A top Disney
executive told a Congressional subcommittee Wednesday that the company does not require distributors to carry low-rated networks in order to gain access to popular ones. But a DirecTV executive said
there is an element of bundling involved in negotiations, including with penetration requirements.
“I’ve signed three affidavits attesting to the fact that we do not employ what
is commonly known as tying,” said Ben Pyne, president of global distribution at Disney Media Networks.
Without referring to Disney in particular, DirecTV Executive Vice President Mike
Palkovic said large programmers offer the satellite operator a single price for all of their channels (including local stations). If it wanted to carry selected ones, it would not be economical, he
said.
“I think that’s intended … you end up with situations where even if we could create a package for consumers that was affordable, that only had in that package
enough programming to support a price point they would want, we’ll run afoul of penetration obligations in those agreements,” Palkovic told the subcommittee. “So you can do it, but
you end up either having to stop selling that package, or you have to pay through the nose to the programmers for violating those terms.
"It's not just the tying of all the channels. There
[are] penetration obligations on the more popular channels that accrue to the rest of the suite of services. It’s a tough situation today to deal with.”
The hearing by a House
Energy & Commerce subcommittee was aimed at exploring reauthorization of legislation that impacts satellite operators DirecTV and Dish Network, but dealt with a variety of issues.
Amy
Tykeson, the CEO of the much smaller Oregon distributor BendBroadband, told the subcommittee that programmers are requiring operators to place networks on tiers that raise prices for customers.
“I have to put these channels in these wide-penetrated tiers, and customers don’t want them,” she said. “My packages are becoming way too expensive, and it’s just not
fair for my customers.”
As evidence that is does not bundle, Pyne offered that 15% of cable systems only carry ESPN and ESPN2, two of Disney’s more popular networks. (He
may have been referring just to networks within the ESPN family, which also include ESPNU and ESPN News, since the company also operates the Disney Channel, ABC Family and local ABC stations.)
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It is possible these days to 'cut the cord' and design one own package among low cost and free options...