With reports of renewed momentum on Wednesday, there was a faint hope that Disney and Google could strike a deal that would end the YouTube TV carriage dispute and restore ESPN, ABC, and other networks to the platform ahead of Disney’s earnings call on Thursday morning. However, that did not happen. And Disney CEO Bob Iger was left to try to sell his side of the prolonged impasse to shareholders.
In the midst of Disney’s earnings call, all eyes in the sports world were on any insights that Iger or others would share on what has turned into one of the longest and most painful carriage disputes for sports fans in recent memory.
Iger touted ESPN’s viewership growth, saying all ESPN networks including sports programming on ABC were up 25% for the quarter over the prior year. (We’re now programmed to share that some of that at least could be related to Nielsen’s new Big Data measurement system that has been advantageous for most sports programming.) He also called the launch of the ESPN direct-to-consumer platform a success, even though there has been some serious brand confusion along the way. However, he cited both the user experience and the ability to reach cord nevers as two ways in which ESPN Unlimited has been a positive. Iger affirmed the execution of the DTC launch stating, “this certainly is a step in the direction of solidifying ESPN’s future going forward.”
But as it pertains to the YouTube TV blackout, it was a very different tone being struck.
In the question and answer portion of the call, Iger and Disney CFO Hugh Johnston and Treasurer Carlos Gomez chose not to go into specifics on the current state of live negotiations. However, Johnston did say that Disney had “built a hedge into that with the expectation that these discussions could go for a little while.” He also mentioned that while Disney is losing millions each day because of the dispute, any customers subscribing directly to a Disney or ESPN platform or switching their subscription are at least somewhat mitigating the losses.
Then, at the end of the call, Bob Iger addressed the carriage dispute directly, something that he chose not to do when making an appearance on the ManningCast while watching his Packers play the Eagles on Monday Night Football.
Iger stressed that he cared about the plight of the consumer, but put the ball in the YouTube TV court by saying that what Disney is offering to Google is “equal to or better than what other large distributors have already agreed to.”
I just want to end the call because we’ve been so engaged in this over the last few weeks by kind of giving an overall summary of just where things stand. First of all, obviously, we care deeply about our consumer, and our priority has always been to remain on their service without interruption, to close a deal on a timely basis so that interruption does not occur. The deal that we have proposed is equal to or better than what other large distributors have already agreed to. We’re not trying to really break any new ground.
While we’ve been working tirelessly to close this deal and restore our channels to the platform, it’s also imperative that we make sure that we agree to a deal that reflects the value that we deliver, which both YouTube, by the way, and Alphabet have told us is greater than the value of any other provider. We’re not trying to break new ground. The offer that’s on the table is commensurate with deals that we’ve already struck with actual distributors that are larger than they are. We’re trying really hard, as I said, working tirelessly to close this deal. We’re hopeful that we’ll be able to do so on a timely enough basis to at least give consumers the opportunity to access our content over their platform.
The comments from Bob Iger and company are not necessarily going to encourage sports fans that this deal will come to fruition imminently. They clearly feel they are offering a fair deal to YouTube TV and have built in enough protections in case the deal goes on for an extended period of time. Now that multiple weeks of football have passed, as well as Disney earnings, it’s difficult to see when the next deadline might come that could spur either side into making a deal.
And the truth is that both sides can probably afford for this carriage dispute to go on a little bit longer. Alphabet and Disney are two of the largest companies in the world. Alphabet is worth $3.38 TRILLION dollars. Disney is valued at a paltry $193 billion in comparison. ESPN has a new DTC product that is out there waiting for sports fans to subscribe to who may finally get fed up with the prolonged blackout because they know sports fans need their unmatched content library. ESPN has made clear they don’t necessarily care where or how you subscribe, just as long as you do.
Meanwhile, YouTube TV is a raindrop in the ocean of Alphabet’s wider business, and if they can get a deal that’s advantageous for the platform, they can afford a short-term sacrifice for better long-term prospects. It’s why they may be more resolute compared to other providers that Disney has dealt with in the past.
As for what that means for sports fans, the carriage dispute looks set to roll into a third weekend of missing ESPN from YouTube TV with no true end in sight.
About Matt Yoder