As with any extended carriage dispute, everyone is eager to assign blame to either Disney or YouTube TV as the two sides continue negotiating a new deal while Disney-owned networks remain unavailable to YouTube TV’s 10 million customers.
Those looking for a straightforward narrative blaming one side or the other may come away from this column unsatisfied.
That’s because both sides are partially at fault. But at the same time, both sides also have legitimate excuses to deflect any blame at all.
Let me explain.
What does YouTube TV want?
By all accounts, Disney and YouTube TV remain at odds over pricing. Sports Business Journal reported on Monday that the companies are still “far apart” in that department. Price, in this case, is the amount YouTube TV pays Disney per subscriber each month for Disney’s networks, such as ESPN and ABC.
Generally speaking, the more subscribers a pay TV distributor has, the better price it can negotiate with content providers like Disney. It is a basic economy-of-scale effect.
At the crux of this dispute is YouTube TV’s insistence on paying rates commensurate with those of the biggest pay TV distributors in the country, like Comcast. YouTube TV is currently the fourth-largest pay TV distributor in the country, but is projected to be the largest by next year as traditional cable and satellite carriers continue to shrink due to cord-cutting. In contrast, YouTube TV grows as more people adopt streaming. Therefore, YouTube TV is asking to either pay the same prices as the biggest distributors or ink a short-term deal that will allow it to renegotiate sooner when it inevitably surpasses the likes of Comcast and DirecTV.
Simple enough.
What does Disney want?
Disney, on the other hand, is fighting to keep YouTube TV’s rates in line with its current size, rather than conceding that the service will be the largest in the country in the near future.
From a business perspective, it’s simply a matter of necessity for Disney to hold a hard line in these negotiations. Since a high watermark of approximately 100 million pay TV homes in the mid-2010s, Disney, like other legacy media companies, has seen that number crater to about 65 million homes today. In other words, 35 million households that Disney once collected monthly fees from via cable and satellite distributors are no longer paying the company. Simultaneously, the price of live sports rights that Disney needs to maintain ESPN’s status as the most valuable network in the multichannel bundle has skyrocketed.
Just this year, ESPN began paying an average of $2.6 billion per year for NBA rights. Soon enough, the NFL will come knocking again (likely earlier than expected) and expect a sizeable increase on its current $2.7 billion-per-year fee. All the while, customers continue to leave the pay TV bundle altogether. To make the economics work, Disney needs to squeeze every possible cent out of distributors like YouTube TV.
That price, of course, gets passed along to the consumer. But this was obviously going to happen for anyone who was paying attention. For the entire history of the cable bundle, non-sports fans subsidized the cost of live sports simply by paying into the bundle. Networks with sports content were always the most expensive for distributors, but they could spread that cost to sports fans and non-sports fans alike. Now, with few non-sports fans left in the bundle, and rights fees continuing to increase, fans are starting to realize the actual cost of live sports content.
Who is truly to blame?
So in a sense, neither Disney nor YouTube TV is to blame. The blame should be placed on an economic model that, for so long, relied on soliciting money from customers who never consumed the content in the first place. Now, these businesses are fighting to keep some semblance of that once-lucrative model alive by extracting more money from the most diehard consumers, sports fans.
And in that vein, both Disney and YouTube TV are to blame. Each company knows the economic realities are grim. Both need each other to remain viable. Disney is losing $5 million every day it remains dark on YouTube TV. YouTube TV is hemorrhaging subscribers each day it remains without Disney’s networks. Neither company is going to let this go on for any extended period. The business impact is too dire. That reality makes it all the more frustrating that both sides can’t just get in a room and sort this all out. Agree on a price and move on. Let fans get what they paid for.
The reality is that pay TV isn’t a great business right now. Margins for content providers like Disney are getting oh-so-slim. And a company like YouTube TV isn’t necessarily in the business of being a traditional pay TV distributor. YouTube TV wants to be part of a much larger, integrated platform that includes free YouTube and other video offerings.
It’s a perfect formula for a protracted dispute. Well, at least one that becomes more protracted than usual.
Disney vs. YouTube TV was inevitable
Keep in mind that Disney has had two other high-profile disputes that resulted in blackouts in the past two years: a 10-day blackout with Charter in 2023 and a nearly two-week blackout with DirecTV in 2024. Among legacy media companies, Disney seems to have the largest appetite for blackouts.
But also keep in mind that YouTube TV hasn’t exactly been easygoing in carriage disputes recently either. Negotiations with both Fox and Comcast went down to the wire earlier this fall, and the service still hasn’t struck a deal with TelevisaUnivision, which has been dark on the service for over a month.
At the risk of sounding nihilistic, it is what it is. The pay TV business is shitty, and each company is trying to move forward under the least shitty terms possible. Until some form of radical shakeup or re-bundling completely changes the equation, these types of disputes will only become more common and potentially uglier.
About Drew Lerner
Drew Lerner is a staff writer for Awful Announcing and an aspiring cable subscriber. He previously covered sports media for Sports Media Watch. Future beat writer for the Oasis reunion tour.