Google-Disney Standoff Leaves Football Fans in the Dark
ABC and ESPN networks are off YouTubeTV for a second weekend.
CNBC (“CNBC Sport: As Disney and YouTube TV battle over carriage fees, it’s unclear who has the upper hand“):
YouTube TV subscribers know by now that all of Disney’s programming has been removed until the two sides reach a new carriage agreement. That means no ABC and no ESPN for about 10 million households until a new deal is struck.
The key sticking point here is the rate at which Disney charges YouTube TV for its networks – the most valuable of which is ESPN, which charges more for carriage (more than $10 a month per pay-TV subscriber) than any other network in the U.S.
Disney has successfully negotiated deals with the largest two U.S. pay TV providers – Comcast and Charter – and is offering YouTube TV terms commensurate with those deals, according to people familiar with the matter.
But YouTube TV wants better rates than the third-largest pay-TV provider would typically get, because YouTube TV is the only distributor of size that’s actually growing, according to people familiar with the talks between the companies, who asked not to speak publicly because the discussions are private. In other words, while YouTube TV may be No. 3 today, by the time a two- or three-year carriage agreement concludes, it could be No. 1, and it wants rates that reflect that.
Most of the frustration online seems to be directed at Disney, which sports fans think is being “greedy” in demanding more money while Google is trying to avoid passing higher costs to its subscribers. But live sports is the only content most viewers are willing to sit through commercials to watch, so it’s the most valuable commodity in streaming. As a result, sports leagues charge ever-and-ever higher rights fees to broadcasters. Naturally, those get passed along.
Regardless, while the prospect of outraged fans switching providers usually creates leverage to end these standoffs quickly, it hasn’t been the case this time.
The Athletic’s Andrew Marchand (“Pessimism in standoff as ESPN, YouTube TV head toward ‘Monday Night’ showdown“):
When these deals turn from stalemate to an agreement, it happens quickly. But there is pessimism at the moment, leaving 10 million YouTube TV subscribers to decide when and where to find alternatives for a second straight weekend, specifically college football on Saturday and “Monday Night Football.”
They are bystanders in a staring contest between a multi-trillion-dollar company, Alphabet, and a multi-billion-dollar company, Disney. Can Monday’s game do what the Dallas Cowboys and Arizona Cardinals couldn’t earlier in the week?
YouTube TV has some of the most diehard NFL fans anywhere because of its deal with the league for Sunday Ticket. Alphabet pays the NFL $2 billion a year for Sunday Ticket. At a slight discount, YouTube TV subscribers can watch every out-of-market game. This incentive makes YouTube TV a go-to platform for the biggest NFL fans. (You can still subscribe to Sunday Ticket without YouTube TV, but it costs more.)
The Sunday Ticket/YouTube TV fans who want to watch every game will have a second Monday night when the game may not be available. They already paid the bill.
This, alas, is the boat I’m in. I switched to YouTubeTV because it held the rights to Sunday Ticket (long the province of DirecTV) and have already paid for that premium add-on. I can’t cancel the service until the end of football season without forfeiting the money. And I shouldn’t have to pay for a second service to get the ESPN content that I’m already paying YouTubeTV to watch.
Another wrinkle in the negotiations:
Hanging over all the talks is an executive move that happened earlier this year. Justin Connolly, who was Disney’s president of platform distribution, broke his contract with the company, in which he was making $6 million a year, to become YouTube’s first global head of media and sports. He had reported to ESPN’s chairman, Jimmy Pitaro, and essentially switched teams amid negotiations.
After lawsuits about the move, the two sides eventually settled, and Connolly was made to recuse himself from these negotiations. His team is handling it without him.
But does his team know every pressure point that Disney/ESPN is willing to bear or not? Do they know when Disney/ESPN will fold? Maybe. Maybe not.
If YouTube’s team has all of Disney/ABC/ESPN’s game plans, it might be in a position to wait until the optimal moment to strike a deal. Is that time upon us?
Also highly problematic: Disney is vertically integrated. It both provides content, including live sports, to YouTubeTV, Comcast, and others, but competes with those same companies for subscribers to Hulu, Fubo, and ESPN+.
Compounding the problem is the sheer size of YouTubeTV’s parent company, Google/Alphabet, which has a market cap of around $3.4 trillion! YouTubeTV is such an insignificant part of the company’s portfolio that losing viewers over this dispute won’t be noticeable. Hell, it could simply buy Disney, worth a measly $200 billion, if it wanted.
Judging from the online reaction, a lot of people are simply stealing the content. Others, like me, are taking advantage of free trial offers from other vendors and canceling before charges kick in. Neither is exactly an ideal option.
********************@
First world problems.
@EddieInCA:
Yep. File it with 10% of flights being cancelled at less than 4 dozen airports.
Google/Youtube will learn the same lesson cable companies learned decades ago: content aggregators have very little leverage over the content producers who hold the rights to America’s preferred professional and semi-pro sports. (I could drop that semi-pro part, I guess, since the NCAA Div 1 major sports pay the athletes now.) If they don’t want to pay what ESPN thinks the content is worth, their alternative is to go into the sports TV production business and outbid ESPN when the contracts with the conferences expire. And should win at that. Any company that thinks it has the money to put AI data centers in space has the money to outbid ESPN.
The term “enshittification” comes to mind.
@EddieInCA:
Indeed. here in the Third World, ESPN, ESPN2, and ESPN3 come with basic cable subscriptions 😀
I suspect everyone (Disney, Apple, Comcast, whoever else) is overpaying for sports rights. I understand the logic – sports is the only broadcasting you can’t watch the next day. But it still feels like a bubble.
@EddieInCA: I mean, I live in the First World. Live sports is not only one of the few genuine escapes from the grim realities of the world—we actually tend to give it our full attention, at least if we have a stake in the outcome—but it may be the last remaining cross-cultural connection we have left. People, regardless of socioeconomic status or politics, can talk sports.
@Steven L. Taylor: This isn’t that, really. This isn’t either YouTubeTV/Google or Disney/ESPN intentionally making their product worse because the initial business model was unsustainable. It’s expensive to serve up content, and there’s a constant fight over fees. Hell, even when my carrier isn’t in the fight, there see to be routine scrolls across the programming about their fights with other carriers.
@Michael Reynolds: At some point, it has to end. I doubt I’ll subscribe to Sunday Ticket again next year, even though I’ve had it since 2002. The cost has gone up to absurd levels for the handful of games I wouldn’t have gotten, anyway, and, as this has shown me, it binds me to a provider. And the splintering of the content across multiple platforms that all want to get paid (Amazon, Yahoo, and others now compete with the cable and satellite companies) is almost impossible for most to keep up with, much less afford.
@James Joyner:
Being married to a Philippine born woman and having spent time living with she and her family, I know what television was like.
1989 was the year I got married and stopped serving in the Navy. When I arrived back in the states, the place I was living had cable television which in those days consisted of around 20 channels. HBO, Cinemax, Showtime, ESPN, CNN, the three major networks, 2 PBS channels, Fox, and some independent stations. Most of those channels were on 24 hours a day*.
My in-laws are from Tacloban on the island of Leyte. A city of over 100,000 people on one of the Visayas regions biggest islands. Television in 1989 consisted of 1 television station. On the air 5 pm to midnight weekdays and Noon to midnight. A very simple evening news program, movies rented from a store**, and VHS recorded mostly 1970’s television shows like Streets of San Francisco, Cannon, Battlestar Gallactica to name a few.
Available entertainment in the 3rd world and the 1st world can be widely different.
*- Some of us may remember channels signing off at 1 or 2 am in the morning and just before doing so would play the national anthem.
**- I gave my in-laws my first vhs player, a toploading Panasonic then rented them a copy of the James Bond film The Living Daylights. The tape had probably been made in China, because it had Chinese subtitles. Not too long after my tape rental, the local station played TLD one night. It also had Chinese subtitles and was probably the same tape me and my in-laws watched.
@James Joyner:
I suppose it technically isn’t, but it feels adjacent. Consumers start off with a really good deal to draw them into a new product, and then prices go up and the service quality decreases.
@Michael Cain:
I’m apparently going to get Disney next year because they outbid ESPN for F1 coverage. F1 is hot lately. I doubt it will last.
@James Joyner: I’ve said for years that our politics would be completely different if middle class men took a quarter of the time they spend on sports to watch current events.
@James Joyner: The Denver Post published an article where the reporter worked through the various options for getting all of the Denver Nuggets regular season NBA games on television. They considered all sorts of strange options, like subscribing to 30-day free trails at exactly the right time. The cheapest arrangement, at $420 total, was fairly simple: six month subscriptions to Amazon Prime*, Peacock, Altitude Plus**, and ESPN Unlimited***. You do get (and are paying for) a lot more sports than just the Nuggets, of course.
* The NBA, in its wisdom, gave Amazon exclusive rights to four Nuggets games, which won’t even be on the team owner’s regional sports network.
** The streaming version of the team owner’s regional sports network.
*** ESPN’s new direct-to-consumer service. People have asked for years, why do I have to pay for a whole cable bundle to see ESPN? Why can’t I just get ESPN? How expensive can it be? We now know that the price for the ESPN bundle alone — and like most cable companies, you have to buy the whole bundle — is $30 per month.
@Bill Jempty: I mean, I had way less than that growing up. And we had only one channel, which I couldn’t actually receive in my apartment, when I was stationed in Germany. But we don’t live in that world anymore and I’m actually paying for the channels I’m unable to receive.
@Steven L. Taylor: Oh, for sure. All of the live streaming channels were like $35 a very few years ago. Now they all $80 or more. Still less than I was paying for DirecTV when I “cut the cord,” but of course now I “have” to pay for a live TV streaming service plus several others who provide niche content. It’s a lot more content than I need, and I’d be more strategic in canceling and restarting services if we didn’t have so many people watching their own shows in the house (and, now, elsewhere).
@gVOR10: While I naturally would prefer a more informed electorate, those things aren’t fungible. People need to relax and unwind. And, frankly, most who consume a lot of politics content do so in exactly the way people consume sports: they have a rooting interest and are seeing how their team is doing and looking for predictions for future results.
Given a choice between commercials and some dumb ass describing which team is hungrier for the win or whatever shit, I think commercials are the less worse choice.
I’ll just skip the sports altogether, but sportscasters are insufferable.
“I haven’t seen a play like that in at least 3 days, and it shows that Jose Prosciutto has a fire in his belly along with IBS in his pants. His father was jailed for unspeakable acts involving goats last year, so this is a real comeback story.”