Networks take another blow in fight against Sling TV’s ‘Day Passes’

Sling TV has won another favorable court ruling over the sale of short-term “Day Passes” to consumers.

The Dish-owned virtual pay TV platform was given a positive ruling earlier this week against Warner Bros. Discovery, the second major content provider to sue the company over the sale of “Day Passes” which allow consumers to purchase full live TV subscriptions for as little as 24 hours at a time, rather than committing to a full month as most services require.

Sling has advertised these subscriptions specifically at sports fans that may want to watch one game, or a weekend’s full of games, without paying a steep monthly fee. Content providers like Warner Bros. Discovery and Disney, both of whom have filed suit against Dish, are claiming breach of contract.

Just last month, U.S. District court judge Arun Subramanian ruled against Disney’s injunction to halt the sale of the short-term subscriptions. And on Tuesday, Subramanian made a similar ruling in favor of Sling TV against Warner Bros. Discovery.

At the heart of the rulings are poorly written contracts that fail to define exactly what a “subscriber” is. Warner Bros. Discovery and Disney argue that Sling’s short-term subscription offerings undercut the longstanding business model of the pay TV bundle. Traditionally, distributors like Sling pay content providers like Disney and Warner Bros. Discovery a set monthly fee per subscriber. The current contracts do not account for customers that subscribe to a service for less than a month because, before Sling launched its short-term passes, there was never an option to subscribe for less than a month.

Sling has essentially taken advantage of a loophole in the contract. Companies like Disney and Warner Bros. Discovery are paid based on the number of subscribers Sling has on the 21st day of any given month. That means if, for instance, a consumer purchased a Day Pass for the 14th day of the month, Disney and Warner Bros. Discovery wouldn’t receive a dime for that subscriber since they weren’t active on the 21st. However, if a consumer happened to purchase a Day Pass for the 21st, Sling would be on the hook to pay Disney and Warner Bros. Discovery a full month’s price for that subscriber, even though they only paid for one day of content.

These contracts will almost certainly be rewritten to address this very issue whenever Dish needs to renew agreements with Disney or Warner Bros. Discovery.

While the move to sell short-term subscriptions is paying off for Dish so far, it might not be the best decision long-term. Dish has now successfully angered two of its most important business partners when it comes to accessing live sports programming, and both companies will be sure to play hardball when it comes time to negotiate new contracts. Whereas if Dish had held off on selling short-term subscriptions until negotiating new contracts with Disney and Warner Bros. Discovery, rather than exploiting a loophole in its current agreements, the two sides likely could’ve came to an agreement that would have been beneficial for both.

In that hypothetical scenario, the content providers could’ve charged a premium per-day rate for subscribers that didn’t purchase a full month. This would’ve allowed Sling to sell Day Passes in a way where companies like Disney and Warner Bros. Discovery still stand to benefit. Instead, the content providers see Sling as functionally stealing valuable content.

Now, it wouldn’t be surprising to see the content providers try and shutdown this practice entirely during future negotiations. Monthly subscribers are the core of any subscription video business, and have been for quite some time. In the never-ending battle to reduce churn, content providers are much more inclined to incentivize long-term offerings rather than allowing for consumer friendly short-term subscriptions.

Dish, and anyone who uses Day Passes, should enjoy this setup while they can, because it likely won’t be around for long. At least not at the current affordable rates, which start at just $4.99 per day.