Earlier this week, a report emerged that YouTube TV was demanding lower prices than every other major distributor for access to Disney’s suite of television networks. Now, the Google-owned platform is clarifying exactly what that means.
On Monday, Puck sports correspondent John Ourand reported that YouTube TV is attempting to negotiate rates for Disney’s content that are lower than the three largest pay TV distributors in the country: Comcast, Charter, and DirecTV. Disney sees this as untenable, as agreeing to give YouTube TV a lower rate would trigger “Most Favored Nation” clauses in its other contracts that would force the company to give the same lower rate to the other distributors.
In total, Comcast, Charter, DirecTV, and YouTube TV account for about 68% of pay TV households in the United States, meaning Disney would be taking a haircut on the lion’s share of its distribution revenue should they agree to a lower rate.
YouTube TV, however, is pushing back on parts of Ourand’s reporting. A spokesperson for the company tells Awful Announcing that YouTube TV is not asking for the lower rates immediately, but wants to codify lower rates once it surpasses the three other distributors in subscribers. In the interim, the Google-owned service suggests it’d pay the same rates as other distributors.
Of the four largest pay TV distributors, YouTube TV is the only one on a growth trajectory. The other three continue to lose subscribers to cord-cutting. Analysts suggest that YouTube TV could become the largest pay TV distributor in the country by next year.
It’s unclear whether or not waiting until YouTube TV is the largest distributor in the country to give the service lower rates would trigger the “Most Favored Nation” clauses for other distributors.
Additionally, the YouTube TV spokesperson tells Awful Announcing that the two sides are in alignment when it comes to the price for ESPN. The primary sticking point in the negotiation currently is the price of ABC.
In recent years, Disney has increasingly taken live sports that at one point were exclusive to ESPN and has simulcast them on ABC. The most prominent example, of course, would be Monday Night Football. Disney would argue that the increase in live sports inventory on ABC should beget higher rates from distributors, while the distributors would argue this is essentially double-dipping on Disney’s part, since they’re already paying premium rates for ESPN, where the content is also available.
So saying the ESPN rate is settled but the ABC rate is not is essentially a semantic argument. Both are directly tied to how the live sports inventory on those channels are valued in conjunction with one another.
None of this information would seem to indicate a resolution is imminent. However, both sides still have plenty of incentive to reach a deal sooner rather than later. Disney continues to lose about $5 million each day it remains dark on YouTube TV. And YouTube TV will continue to bleed subscribers the longer it doesn’t have Disney’s content.
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.