Satellite TV Is in Trouble. DirecTV’s Dispute With Disney Shows Why.

It’s no secret that the TV business is in upheaval. And in the sea of struggling companies, satellite TV distributors may be in the most precarious position.

That unforgiving economic reality has been thrown into sharp relief by a bitter dispute between DirecTV and Disney that has dragged on over the past two weeks.

In many ways, the two businesses are engaged in a routine fight between a television programming company and its distributor that results in a service disruption. In this case, many of the satellite provider’s roughly 11 million customers haven’t been able to watch popular programs like the U.S. Open and Monday Night Football.

But DirecTV has significantly less negotiating leverage than its competitors in traditional TV. That’s because satellite companies don’t have the same hook to retain customers when the channels go dark: internet access.

Unlike Comcast and Charter — U.S. cable TV heavyweights whose businesses are anchored by broadband internet access — satellite TV companies like DirecTV and Dish are primarily TV services, making it easier for customers to cancel in favor of streaming alternatives like YouTube TV, Hulu Live+TV or Fubo, a sports-focused streaming service.

Satellite TV’s other disadvantage: Unlike cable TV, basic satellite TV technology does not allow viewers to watch content on demand. Instead it offers a large menu of shows and movies, with the option to record with a DVR. But satellite TV still resembles a traditional broadcaster and is out-of-step with the current era of streaming video.