. DirecTV will be charged a wholesale rate to have the ability to sell the services, which also will be offered on an a la carte basis to all subscribers.

DirecTV will have rights to launch a new much-anticipated ESPN streaming service next year at no additional costs to its subscribers.

In addition to the DirecTV satellite service, the deal also covers the DirecTV streaming platform and U-Verse.

During the contract squabble, DirecTV filed a complaint at the Federal Communications Commission accusing Disney of negotiating in bad faith. That complaint remains active, a person familiar with the matter said.

Contract disputes between programmers and pay-TV distributors that lead to blackouts for consumers have grown more prevalent in recent years. Both entertainment companies and distributors are battling to fight cord-cutting and compete with streaming services such as Netflix.

Disney and DirecTV have each launched streaming versions of their respective content and distribution outlets in an effort to hold on to viewers and create new revenue streams.

Shortly after the deal became public, ESPN announcer Pat McAfee said on ESPN's "College GameDay" show, "DirecTV, welcome back, baby. Welcome back to the party."

Write to Joe Flint at Joe.Flint@wsj.com

(END) Dow Jones Newswires

September 14, 2024 10:09 ET (14:09 GMT)

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