Disney warns customers its channels may go dark on YouTube TV
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Disney on Thursday warned customers that its networks, including ESPN, ABC and its entertainment channels, may be dropped from YouTube TV if the two parties cannot reach a new distribution agreement ahead of their current deal expiring next week.
Why it matters: If the two parties fail to strike a deal, millions of YouTube TV consumers could lose access to live games across a slew of major sports franchises.
What they're saying: "This is the latest example of Google exploiting its position at the expense of their own customers," a Disney spokesperson told Axios.
- "We invest significantly in our content and expect our partners to pay fair rates that recognize that value. If we don't reach a fair deal soon, YouTube TV customers will lose access to ESPN and ABC, and all our marquee programming — including the NFL, college football, NBA and NHL seasons — and so much more," the spokesperson added.
The other side: "We've been working in good faith to negotiate a deal with Disney that pays them fairly for their content on YouTube TV," a YouTube spokesperson said.
- "Unfortunately, Disney is proposing costly economic terms that would raise prices on YouTube TV customers and give our customers fewer choices, while benefiting Disney's own live TV products — like Hulu + Live TV and, soon, Fubo," the spokesperson added.
- "Without an agreement, we'll have to remove Disney's content from YouTube TV, and if it remains unavailable for an extended period of time, we will offer subscribers a $20 credit."
Zoom out: This is the fourth time since August that a major programmer has had to leverage a consumer campaign to negotiate a distribution deal with YouTube TV.
- In August, ahead of football season, Fox Corp. warned customers that YouTube TV was threatening to drop its channels, including Fox News and Fox Sports. The two sides ultimately came to an agreement days later.
- Last month, NBCUniversal warned customers that its networks may be dropped from YouTube TV if the two parties couldn't reach a new distribution agreement by Sept. 30. The two parties ended up reaching a long-term deal a few days later after agreeing to a short-term extension.
- In September, TelevisaUnivision, one of two major Spanish-language broadcasters in the U.S., unveiled a consumer ad campaign warning customers that YouTube TV planned to remove Univision from its core offering and move it to a Spanish-language package at an extra cost. The two parties have still not resolved their dispute, and Univision remains blacked out for YouTube TV customers.
Between the lines: With more than 8 million customers, YouTube TV is one of the largest pay-TV providers in the U.S. That market position has given it leverage in distribution negations, but it's also raised alarm bells with policymakers and government officials.
- Earlier this month, President Trump urged YouTube TV to restore access to Univision, calling it "VERY BAD for Republicans in the upcoming Midterms."
- FCC chair Brendan Carr told YouTube TV and its parent Google to "get a deal done" with Fox over the summer.
- Several Hispanic lawmakers voiced concerns about YouTube when the possibility of NBC's Telemundo and Univision both being blacked out loomed last month.
Context: These types of carriage fights have long occurred between major pay-TV companies and programmers, but as digital live-TV providers like YouTube TV get bigger, they are becoming more frequent with streamers.
The big picture: Because virtual pay-TV providers are not regulated in the same way as traditional pay-TV providers, these disputes also give them an opportunity to reshape pay-TV agreements in the digital era in a way that better suits their objectives.
- For example, YouTube is reportedly considering the creation of a separate sports and broadcast package.
- Asked whether ESPN would be open to a specialized sports package on YouTube TV, ESPN chair Jimmy Pitaro told Axios last month, "We are certainly open to a sports package or a genre-specific sports offering on the right business terms."
Yes, but: These new types of package ideas don't always sit well with programmers.
- Disney, notably, sued Dish Network's Sling TV in August, alleging that the pay-TV service included its networks in short-term, specialized packages without its permission.
- YouTube TV told TelevisaUnivision that it plans to remove Univision from YouTube TV's core offering and move it to a Spanish-language package at an extra cost. That idea has been a non-starter for TelevisaUnivision.
What to watch: These disputes, when resolved, tend to create new precedents for how pay-TV providers and programmers arrange distribution deals for the streaming era.
- In YouTube TV's agreement with NBCU, struck earlier this month, the two parties agreed to add Peacock as a subscription option through YouTube Primetime Channels.
- Disney's 2023 deal with Charter gave Charter customers access to the basic, ad-supported tier of Disney+. Charter subscribers who pay for a higher tier got access to ESPN+. ESPN's new direct-to-consumer service is available to Spectrum TV Select subscribers.
Editor's note: This story was updated with comment from YouTube.
