“Troubling Prices” Smack Disney With Major Lawsuit

in Disney, Entertainment

Walt Disney Company CEO Bob Iger in front of Cinderella Castle

Credit: Inside the Magic

The Walt Disney Company will have to answer in court for some of its pricing decisions and business practices, according to the latest reports.

Launched on November 12, 2019, Disney Plus (stylized Disney+) quickly established itself as a major player in the competitive streaming industry. The platform is known for its extensive library of content that encompasses a wide range of family-friendly entertainment, making it a favorite choice for viewers of all ages.

Bob Iger close-up
Credit: Thomas Hawk, Flickr

Disney+ boasts an impressive catalog of content, including classic animated films, beloved Disney Channel shows, Pixar movies, Marvel superhero adventures, Star Wars franchises, and even National Geographic documentaries. The platform also features original programming created exclusively for Disney+, including beloved television series like The Mandalorian, WandaVision, Loki, and The Falcon and the Winter Soldier. These shows have garnered critical acclaim and a dedicated fan base.

Over the last few months, Disney lawsuits have not been hard to find. Walt Disney World Resort was hit with a lawsuit over a guest who suffered pain from a “wedgie” while on a waterslide. Disney also filed a lawsuit against Florida Gov. Ron DeSantis following decisions to remove the Reedy Creek Improvement District and replace it with the state-owned Central Florida Tourism Oversight District. In addition, Disney Magic Key Holders sued the company over practices at Disneyland Resort, and the company will pay them close to $10 million.

Now, another Disney lawsuit has come forward, and according to a judge, the company will have to answer for its business practices, including increased prices.

Bob Iger
Credit: Qilai Shen/Bloomberg

Reports indicate that a federal judge in the United States has issued a ruling that The Walt Disney Company must confront accusations from consumers regarding its business practices, which are alleged to have negatively impacted competition in the live-streaming paid television market, ultimately leading to increased prices.

U.S. District Judge Edward Davila, presiding in San Jose, delivered two related 25-page orders on Saturday, allowing subscribers of Google’s YouTube TV and AT&T’s DirecTV Stream to pursue claims against Disney. These claims center around what are described as “onerous” contracts that purportedly erected unfair barriers for potential competitors.

However, it’s worth noting that Judge Davila has ruled that the consumer plaintiffs are not entitled to seek monetary damages. Additionally, he determined that they had not established an unlawful agreement among competing streaming TV services. The judge has provided the consumers with a deadline of October 16 to file any revised case submissions.

a photo of Cinderella's castle inside of Magic Kingdom at Disney World
Credit: Inside The Magic / Walt Disney World Resort

As of Monday, there has been no response from Disney’s legal representatives or company spokespersons to requests for comment, and the attorneys representing the consumers have not responded to similar requests.

The two potential class-action lawsuits allege that Disney wielded “unmitigated power” to raise the prices of rival streaming services by requiring them to include the sports network ESPN in their lowest-priced channel packages. It’s important to note that Disney owns ESPN. Additionally, Disney’s controlling interest in Hulu, the country’s second-largest streaming pay live television provider, is also cited in the lawsuits.

The plaintiffs contend that Disney’s streaming TV infrastructure and content agreements have created significant barriers for new competitors, as no “at-scale” rivals have emerged without some pre-existing video streaming infrastructure.

Disney’s legal team argued in February that the plaintiffs misunderstood fundamental antitrust and economic principles, asserting that antitrust laws are designed to safeguard competition, not individual consumers.

Judge Davila’s ruling on Saturday acknowledged the plaintiffs’ “detailed allegations of barriers to entry” as a sufficient basis for permitting the antitrust lawsuit to proceed at this early stage. However, he barred the plaintiffs from pursuing claims for damages, as they are considered “indirect” purchasers not directly involved in the contracts and agreements under scrutiny in the litigation. Instead, the plaintiffs are seeking an injunction to prevent alleged anticompetitive practices, reports Reuters.

Inside the Magic will keep you updated on the latest developments surrounding this Disney lawsuit.

Comments Off on “Troubling Prices” Smack Disney With Major Lawsuit