Q. I see that YouTube TV will pull the Fox regional sports channels tomorrow, Why are they doing this and do you think it will be a short situation or a lengthy one? — Miranda, San Diego.
Miranda, as you know, YouTube TV, the live streaming service, yesterday posted an announcement saying it will remove the 22 Fox regional sports networks, and the Yes Network, from its lineup effective tomorrow. The company says it could not reach a new carriage deal with their owner, Sinclair Broadcasting.
Sinclair says YouTube TV rejected an offer that included lower fees than it had to pay previously. YouTube TV counters that Sinclair is actually asking for more than it charges other pay TV distributors.
The truth, as it almost always is in these fee fights, is likely somewhere in the middle. But since neither company will disclose actual terms, we don’t know who’s closer to the facts.
But one reality here, in my humble opinion, is that the dispute will likely last for a significant amount of time, perhaps even forever.
Some might say that would be because pay TV operators are less likely to carry regional sports channels now due to declining subscription numbers. For instance, Dish and Sling TV have been without the Fox regionals since July 26, 2019 due to a different carriage battle.
But the Dish and YouTube TV situations couldn’t be more different, which is why I think Dish and Sinclair will settle relatively soon while YouTube and Sinclair will not.
Dish charges premium prices for its pay TV packages with some subscribers paying more than $100 a month. When Sinclair comes calling this summer (or earlier) to negotiate a new carriage agreement for its 100+ local channels and the sports regionals, Dish will be highly motivated to make a deal. The satcaster knows it could lose a large number of high-paying subscribers if it loses both Sinclair’s locals and its sports channels.
But YouTube TV doesn’t have quite the same pressure. For starters, YouTube TV charges just $49.99 a month for its package of 70 plus channels, and there are no extra fees such as equipment charges and so on.
Consequently, as you can imagine, YouTube TV’s economic model is a tight one with relatively little profit. This requires the service to practice extreme caution in deciding which programming to carry and how much to pay for it. The Sinclair locals and sports channels are important, but probably not so important to pay a steep price for them. (Note: It’s unclear when YouTube TV’s contract for Sinclair’s locals expires.)
At $49.99 a month, Sinclair’s impact on YouTube TV’s bottom line is relatively insignificant even if five percent of subscribers drop it. There just isn’t that much money involved here.
Second, while many YouTube TV subscribers want Sinclair’s sports channels, they likely wouldn’t pay more to get them, or at least, not much more. Most of them subscribe to YouTube TV because it’s less expensive than cable or satellite. If YouTube TV raises its price to offset Sinclair’s fees, it defeats the purpose of offering a lower-cost service. And if YouTube TV doesn’t raise prices, its profit shrinks.
So it says here that the Sinclair-owned sports regionals will show up on Dish by summer’s end, if not much sooner, while they may be a thing of the past for YouTube TV.
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— Phillip Swann