YouTube TV has made over 20 Disney-owned networks unavailable after the two sides were unable to agree on a carriage contract, leaving YouTube TV subscribers without such staples as ABC, ESPN, National Geographic, FX, and Disney Channel. It is a reminder of just how thin the margins of live TV streaming packages are as prices continue to rise. The service currently costs $72.99 a month. YouTube TV is compensating for the outage by granting a $20 credit. In the meantime, the immediate pain point for many families is that their favorite TV show may have disappeared just when world-class tournaments and primetime series are reaching peak viewership.
ESPN’s whole family is in the spotlight at the moment. YouTube TV has darkened all ESPN networks, which host Monday Night Football, National Basketball Association regular-season games and key encounters, National Hockey League games, and studio titans like College GameDay. Except for National Basketball Association and Hockey, many sports fans form their live TV choices around ESPN, and ABC’s local newscasts, among other things, will take a direct hit.
Indeed, even viewers who scroll the entire Friday evening plan to cope with Disney, which offers series and specials on weekend nights, will remain unaware of what has transpired. For example, in a child- or teenager-centered household, viewers can discover favorites in the DVR but will be unable to enjoy watching the replacement.
Each side blames the other as sports costs keep rising
Publicly, each side is blaming the other. YouTube states Disney used the threat of a blackout to impose double-digit increases on its subscriber base. A report from The Wall Street Journal takes YouTube’s side and argues that it sought shorter contract terms and lower fees like those major cable operators charge, while Disney claims its bundle is what makes live TV bundles worthwhile in the first place. That does not clarify anything.
The issue is a difficult math problem. Sports have become far more costly to acquire. ESPN’s wholesale fee is one of the highest in the television sector, and sports rights costs have skyrocketed in football at the NFL, NBA, and college levels. U.S. analysts at S&P Global Market Intelligence have assessed ESPN’s carriage in the high single digits per user, which is far more than the vast majority of entertainment networks and places stress on any distributor trying to maintain a value line of assets.
And that is the crux of the issue. Industry researchers at MoffettNathanson and Leichtman Research Group have demonstrated how erosion of the paying client base from cord cutting is exacerbated by increased programming prices. The fact places intense pressure for original programming in every renewal — raise rates, reduce channel packages, or accept a drop in margins. Viewers miss out when no one changes. For streaming bundles, it’s a typical pattern. YouTube TV has barely fended off past disputes with NBCUniversal, Fox, and Paramount; multiple short-term extensions were agreed until an agreement was reached. Only a year ago, an extended blackout between Charter’s Spectrum and Disney ended up creating a long-term agreement after the former devised a novel model enabling consumers to access streaming apps alongside linear networks.
YouTube TV’s scale raises stakes when channels go dark
YouTube TV is now the biggest live TV streaming business in the US. It has multiple customer accounts nationwide, outpacing Hulu + Live TV and Fubo, according to company disclosures. Its size gives it more bargaining power, but it also increases the number of subscribers who flee when channels go dark — according to subscription data company Antenna, disconnections usually skyrocket when sports experience blackouts.
What subscribers can do while Disney channels are off
Assuming ABC is the most pressing concern, many customers, like myself, get their local stations via a simple over-the-air antenna. Yes, the signal will go straight to the television; no, there will be no monthly bill. There is no viable direct-to-consumer substitute. There is no direct-to-consumer stand-alone option for linear cable networks like ESPN; ESPN+ does not offer several ESPN linear programs, including Monday Night Football and other top-tier games.
Short-term switch-ups are possible: For the time being, there are still easy alternatives. Competing expanded base bundles like Hulu + Live TV, Fubo, and DirecTV Stream all deliver Disney networks, and they all offer monthly plans that may be terminated when the dispute is resolved.
- Hulu + Live TV
- Fubo
- DirecTV Stream
Before hopping in, be sure to check the following features, as contract information and prices often vary:
- Cloud DVR restrictions and storage limits
- On-the-go viewing and simultaneous streams
- Regional sports coverage and channel lineups
In addition, on the billing front: Regarding the promised $20 credit, look for either a note or an email if the blackout continues. Normally, credits are applied on the next statement cycle. Your account communications and the Help Center will be the areas to look, as terms can fluctuate frequently.
What to expect next in the YouTube TV and Disney standoff
Most carriage fights end with a deal after a few days of public posturing, a few well-timed ads, and targeted make-goods. Both live sports and broadcast access have great financial implications, making it unacceptable for either side to let negotiations turn acrimonious. Thus, there is a strong incentive to compromise, perhaps even on a higher wholesale rate, or a shorter contract, or maybe channel bundles get constrained with concessions from Disney’s streaming services. But this is the same storyline that is rewriting the entire TV bundle. As content becomes more expensive and the base of subscribers gets smaller, distributors and programmers are running on new economics. For at least YouTube TV, this means that its clients will pay the immediate price for the elimination of their preferred channels. The death rattles could become louder the longer this goes on. Clients are likely to respond by voting with their wallets.