Ahead of the weekend, Google’s YouTube TV and Disney reached a carriage renewal that not only restored the media company’s linear channels, including ABC and ESPN, to the virtual MVPD’s lineup but also allows for direct integration of some ESPN DTC content within the YouTube TV app.
Announced November 14, the multi-year distribution agreement marks the end of a public carriage dispute that saw YouTube TV subscribers go without key programming, including college and NFL football, for two weeks.
And the dispute represented a face-off between two heavy hitters as YouTube TV is the leading U.S. streaming pay TV provider with estimates of nearly 9 million subscribers (and the pockets of parent Google) while Disney counts crucial programming, particularly during the fall sports season.
The new agreement spans continued YouTube TV carriage of Disney’s linear channel portfolio, including all the ESPN networks, ABC, Disney-branded channels, Freeform, the FX Networks and the National Geographic channels. Select Disney networks will also be included in various genre-specific packages from YouTube TV. Other pay TV providers have moved to offer sports-focused skinny or genre bundles like those from DirecTV, Comcast and Fubo. The deal also adds ESPN’s new direct-to-consumer Unlimited Plan service to YouTube TV pay TV packages at no extra cost and gives YouTube TV the ability to include the Disney+ and Hulu bundle as part of select offerings.
“This new agreement reflects our continued commitment to delivering exceptional entertainment and evolving with how audiences choose to watch,’’ said Disney Entertainment Co-Chairmen Alan Bergman and Dana Walden and ESPN Chairman Jimmy Pitaro, in a statement. “It recognizes the tremendous value of Disney’s programming and provides YouTube TV subscribers with more flexibility and choice. We are pleased that our networks have been restored in time for fans to enjoy the many great programming options this weekend, including college football.”
YouTube TV released a statement saying, “We’re happy to share that we’ve reached an agreement with Disney that preserves the value of our service for our subscribers and future flexibility in our offers.”
It alerted customers last Friday that Disney channels as well as library recordings would return to their YouTube TV service over the course of the day, adding “We apologize for the disruption and appreciate our subscribers’ patience as we negotiated on their behalf.”
During the public back and forth, the usual posturing was at play of distributor YouTube TV saying Disney was seeking aggressively increased rates and programmer Disney contending it wanted fair compensation for content.
But as Disney prioritizes and charts a streaming future, its new flagship ESPN DTC has also become part of the pay TV picture – included in packages from the likes of Charter, DirecTV and Fubo.
And as Disney called out in announcing key terms of the YouTube TV agreement, the vMVPD will be able to offer a selection of live and on-demand programming from ESPN Unlimited inside of the YouTube TV app – meaning consumers won’t need to navigate in and out of separate standalone apps to watch – although the extent of this content ingestion wasn’t disclosed.
Disney recently allowed for ESPN Unlimited content ingestion in a new skinny sports-focused bundle from Fubo (whose business is now combined with Hulu + Live TV and 70% owned by Disney), which marked the first. Otherwise Disney has struck deals for the ESPN DTC to be included in pay TV packages but not necessarily have DTC content ingested into distributors’ apps, as is the case with Charter and DirecTV.
As highlighted by LightShed Partners analysts, the content ingestion topic previously came up in earlier carriage negotiations between YouTube TV and other programmers, such as NBCUniversal. In that case a deal was reached before a channel blackout, and while Peacock content wasn’t directly ingested, it was in somewhat of a roundabout way.
“In YouTube TV’s renewal with Comcast’s NBC Universal last week (link), they agreed to carry a new channel, NBCSN, which carries most of Peacock’s exclusive sports content, so that Peacock sports content can now be effectively ingested into YouTube TV (no need to have or use Peacock anymore for YouTube TV subs that are focused on sports),” wrote LightShed analyst Rich Greenfield in an October 8 post regarding ingestion and a then-looming carriage renewal between Disney and YouTube TV.
For YouTube TV subscribers getting ESPN Unlimited content directly from the YouTube TV app without having to switch and authenticate in a separate app could remove one point of friction in the current streaming environment.
The Streaming Wars’ Kirby Grines, meanwhile, pegged the deal as indicative of Disney’s larger aggregator distribution play to help give both the ESPN DTC quicker scale and Disney continued reach and advertising protection within pay TVs walls, and where he views the ESPN DTC, in part, as negotiating leverage in carriage agreements.
“ESPN Unlimited introduces a premium tier that Disney can position inside or outside distribution partnerships depending on the leverage it needs,” wrote Grines. “The structure gives Disney a negotiation tool that traditional linear channels could never provide. It strengthens future renewal talks without forcing consumers into a brand-new app on day one.”