Disney has been hit with an antitrust lawsuit by a group of YouTube TV subscribers from four different states, who claim that the business deals it has done with live TV service providers have inflated the amount consumers have to pay.
Live TV platforms like YouTube TV are required by Disney to include ESPN in their base packages, which means that customers have to pay much more, even if they don’t want to watch ESPN.
Last year, Disney and YouTube TV got into a carriage dispute, which saw Disney’s channels temporarily become unavailable, and YouTube TV issued a statement saying that if they couldn’t get a new deal, the Disney-owned channels would be removed and customers would receive a price cut from US$64.99 to US$49.99. This is obviously the main reason why people have cottoned onto how much people were paying each month for the Disney channels, including ESPN. The carriage dispute was eventually sorted out, with the price of YouTube TV staying at $64.99.
The 82-page class-action complaint filed this week in U.S. District Court in San Francisco (click here for the full details) alleges that Disney uses ESPN and Hulu to set a price floor in the SLPTV Market and inflates prices marketwide by raising the prices of its own products. And this is exactly what Disney has done in the past three years, since it took operational control of Hulu.
According to the lawsuit:
Since Disney acquired operational control over Hulu in May 2019, prices across the SLPTV Market, including for YouTube TV, have doubled. This dramatic, marketwide price inflation has been led by Disney’s own price hikes for Hulu + Live TV, and has directly tracked Disney’s competitor- by-competitor negotiation of new SLPTV carriage agreements over this time period.
The plaintiffs are seeking damages as well as injunctive relief to halt and unwind Disney’s anticompetitive practices. They are demanding a jury trial.
Disney currently owns a 66% stake in Hulu, with Comcast owning the other 33% stake. Disney took control of the day-to-day running of Hulu when it acquired 20th Century Fox. The two companies agreed that as early as January 2024, Comcast can require Disney to buy NBCUniversal’s interest in Hulu, and Disney can require NBCUniversal to sell that interest to Disney for its fair market value at that future time. Hulu’s fair market value will be assessed by independent experts, but Disney has guaranteed a sale price for Comcast that represents a minimum total equity value of Hulu at that time of $27.5 billion.
The ownership of Hulu is a major issue for Disney right now, and with Bob Iger recently returning to Disney as the new CEO, this is another issue the streaming service will have to deal with.
Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom.