Disney and YouTube TV stalemate drags on
A version of this article first appeared in the CNBC Sport newsletter with Alex Sherman, which brings you the biggest news and exclusive interviews from the worlds of sports business and media. Sign up to receive future editions, straight to your inbox. It’s day 14 of the Disney – YouTube TV standoff. This marks the longest Disney carriage blackout ever, topping 2024’s DirecTV dispute, which lasted 13 days. From what I’ve heard, the sides have moved significantly closer to making a deal, with a lot of progress made in the past 24 hours. I can verify the sides were discussing the agreement late into the night last night. Disney reported earnings this morning, and you know executives are going to field questions from analysts during the earnings call about the business impact of the standoff. Morgan Stanley analyst Ben Swinburne estimates Disney is losing $30 million each week its networks are off YouTube TV. Obviously it would have been nice for Disney CEO Bob Iger to do a victory lap on the earnings call this morning, but I’m told that’s not going to happen. I talked about the basic details of why Disney’s networks have been temporarily removed from YouTube TV in last week’s newsletter – you can find it here in case you care to refamiliarize yourself. Given the progress, I want to focus on three issues I think have been underreported or ignored in the past two weeks. I’ll do my best John McLaughlin impression here … “Issue No. 1!” (What? You’re telling me the kids reading this don’t appreciate John McLaughlin impressions?) We don’t know the exact price increase Disney wants YouTube TV to pay for the right to carry its suite of networks — the most expensive of which are ESPN and ABC. But one quirk that’s idiosyncratic to Disney is the company simulcasts certain Monday Night Football games on ABC. In other words, some Monday Night Football games are on both ESPN and ABC. Disney does this to allow cable and non-cable subscribers to watch particular games. But it also allows the company to essentially double charge pay TV providers by arguing the popularity of Monday Night Football (the most popular program on cable TV by far) adds significant value to both ESPN and ABC. No other media company that owns a broadcast network uses this simulcast strategy. I don’t know for sure if the Disney double-dipping issue is particularly irritating to YouTube TV, but Awful Announcing mentioned it this week as a potential sticking point , and logic suggests it would be one. Still, this issue hasn’t tripped up Disney from reaching carriage agreements with other large providers — including Comcast just a few weeks ago — so I don’t think it’s a huge deal, but it’s worth noting as a sports angle to this big fight. “Issue No. 2!” I mentioned last week that a side issue of contention between Disney and YouTube TV is whether Disney’s streaming services should be sold in YouTube’s Primetime Channels. I still think this is a minor issue to pure economics, but it’s an interesting one worth some analysis and explanation. Channels allow someone watching YouTube TV to access premium networks and some streaming services within the YouTube platform. Amazon Prime Video has a Channels store too. For most media companies, Channels isn’t a sticking point in a carriage deal. Warner Bros. Discovery has always sold HBO as an add-on channel, so it doesn’t mind selling HBO Max the same way. The same is true for Paramount, which has turned what used to be called Showtime into a premium cable network vessel for Paramount+ content. Similarly, NBCUniversal plans to launch a sports network so that it can function as a cable equivalent of Peacock for sports. That network will debut Monday — first just for YouTube TV subscribers. Consequently, HBO Max, Paramount+ and Peacock are all sold in both Amazon Channels and YouTube Primetime Channels. But Disney isn’t available on Amazon Channels, and it has told YouTube TV that it has no intention of joining YouTube Channels. Disney wants its subscribers watching in its own ecosystem. It has spent many millions of dollars to integrate ESPN and Hulu into Disney+. It wants a direct relationship with its consumers — and the data that comes with that. So why does YouTube TV care? It has to do with the amount of content that’s exclusive to Disney’s subscription streaming services. There are billions of dollars worth of valuable programming — new and old — on Disney+ and Hulu that can’t be accessed with a typical cable subscription. That makes Disney different from Fox and NBCUniversal — other media companies that have recently reached deals with YouTube TV. While Peacock does have some original entertainment programming on its service that can’t be accessed through an NBCU cable channel, it’s de minimis compared to what’s on Disney+ (which now includes both Hulu and ESPN). From what I’ve been told, YouTube TV gave up early on the idea that Disney+ would be in Channels. However, YouTube TV is still pushing to have ESPN’s direct-to-consumer service available in YouTube TV — but not Channels. Instead, I’m told YouTube executives want to make sure customers will have access to any content that’s available on ESPN’s direct-to-consumer service (formerly known as ESPN+, now known as ESPN Unlimited because it also includes all of ESPN’s programming – linear or digital) within the YouTube TV viewing experience. This is a little bit similar to Disney’s deal with Charter, where Disney allowed Spectrum TV customers access to Disney+, Hulu and ESPN+. But in this case, YouTube TV subscribers won’t get free Disney+ and Hulu — they’ll only get ESPN Unlimited content. YouTube doesn’t want to risk ESPN moving sports programming from its linear network to ESPN Unlimited over the next few years after paying a rate increase for ESPN’s linear networks in this deal. Disney may also add new sports just to ESPN Unlimited, such as the announcement a few months ago to add certain WWE premium live events just to ESPN’s digital service. Customers will be able to see these within YouTube TV. Of course, ESPN will also give YouTube TV subscribers access to the ESPN direct-to-consumer application through authentication — something that Disney hopes to roll out before the end of the year for both Comcast and YouTube subscribers. “Issue No. 3!” One of the most important executives for Disney in all of its distribution deals for the past five years has been Justin Connolly , most recently Disney’s president of platform distribution. Connolly left Disney to join YouTube TV earlier this year. The departure was such a big deal that Disney sued YouTube for poaching him (and Connolly, himself, for breach of contract). That lawsuit settled just before Disney and YouTube TV began their blackout. Connolly has recused himself from these negotiations. Several people familiar with Connolly’s influence at Disney have wondered if this blackout would be over by now had Connolly simply stayed at Disney. It’s not just that there may be some bad blood between YouTube TV and Disney. It’s that without him, Iger, ESPN Chairman Jimmy Pitaro, and Disney’s head of TV Dana Walden have lost a reliable in-house closer on tense negotiations. Part of why these carriage negotiations can be difficult is because they contain so-called “most favored nation” clauses, which guarantee that rate changes are adjusted across competitors. The MFNs effectively make certain asks nonstarters, both for distributors and programmers. If YouTube TV wants dramatically better rates in future years based on projected growth, those types of sliding-scale clauses would then have to become industry standard. That’s often a bridge too far for content providers, who would have to rewrite existing contracts. Whatever the specifics are in this case, no one knows the difference between feasible and “not on your life” better than Connolly. Having him away from the table on this one — and literally working for the counter-party, even if he’s not involved in the deal talks — may be part of the problem. FCC Chairman Brendan Carr has now weighed in, posting on X Monday that “Google and Disney need to get a deal done and end this blackout. People should have the right to watch the programming they paid for — including football. Get it done!” From what I hear, a deal is much closer than it’s been over the past two weeks. But as we sit here this morning, the wait continues. *** One other quick sports-related note – this one on the ongoing saga of who Warner Bros. Discovery would sell itself to. Two weeks ago, soon-to-be Comcast co-CEO Mike Cavanagh said during the company’s earnings conference call that Comcast would be interested in acquiring “streaming assets and studio assets,” given its upcoming spinoff of Versant, CNBC’s future parent company and the new home to almost all of NBCUniversal’s cable networks. This means any deal between Comcast and Warner Bros. Discovery would be for HBO Max and Warner Bros. studio but not WBD’s cable networks. This makes sense. Why would Comcast want a bunch of declining-revenue cable networks when it’s in the process of spinning off its own cable networks? Still, I wondered, wouldn’t NBCUniversal want TNT Sports? Adding TNT Sports to NBC Sports would make Comcast a juggernaut for sports rights. Yes, TNT Sports lost the NBA this season, but it still owns the rights for MLB, the NCAA Men’s Basketball Championship, the NHL, U.S. Soccer, NASCAR, the French Open and digital assets including Bleacher Report and House of Highlights. So, I asked a few well placed sources, and here’s my read: Yes, NBCU would love TNT Sports. The problem is TNT Sports is probably the most valuable part of Discovery Global, the half of WBD that Comcast doesn’t want. That probably makes adding TNT Sports a moot point for NBCU. Either Comcast would need to buy all of the cable networks – something Cavanagh just said he had no interest in doing – or it would need to leave TNT Sports to go with the rest of WBD’s cable assets so that those businesses can have a fighting chance of flourishing (and gaining future distribution when it has its own carriage renewal deals) as a separate publicly traded entity. Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant would become the new parent company of CNBC upon Comcast’s planned spinoff of Versant. On the record With Las Vegas Aces head coach Becky Hammon . … In just a few short years, Hammon has become one of the most successful professional basketball head coaches of all time. After joining the Aces for the 2022 season, she’s won three of the last four WNBA titles. Her leadership is aided by A’ja Wilson , who again won the WNBA MVP award this past season for a record-setting fourth time. Last month, Hammon told ESPN that “when it’s all said and done,” Wilson will be the greatest WNBA player of all time. Well, with me, she went one step further. Hammon told me she’s already the GOAT. “I do think she’s the greatest to ever play,” Hammon told me. “A career of an athlete goes quick. Your prime years go quick. Life moves quick. If you get a chance to watch this woman hoop, you should take advantage of it, because she’s one of the most exciting players I’ve ever seen, male or female.” She also predicted the WNBA will move on from Cathy Engelbert as its commissioner after recent tensions with players. “I would say they’re probably going to look for a change in leadership,” Hammon said. “I just think it might be too fractured at this point.” You can watch our entire conversation here . Or listen here and follow the CNBC Sport podcast if you prefer the audio version. Contessa’s Corner Yet another sports betting scandal — this time in baseball — but this one came with a near-immediate pivot from Major League Baseball and its sportsbook partners to limit bets on pitches. Kind of. Maximum bets of $200 on an individual pitch and excluding pitch bets from parlays altogether may limit profits, but c’mon. Most gamblers with a penchant for micro-bets on whether the next pitch will be a ball or strike aren’t wagering big money. These types of bets were already typically very small. And it’s hard to fathom why a highly compensated pitcher like Emmanuel Clase would risk his millions in salary for thousands in betting kickbacks, as authorities are alleging. (His lawyer says he didn’t rig his pitches or share that information ahead of time with gamblers.) So if athletes don’t cheat for the money – how is limiting the profits going to dissuade them? FanDuel, DraftKings and Fanatics all told me the recent string of betting scheme busts illustrates their willingness to work with leagues and lawmakers to protect the integrity of sport. You can see my interview with FanDuel CEO Amy Howe here . Howe highlights, for example, that FanDuel prohibits bets it considers more high-risk for inappropriate influence — like those on field goals, free throws, turnovers and fouls across sports and won’t permit prop bets on injuries or athletes on 10-day contracts or two-way players who move between major and minor leagues. I’m watching to see whether regulators demand more action, for instance prohibiting any kind of “under” prop bets – where gamblers wager that an athlete will fail to accomplish a pass or a putt or some other endeavor. After all, if sports enthusiasts want to gamble on a quarterback completing a pass – it seems obvious that betting on pass incompletion leaves open questions about whether the QB is intentionally throwing away the ball. Those questions evaporate if your only option is to bet on success. By the way, not a single analyst asked DraftKings about the sports betting scandals and its impact on the business of the sportsbook during the company’s recent earnings conference call . Nor during FanDuel parent Flutter’s call. Instead, analysts are gaga over prediction markets – the opportunities and competitive threats. FanDuel had news about launching its own platform for event contracts in December. It’s partnering with CME Group to offer prediction trades on all kinds of markets, including sports, through FanDuel Predicts. Howe told me the company could spend as much as $300 million marketing the prediction platform. “We think this could be a very attractive growth opportunity for us,” she told me. “We are leaning in. … This is not something where we’re waiting and seeing how things evolve.” The New York State Assembly has introduced a regulation that would ban prediction markets from offering trades on sports (as well as catastrophes, elections, deaths and securities). It also would require prediction platforms like Kalshi, Polymarket and Robinhood to include problem gambling hotline information on their advertisements as well as institute tools for responsible gambling into their platforms. Kalshi insists it’s not gambling. It also says 9 out 10 Americans support prediction markets, citing a survey conducted by Axis and funded by Kalshi. The survey results included gems like this: “Voters Reject Gaming Commission Meddling in Futures: 80% of respondents agree with the statement that ‘Buying a stock or investing in the future price of wheat is not gambling and should not be regulated by a state gaming commission.'” Victor Rocha , conference chair of the Indian Gaming Association, offered a different take in a post on X : “Kalshi research funded by Kalshi says Kalshi’s customers believe Kalshi is the best, says Kalshi employee.” Tribal leaders are understandably furious about the inroads prediction markets are making. They just lost a preliminary injunction against Kalshi in California that sought to prevent Kalshi from offering trades on tribal lands. Maybe the rise of prediction platforms will lead tribes to revisit sports betting with commercial operators. Or maybe they’ll try offering prediction platforms themselves. Just remember, when it comes to sports prediction markets, whoever tells you this is a done deal is simply making a prediction. CNBC Sport highlight reel The best of CNBC Sport from the past week: The Snow League has raised $15 million in new funding. What’s The Snow League? It’s Shaun White ‘s snow sports startup. White wants a skiing and snowboarding league to exist outside of the Olympics. It’s a similar idea to Alexis Ohanian ‘s bet on Athlos , a women’s track league. White stopped by “Squawk Box” to talk about his league and its plans to gain visibility. PrizePicks is the latest sports betting business to expand into prediction markets. It allows PrizePicks to enter new states and grow its business. CEO Mike Ybarra also joined “Squawk Box” to talk about the differences between online sports betting and prediction markets. CNBC’s Jim Cramer is holding Nike in his charitable trust despite the company’s recent turmoil. Bank of America analysts agree, writing in a note to clients this week that “the recent pullback since first-quarter earnings offers a particularly attractive buying opportunity,” citing continued sales and margin improvements as Nike’s innovation pipeline ramps up. The big number: $6 billion If there’s any doubt that Formula 1 is big business, Mercedes Formula 1 CEO and team principal Toto Wolff is in advanced talks to sell a portion of his 33% stake in the team at a $6 billion valuation, Sportico reported this week. ESPN followed with a report that the buyer is CrowdStrike CEO George Kurtz, and The Financial Times reports the size of the stake is 5%. Quote of the Week “Basically, Patrick was like, he feels horrible for the trade and wants to make it up to us.” 18-year-old Nicholas Dickason told The Athletic this week Dallas Mavericks owner Patrick Dumont apologized for trading Luka Dončić in February. Dickason spoke to Dumont courtside at a recent Mavs game wearing a Lakers Dončić jersey. The conversation was swiftly followed by the news that Dumont had fired General Manager Nico Harrison , the architect of the trade – just nine months after pulling off the much maligned blockbuster. Around the league The NWSL has awarded its latest expansion team to Atlanta. The team will be owned by Arthur Blank , who also owns the NFL’s Falcons, the MLS’s Atlanta United FC and Atlanta Drive GC of TGL. The club will begin play in the spring of 2028. It will be the 17th NWSL team. Versant’s sports media holdings will now be known as USA Sports . The NBA plans to make $14.3 billion in revenue this year, up 12% from last year’s $12.75 billion, according to Sportico . Goldman Sachs’ private equity arm is taking a majority investment in Excel Sports Management, the sports agency that represents athletes including Caitlin Clark , Tiger Woods and Nikola Jokić , according to The Athletic.
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