Nasdaq rises, Dow falls in whipsaw trading action as inflation report looms

A contract dispute between Disney ( DIS ) and DirecTV has yet to reach a conclusion after the media giant pulled its owned-and-operated channels, including ESPN and ABC, from DirecTV last week.

The media pan has already affected the start of the NFL season, including the first Monday Night Football game, in addition to college football.

Along with ESPN, other Disney Entertainment channels affected include Disney Channel, Freeform, National Geographic and local news stations on the ABC network, which is set to host the first presidential debate Tuesday night between Donald Trump and Kamala Harris.

The core of the problem? DirecTV doesn’t want to carry (and pay for) all these channels. It wants a “leaner” package, something media companies have begun experimenting with amid steep declines in linear TV viewership as more subscribers ditch cable and switch to streaming services.

“Everybody loses,” Needham analyst Laura Martin told Yahoo Finance’s Morning Brief on Tuesday. “Content and distribution are complementary networks. Both win together and both lose together. But this is inevitable because Disney continues to want to raise prices.”

“DirectTV wants to pay less (because) it has negative margins in the cable business. So such disputes will become more and more frequent.”

The dispute is similar to last year’s media ban between Disney and broadband provider Charter Communications ( CHTR ), which fought to include more of Disney’s streaming options in its offerings.

The two sides eventually reached an agreement in which Charter will offer some Disney streaming services — the ad-supported version of Disney+, ESPN+ and ESPN’s yet-to-be-released direct-to-consumer offering — as part of select packages of cable at no additional cost to the consumer.

But it’s a different set of bargaining chips this time.

“What makes it different is that DirecTV doesn’t have a broadband distribution business that they can somehow align with,” Macquarie analyst Tim Nollen told Yahoo Finance in an interview on Monday. “They’re totally dependent on the pay TV ecosystem, and Disney is playing hardball with them because they can.”

In other words, DirecTV, which boasts more than 11 million subscribers, cannot offer streaming packages as part of its packages. That makes the satellite cable provider less powerful in its negotiations with Disney.

“Charter could come with cross-selling options in broadband packages,” explained Nollen. “They could combine this combination of linear channels with streaming for their pay TV subscribers, while DirecTV is the satellite provider.”

“They don’t have the same flexibility in terms of how to bring content to consumers over a broadband connection. Without that, I think DirecTV is more limited in what they can offer.”

Read more here.