*Update: As of September 30, NBCU and YouTube TV announced a short-term extension, avoiding a channel blackout as the two sides continue to negotiate new carriage terms.
With their program licensing deal ending along with the month of September on Tuesday, and no renewal agreement yet struck, YouTube TV and Comcast/NBCUniversal began last week raising the usual flags threatening carriage war.
YouTube TV, along with its parent company’s $3 trillion market cap, has “refused the best rates and terms in the market,” NBCU said in a statement.
“NBCUniversal is asking us to pay more than what they charge consumers for the same content on Peacock, which would mean less flexibility and higher process for subscribers,” YouTube shot back on its official blog.
That last statement is meaningful. As we’ve reported on these pages recently before, the start of the college and NFL football seasons, and all the high levels of TV usage that entails, marks a natural end/begin point for pay TV carriage deals. Both sides are inclined to solve their differences at this time of year. Viewers and their congressional reps expect nothing less. And since plenty of deals started in falls past amid this kind of turmoil, some deals are expiring.
But as LightShed Partners analyst Richard Greenfield sees it, YouTube’s statement hints at complicating factors in regard to an NBCU deal.
“Put yourself in YouTube TV’s shoes,” Greenfield blogged. (Watch for the paywall.) “Peacock includes the linear feed of NBC and much of the content that airs live and on demand across the NBCU family of channels available on YouTube TV. Despite YouTube TV paying over $10/sub/month for the NBCU suite of channels, it sees Peacock run promos for $25/year (link). Concurrent with the aggressive discounting of overpriced DTC streaming services (relative to content and engagement), programmers are now pushing/adding their streaming services into existing MVPD/vMVPD bundles.”
As Greenfield also noted, YouTube TV’s growing market power is also a factor. Parent company Alphabet rarely breaks out subscriber numbers for its virtual MVPD, but the analyst now pegs the service at north of 10 million paid users. It’s currently trailing only Charter Communications, Comcast and DirecTV in terms of U.S. pay TV stature, but those three incumbent market leaders are losing gobs of customers every quarter as YouTube TV continues to grow.
Factor in massive Alphabet/Google’s very different business objectives.
Greenfield believes YouTube actually cares little about the rate it pays for NBCU content versus its ability to “ingest” NBCU content into its own app and own more user engagement. In other words, it would rather pay more to sign a carriage deal that creates more YouTube TV app users versus Peacock users.
Again, both sides have said that NBCU content — which includes Sunday Night Football and The Voice — could get pulled off YouTube TV if an agreement isn’t reached by Tuesday. Also affected are the 11 networks of Versant, the recent NBCU spinoff.
And then there’s the also-impacted TelevisaUnivision/Telemundo. On Friday, the division’s chairman, Luis Fernández, urged Alphabet CEO Sundar Pichai to not “turn your back” on Hispanic viewers with this statement.
All hands on deck in a carriage war.