Disney seeks dismissal of ESPN lawsuit, claiming judge mistakenly allowed some claims to proceed

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Update:

• Disney asked a California federal judge to throw out a class action lawsuit accusing the company of making live-streaming carriage agreements that prevent ESPN from being excluded from cheap bundling packages. 
• Disney previously attempted to get the complaint dismissed earlier this year, arguing it is not a competitor but simply a channel provider, exempting it from claims under the Sherman Act. 
• Disney now claims changes made to the lawsuit following its first dismissal request are not enough to save damages claims that had been thrown out and that the complaint should have been dismissed entirely. 
• YouTube TV and DirecTV Stream subscribers filed the class action lawsuit, claiming Disney injured them financially by requiring ESPN to be included in their packages. 

YouTube TV live pay television class action overview:

• Who: YouTube subscribers accuse Disney of driving up the cost of streaming on YouTube TV.
• Why: The plaintiffs claim Disney forced its way into several competing streaming services as a way to control the market.
• Where: The case was filed in the U.S. District Court for the Northern District of California. The four lead plaintiffs are from California, Arizona, Indiana and Kentucky.

(Nov. 28, 2022)

YouTube subscribers filed a class action antitrust lawsuit against The Walt Disney Co., alleging it unlawfully uses its power in the media industry to control competing streaming services, which drive up subscription costs on platforms such as YouTube.

Through its ownership and control of Hulu, the second largest streaming service in the United States that includes a live-TV streaming option, the 85-page complaint alleges Disney leverages a “horizontal, anticompetitive” advantage for ESPN and ESPN-related channels. Disney also owns ABC and 21st Century Fox.

The lawsuit accuses Disney of controlling pricing power over the entire live TV streaming market in two ways:

• Disney’s carriage agreements require that base or lowest-priced bundles offered to streaming services must include ESPN
• Disney’s carriage agreements include “Most Favored Nation” clauses that put upward price pressure on every rival live pay television streaming product

Live TV streaming costs doubled since Disney acquired Hulu in 2019, YouTube TV class action says

The plaintiffs say prices across the live paid television market have doubled since Disney acquired Hulu in 2019. It also claims Disney caused YouTube TV subscriptions to nearly double, from $35 per month to $65 per month, when Disney required that ESPN be included in the package. 

ESPN, according to an article on Yahoo Finance, is said to be the most expensive channel on basic cable and streaming plans, with some estimates pricing it at $9 or more per month. The plaintiffs allege that Disney requires streaming services to carry ESPN in its lowest-priced bundles, amounting to what the plaintiffs call an “ESPN tax.”

“Customers that left cable and satellite TV in favor of an (streaming) product in order to escape mandatory high-cost channels in their cable or satellite base package are faced with the same inefficient and unwanted product in the (streaming) market,” the YouTube TV class action states. Consumers who don’t want to pay for ESPN have no way to opt out, according to the complaint.

The lawsuit says that after taking control of Hulu in 2019, Disney immediately raised the price of Hulu’s Live TV offering by $10 per month, bringing the cost of the base package to $54.99. The complaint says other competing platforms followed suit. Within months, AT&T streaming increased $15, PlayStation Vue shuttered, Sling TV increased its subscription by $5 per month, YouTube raised prices by $15 per month and ,one year later, Disney raised the price of Hulu live TV by an additional $10 per month. 

With each increase, Hulu + Live TV further approached the average cost of traditional basic cable and satellite subscriptions, the YouTube TV class action claims.

In related Disney and ESPN news, a class action lawsuit claims that ESPN shares its digital subscribers’ viewing habits with Facebook without consent.

The YouTube TV live pay television class action is Heather Biddle, et al. v. The Walt Disney Co., Case No. 5:22-cv-07317, in the U.S. District Court for the Northern District of California.

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