Key Points:
- Disney is suing Echostar’s Sling TV, claiming its new Day Pass subscriptions for ESPN and other channels violate their distribution agreement.
- Disney says it was never notified of the plan, despite an assurance from a Sling TV executive that programming partners were briefed.
- Sling’s Day Pass lets viewers access Sling Orange, including ESPN, for as little as $5 a day, far cheaper than the regular $46 monthly rate.
The Walt Disney Company has filed a federal lawsuit accusing Sling TV of breach of contract over the streaming television service’s introduction of new short-term subscriptions.
In a complaint filed late Tuesday evening, attorneys for Disney and ESPN said Sling TV’s new “Day Pass” feature was launched earlier this month in a way that violates the streaming TV provider’s distribution agreement.
The Day Pass feature allows Sling TV viewers to watch channels offered in its Sling Orange programming tier, including ESPN, starting at $5 for a 24-hour period. Weekly and weekend passes to Sling Orange are also available. Typically, Sling Orange costs around $46 per month.
In an interview with a trade publication, Sling TV’s Vice President of Product Seth Van Sickel claimed channel operators were notified about the Day Pass feature before it launched. He didn’t say Disney was told about the plan, nor did he say whether any channel owners gave their approval.
The lawsuit filed on Tuesday makes clear that Disney doesn’t approve, and the company says it wasn’t given a heads-up before Sling TV debuted the Day Pass feature two weeks ago.
“Sling TV’s new offerings, which they made available without our knowledge or consent, violate the terms of our existing license agreement,” a spokesperson for Disney said in a statement on Tuesday.
The spokesperson said the lawsuit was intended to force Sling TV and its parent Dish Network to “comply with our deal when it distributes our programming.” Sling TV and Dish Network are subsidiaries of Echostar, which is named as a defendant in the lawsuit.
Echostar and Sling TV have not commented on the matter.
Currently, Sling TV is the only pay TV provider — streaming or legacy — to offer what essentially amounts to pay-per-view subscriptions to ESPN and other Disney-owned channels.
In a statement following the Day Pass launch, a Sling TV spokesperson said the short-term subscriptions were “about putting control back in the hands of the fans, whether it’s tuning in for college football, professional sports, award shows or a spontaneous movie night, all without having to sign a long-term, binding contract.”
Like other channel owners, Disney collects fees from the distribution of its channels on Sling TV. The fees are typically paid by TV distributors monthly, and are calculated on a per-subscriber basis.
Disney was one of Sling TV’s earliest launch partners, offering ESPN and other networks through its base programming tier for $20 per month when the app first hit the market in 2014. Over time, Disney has adjusted its per-subscriber fees, leading to higher costs for Sling TV packages that include ESPN.
Since last year, some Sling TV competitors have taken advantage of new distribution agreements with Disney to put ESPN and other expensive networks in separate programming packages, while relegating entertainment and news channels to cheaper tiers. DirecTV and Charter’s Spectrum TV are two services that have done so, and Fubo — which Disney is in the process of acquiring through a merger of its Hulu with Live TV service — is readying a smaller, ESPN-inclusive sports plan that will launch in the next few months.
At the same time, Sling TV has been essentially forced to carry ESPN in its Sling Orange package, which is priced higher than some comparable, entertainment-inclusive services. At $46 per month, it is also more expensive than ESPN Unlimited, a streaming plan introduced by Disney earlier this month that offers the ESPN multiplex for $30 per month.
The high price of Sling TV and new offerings from competing services has caused ongoing churn at Sling TV, with the company reporting 1.79 million subscribers as of its most-recent financial quarter.
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