Disney and YouTube TV are stuck in a stalemate over how much channels like ESPN are worth.
YouTube TV's 10 million or so subscribers can't watch ABC and ESPN until the two sides agree on a deal. Disney wants more money to support its heavy investments in a sports rights portfolio that includes the NFL, the NBA, college sports, and the NHL. YouTube is telling customers that paying higher rates would require it to raise prices for the second time in a year.
"It's a tale as old as pay TV," said Evan Shapiro, a media industry analyst.
Disney's ESPN and Google's YouTube TV have been cast as the villains in this story by some online commenters.
"It's pretty tone-deaf to tell paying customers to 'go fix' something that's entirely between two billion-dollar corporations," said an X user in response to a post from ESPN's Scott Van Pelt telling viewers to petition Google and YouTube TV about the blackout.
The reality is more complicated, as the leagues and even sports fans themselves bear some responsibility.
The case against Disney
There's a reason media analysts think this standoff is more than a typical pay-TV squabble.
Disney now controls three alternatives to YouTube TV: Hulu + Live TV, Fubo, and the ESPN app (which can give consumers access to all of Disney's sports content). Google's position is that Disney can afford to hold out for higher rates since it could benefit if YouTube TV subscribers cancel.
"What's changed in the landscape is Disney's launch of the ESPN streaming service," said Joseph Bonner, who covers Disney for Argus Research. "It's logical to assume YouTube TV may be demanding some concessions from Disney, either on price or other issues."
However, if Disney bends on price with YouTube TV, other pay-TV providers like Charter and Comcast could pressure it for similar terms. Plus, the company could find it tougher to maximize its investments in live sports, especially with leagues like the NBA, which it's paying an average of $2.6 billion a year for the next 11 years.
YouTube TV is flexing its market power
Sports lovers who pay for YouTube TV are fed up with the blackout that's keeping them from "Monday Night Football" and college football games, plus other games and shows on ESPN.
YouTube is motivated to keep its costs down to improve its bottom line. It can likely afford a tough fight since it's backed by Google's $3.4 trillion parent company, which has a long-term plan to be a go-to destination on TVs.
A Disney spokesperson previously said that "Google is using its market dominance to eliminate competition and undercut the industry-standard terms we've successfully negotiated with every other distributor."
Media analysts say that's not just a Disney talking point.
This Disney-YouTube TV blackout is "indicative of YouTube TV wielding increased bargaining power," Ric Prentiss of Raymond James said in a note after Disney's networks left the pay-TV service.
Leagues are squeezing media companies
Both Disney and YouTube are acting rationally, which is why some media analysts say fans may want to direct their anger elsewhere.
"The obvious 'culprit' for the rising sports rights costs are the leagues," Argus' Bonner said.
Sports rights have exploded in value in recent years. They're seen as must-have programming for top media companies since they're a proven way to attract and keep paying subscribers.
No movie, TV show, or podcast cuts through culture like sports can. In a divided US — both in politics and entertainment — sports unify as one of the last remnants of monoculture.
Advertisers also love live sports, and not just because they're widely watched. Alan Wolk, who cofounded media research firm TVREV, said that sports are a way to reach audiences who rarely see ads, either because they pay to remove them when streaming or use ad blockers.
"It's the only way in this fragmented universe that you can reach millions of people at the same time," Wolk said of sports.
Sports have never been more valuable, and both league commissioners and franchise owners are capitalizing on their leverage.
"The leagues essentially have the distributors over a barrel, given the cable bundle landscape," Bonner said.
Tech giants are pushing up prices
The entrance of deep-pocketed tech companies like Google, Amazon, and Apple into sports in recent years has been a big challenge for traditional media companies.
These disruptors have substantial financial firepower, and they don't necessarily need their media businesses to be a source of profit. YouTube TV, Prime Video, and Apple TV also support their parent companies' primary goals of selling ads, Prime subscriptions, and phones.
As cord-cutting ramps up, Shapiro said live sports are "all that broadcast has left."
"I think the new F1 deal is a sign that the sports bubble will continue to inflate as long as Big Tech is in the game, ready to pay irrational prices," Shapiro said.
Fans bear some responsibility as sports rights soar
The leagues aren't entirely at fault, as they maximize the amount of money they make for their owners and players.
Ultimately, fans are partially responsible for the continued escalation of sports rights costs.
By being willing to pay steadily rising prices for access to games, fans are enabling leagues to extract more money from media companies, who in turn ask pay-TV providers for higher rates. So it shouldn't be surprising when services like YouTube TV and Fubo ask customers to pay up.
Faced with surging streaming costs and the YouTube TV blackout, some sports fans have resorted to piracy. Others are simply watching highlights of the games for free on social media or the free version of YouTube when they're over.
If sports remain the cornerstone of TV, fans shouldn't be surprised to see more disputes like the one between Disney and YouTube TV flare up.
