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YouTube vs. Disney: What’s behind the fight

YouTube TV customers are bracing for another frustrating weekend.

For the last week, YouTube TV’s 10 million subscribers have been denied access to ESPN, ABC and other Walt Disney Co. channels in a dispute that has swelled into one of the largest TV blackouts in a decade. Instead of turning on “College GameDay,” “Monday Night Football” or “Dancing With the Stars,” customers have been greeted with a grim message: “Disney channels are unavailable.”

The standoff began Oct. 30 when the two behemoths hit an impasse in their negotiations over a new distribution contract covering Disney’s channels and ABC stations.

Google, which owns YouTube, has rebuffed Disney’s demands for fee increases for ESPN, ABC and other channels. The Burbank entertainment giant has been seeking a revenue boost to support its content production and streaming ambitions, and help pay for ESPN’s gargantuan sports rights deals.

Talks are ongoing, but the two sides remain apart on major issues — prolonging the stalemate.

“Everyone is kind of sick of these big-time companies trying to get the best of one another,” said Nick Newton, 30, who lives near San Francisco and subscribes to YouTube TV. “The people who are suffering are the middle-class and lower-class people that just love sports … because it’s our escape from the real world.”

Both companies declined to comment for this article.

The skirmish is just the latest between YouTube and programming companies. Since August, Rupert Murdoch’s Fox Corp., Comcast’s NBCUniversal and Spanish-language broadcaster TelevisaUnivision have all complained that YouTube TV was trying to use its market muscle to squeeze them for concessions.

Here’s a look at what’s driving the escalating tensions:

Google’s growing clout in television

The struggle between Disney and YouTube reflects television’s fast-shifting dynamics.

Disney has long entered carriage negotiations with tremendous leverage, in large part because it owns ESPN, which is a must-have channel for legions of sports fans.

Programmers, including Disney, structured their distribution contracts to expire near a pivotal programming event, such as a new season of NFL football. The timing motivated both sides to quickly reach a deal rather than risk alienating customers.

But for Google’s parent, Alphabet, YouTube TV is just a sliver of their business. The tech company generated $350 billion in revenue last year, the vast majority coming from Google search and advertising. That gives YouTube a longer leash to hold out for contract terms it finds acceptable.

“This dispute is not that painful for Google,” said analyst Richard Greenfield of LightShed Partners, noting that YouTube TV could probably withstand “two weekends without college football, and two weeks without ‘Monday Night Football’ — as long as their consumers stay with them.”

Disney, however, depends on TV advertising and pay-TV distribution fees. The week-long blackout has already dampened TV ratings, which means less revenue for the company.

Consumers like YouTube TV

For decades, throngs of consumers loathed their cable company — a sentiment that Disney and other programmers were able to use in their favor in past battles. Customer defections prompted several pay-TV companies to find a compromise to restore the darkened TV channels and stanch the subscriber bleeding.

But YouTube is banking on a more loyal user base, including millions of customers who switched to the service from higher-priced legacy providers.

“I’ll stick this thing out with YouTube TV,” Newton said, adding that he hoped the dispute didn’t drag on for weeks.

“This is one of the problems facing Disney,” Greenfield said. “It’s been a noticeable change in tone from past carriage fee battles. If customer losses stay at a minimum, then Disney is going to be in a tough place.”

It boils down to power and money

YouTube TV is the fastest-growing television service in the U.S. Analysts expect that, within a couple of years, YouTube TV will have more pay-TV customers than industry leaders Spectrum and Comcast.

In the current negotiations, Google has asked Disney to agree to lower its rates when YouTube TV surpasses Comcast’s and Spectrum’s subscriber counts. Disney maintains that YouTube already pays preferred rates, in recognition of its competitive standing, and that Google is trying to drive down the value of Disney’s networks.

“YouTube TV and its owner, Google … want to use their power and extraordinary resources to eliminate competition and devalue the very content that helped them build their service,” top Disney executives wrote last Friday in an email to their staff.

People close to YouTube TV reject the characterization, saying the service has been a valuable partner by providing a strong service that brings Disney billions of dollars a year in distribution revenue.

“The bottom line is that our channels are extremely valuable, and we can only continue to program them with the sports and entertainment viewers love most if we stand our ground,” the Disney executives wrote in last week’s email. “We are asking nothing more of YouTube TV than what we have gotten from every other distributor — fair rates for our channels.”

Higher sports rights fees

A major reason Disney is asking for higher fees is because it’s grappling with a huge escalation in sports costs.

Disney is on the hook to pay $2.6 billion a year to the NBA, another $2.7 billion annually to the NFL, and $325 million a year for the rights to stream World Wrestling Entertainment. Such sports rights contracts have nearly doubled in the last decade, leading to the strain on TV broadcasters.

In addition, deep-pocketed streaming services, including Amazon, Apple and Netflix, have jumped into sports broadcasting, driving up the cost for the legacy broadcasters.

The crowded field also strains the wallets of sports fans, and appears to be adding to the fatigue over the YouTube TV-Disney fight.

Newton wrote in a recent Twitter post that he was spending $400 a month for his various internet, phone and TV services, including Disney+ and NFL Sunday Ticket, which is distributed by YouTube TV.

“I’m already on all the major subscriptions to watch football these days,” Newton, a third-generation San Francisco 49ers fan, said. “You need Netflix. You need Peacock, you need Amazon Prime and the list goes on and on. I’m at the point where I’m not paying for anything else.”

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Why news outlets struggle with credibility when their owners fund Trump’s White House project

President Donald Trump’s razing of the White House’s East Wing to build a ballroom has put some news organizations following the story in an awkward position, with corporate owners among the contributors to the project — and their reporters covering it vigorously.

Comcast, which owns NBC News and MSNBC, has faced on-air criticism from some of the liberal cable channel’s personalities for its donation. Amazon, whose founder Jeff Bezos owns The Washington Post, is another donor. The newspaper editorialized in favor of Trump’s project, pointing out the Bezos connection a day later after critics noted its omission.

It’s not the first time since Trump regained the presidency that interests of journalists at outlets that are a small part of a corporate titan’s portfolio have clashed with owners. Both the Walt Disney Co. and Paramount have settled lawsuits with Trump rather than defend ABC News and CBS News in court.

“This is Trump’s Washington,” said Chuck Todd, former NBC “Meet the Press” host. “None of this helps the reputations of the news organizations that these companies own, because it compromises everybody.”

Companies haven’t said how much they donated, or why

None of the individuals and corporations identified by the White House as donors has publicly said how much was given, although a $22 million Google donation was revealed in a court filing. Comcast would not say Friday why it gave, although some MSNBC commentators have sought to fill in the blanks.

MSNBC’s Stephanie Ruhle said the donations should be a concern to Americans, “because there ain’t no company out there writing a check just for good will.”

“Those public-facing companies should know that there’s a cost in terms of their reputations with the American people,” Rachel Maddow said on her show this week, specifically citing Comcast. “There may be a cost to their bottom line when they do things against American values, against the public interest because they want to please Trump or buy him off or profit somehow from his authoritarian overthrow of our democracy.”

NBC’s “Nightly News” led its Oct. 22 broadcast with a story on the East Wing demolition, which reporter Gabe Gutierrez said was paid for by private donors, “among them Comcast, NBC’s parent company.”

“Nightly News” spent a total of five minutes on the story that week, half the time of ABC’s “World News Tonight,” though NBC pre-empted its Tuesday newscast for NBA coverage, said Andrew Tyndall, head of ADT Research. There’s no evidence that Comcast tried to influence NBC’s coverage in any way; Todd said the corporation’s leaders have no history of doing that. A Comcast spokeswoman had no comment.

Todd spoke out against his bosses at NBC News in the past, but said he doubted he would have done so in this case, in part because Comcast hasn’t said why the contribution was made. “You could make the defense that it is contributing to the United States” by renovating the White House, he said.

More troubling, he said, is the perception that Comcast CEO Brian Roberts had to do it to curry favor with the Trump administration. Trump, in a Truth Social post in April, called Comcast and Roberts “a disgrace to the integrity of Broadcasting!!!” The president cited the company’s ownership of MSNBC and NBC News.

Roberts may need their help. Stories this week suggested Comcast might be interested in buying all or part of Warner Bros. Discovery, a deal that would require government approval.

White House cannot be ‘a museum to the past’

The Post’s editorial last weekend was eye-opening, even for a section that has taken a conservative turn following Bezos’ direction that it concentrate on defending personal liberties and the free market. The Oct. 25 editorial was unsigned, which indicates that it is the newspaper’s official position, and was titled “In Defense of the White House ballroom.”

The Post said the ballroom is a necessary addition and although Trump is pursuing it “in the most jarring manner possible,” it would not have gotten done in his term if he went through a traditional approval process.

“The White House cannot simply be a museum to the past,” the Post wrote. “Like America, it must evolve with the times to maintain its greatness. Strong leaders reject calcification. In that way, Trump’s undertaking is a shot across the bow at NIMBYs everywhere.”

In sharing a copy of the editorial on social media, White House press secretary Karoline Leavitt wrote that it was the “first dose of common sense I’ve seen from the legacy media on this story.”

The New York Times, by contrast, has not taken an editorial stand either for or against the project. It has run a handful of opinion columns: Ross Douthat called Trump’s move necessary considering potential red tape, while Maureen Dowd said it was an “unsanctioned, ahistoric, abominable destruction of the East Wing.”

In a social media post later Saturday, Columbia University journalism professor Bill Grueskin noted the absence of any mention of Bezos in the Post editorial” and said he wrote to a Post spokeswoman about it. In a “stealth edit” that Grueskin said didn’t include any explanation, a paragraph was added the next day about the private donors, including Amazon. “Amazon founder Jeff Bezos owns The Post,” the newspaper said.

The Post had no comment on the issue, spokeswoman Olivia Petersen said on Sunday.

In a story this past week, NPR reported that the ballroom editorial was one of three that the Post had written in the previous two weeks on a matter in which Bezos had a financial or corporate interest without noting his personal stakes.

In a public appearance last December, Bezos acknowledged that he was a “terrible owner” for the Post from the point of view of appearances of conflict. “A pure newspaper owner who only owned a newspaper and did nothing else would probably be, from that point of view, a much better owner,” the Amazon founder said.

Grueskin, in an interview, said Bezos had every right as an owner to influence the Post’s editorial policy. But he said it was important for readers to know his involvement in the East Wing story. They may reject the editorial because of the conflict, he said, or conclude that “the editorial is so well-argued, I put a lot of credibility into what I just read.”

Bauder writes for the Associated Press.

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