For most of cable’s history, carriage disputes have been common. Distributors, such as Comcast, and networks, such as ESPN, regularly clash over the terms of carrying a channel, blaming each other for whatever impasse arises. Then, when the NFL is on the line, the two sides suddenly find a way to strike a deal.
This past weekend, however, Disney’s family of networks - most notably ESPN - stayed dark on Google-owned YouTube TV, leaving millions of fans without Monday night’s nationally televised showdown between the Dallas Cowboys and Arizona Cardinals. That blackout followed a full slate of missed college football Saturday games, leaving fans irate and thrusting the dispute into unfamiliar territory.
The fight, of course, is about money. ESPN has spent billions on live sports broadcast rights - mainly for the NFL, college football and the NBA - in recent years. To profit from those investments, it needs to charge distributors more, especially as cord-cutting reduces the number of homes that pay for traditional TV.
YouTube TV, naturally, wants to pay less. It also asked Disney, which has always sold its networks as a bundle, to let it carry some channels but not all. Why should it have to pay for National Geographic and Freeform when what it really wants is ABC and ESPN?
But there’s a new wrinkle in this fight: YouTube TV is owned by tech giant Google. The service, which now costs more than $80 per month, is the fastest-growing TV distributor with about 10 million subscribers. It’s on pace to become the largest pay-TV provider as early as next year, surpassing DirecTV and Comcast. That gives it the market power to challenge how Disney does business.
Beyond cost, YouTube TV is also making an argument about how it wants to deliver ESPN to its subscribers.
ESPN, for instance, has launched a stand-alone app, and Disney has made ESPN available on slimmer bundles through platforms it owns, such as Hulu and Fubo. YouTube TV wants similar flexibility - possibly to sell ESPN as part of its own sports bundle or to offer the full features of ESPN’s app within its own service.
“They want to have a one-stop shop where you can watch everything sports in one place,” said Rich Greenfield, founder of media and technology investment firm LightShed Partners, on CNBC’s “Squawk Box” this week. “That obviously isn’t great for anyone with a stand-alone sports application like ESPN.”
In past disputes, content used to be king. When football fans began clamoring for their NFL games, distributors usually gave in. But there was a reason for that: Comcast’s cable business depended on millions of subscribers.
Google is not a cable company. Revenue from YouTube TV is only a small fraction of its business. ESPN can try to steer fans toward its app, which costs $30 per month, but losing distribution revenue from YouTube TV would hit its bottom line much harder. According to research firm S&P Global, Disney earned an average of $10.08 per month per ESPN cable subscriber in 2024.
Patrick Crakes, a former Fox Sports executive turned industry consultant, said that kind of thinking would be shortsighted for Google.
“If Google wanted to, they could just pay for every single Disney channel and keep the price for YouTube TV low,” he said. “They’d materially impact all the other pay-TV distributors over the next couple years. Yes, they’d lose money on a cost accounting basis, but they’d roll up the business. But they don’t do that. Instead, they seem to want to run the YouTube TV business to try and break even, which is baffling.”
Greenfield and Crakes predicted the two sides would reach an agreement soon. But the outlines of the next generation of carriage fights have already been drawn. In the meantime, millions of fans are locked out of their favorite sports and scrambling to find new ways to watch.