A contract dispute between Disney (DIS) and DirecTV continued Monday after the media giant pulled its owned and operated channels, including ESPN and ABC, from DirecTV last week.

The media blackout has already impacted the start of the NFL and college football seasons.

In addition to ESPN, other Disney Entertainment channels have been affected, including Disney Channel, Freeform, National Geographic and local news stations on the ABC Network.

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

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

Ultimately, the two sides reached an agreement in which Charter would offer a number of Disney streaming services (the ad-supported version of Disney+, ESPN+, and the yet-to-be-launched direct-to-consumer offering ESPN) as part of select cable packages at no additional cost to consumers.

But this time the negotiating positions are different.

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

In other words, DirecTV, which has more than 11 million subscribers, can’t offer streaming packages as part of its bundles, weakening the satellite cable provider’s negotiating position with Disney.

“Charter could come up with cross-selling options for broadband packages,” Nollen explained. “They could put together this combination of linear channels with streaming for their paid TV subscribers, and DirecTV is the satellite provider.”

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

But the company is still trying to fight back, offering customers a one-time $20 credit in an effort to minimize subscriber churn, along with a $30 credit toward Dish’s Sling or Fubo streaming packages — both of which include the full suite of ESPN networks.

The story continues

Over the weekend, DirecTV filed a complaint with the Federal Communications Commission, alleging that Disney did not negotiate in good faith.

“Disney violated the FCC’s good faith obligations by basing a licensing agreement on DirecTV’s waiver of legal claims relating to Disney’s past, present or future anticompetitive actions, including the ongoing packaging and minimum penetration requirements,” the company said in a statement.

Nollen said the move symbolizes DirecTV’s desire to “reset market expectations” when it comes to how other pay TV companies can negotiate with media companies like Disney in the future.

“They say, look, the world has changed. Others have these options. We should also have options that include smaller packages,” he said.

To that end, Disney itself has partnered with rivals Fox (FOX) and Warner Bros. Discovery (WBD) to launch a “skinny” sports bundle known as Venu Sports. A judge temporarily blocked the service’s launch last month over antitrust concerns. The three companies have since appealed the decision.

In addition to Venu, Disney plans to launch a fully over-the-top ESPN streaming service in the fall of 2025.

“They’re creating their own skinny bundles,” Nollen said. “That’s something they would rather run, manage and control themselves.”

But the analyst said it’s still in Disney’s best interest to make a deal.

“Disney would lose all those viewers (if a deal isn’t reached before Monday night football starts.) And then there’s all that advertising demand that’s not being met,” he said. “So it’s going to be a problem for Disney as well, but DirecTV probably even more so (because) there are other distribution options for Disney.”

On Monday, Disney said it is continuing to negotiate with DirecTV to restore the content as quickly as possible. It said it has urged DirecTV “to stop creating distractions and instead prioritize their customers by reaching a deal that would allow their subscribers to watch our strong upcoming lineup of sports, news and entertainment programming, beginning with the return of ‘Monday Night Football.'”

But as Monday night’s game drew closer, it became clear that this moment represented a much bigger turning point for the industry at large.

“Pay-TV distributors are becoming more and more desperate,” Nollen said. “Subscribers are continuing to decline and this event, losing Disney and ESPN, perhaps the most important piece of content they can have, would be a really bad thing for DirecTV to lose.”

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and send her an email at [email protected].

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