NBCUniversal recently asked YouTube TV to bundle Peacock, the NBC streaming service that doesn’t seem to have gotten many paying subscribers. Comcast-owned NBC wants Google’s own YouTube TV to pay for Peacock as a condition for continued access to NBC channels after the company’s current contract expires.
Google objected, and NBC is apparently ready to drop it. However, a dispute over how much Google should pay NBC is still pending, and both sides have warned that YouTube TV subscribers could lose access to NBC channels.
NBC’s Peacock demand came according to a. during an ongoing promotion dispute between NBC and YouTube TV blog entry yesterday from investor research firm LightShed Partners. The existing contract of carriage between YouTube TV and NBC expires on Thursday, and about 15 NBCUniversal channels would be deleted from YouTube TV if the companies don’t close a new deal in time.
“NBCU is trying to force YouTube TV to bundle and pay for Peacock Premium under a new affiliation agreement for the NBCU channels,” wrote LightShed Partners, pointing out that this was an odd request.
“Your first reaction should be why Peacock is part of this discussion in the first place, given that it is an over-the-top streaming service direct to the consumer,” wrote LightShed Partners. “You don’t need YouTube TV or MVPD / vMVPD [Multichannel Video Programming Distributor] Service to get Peacock – it’s $ 5 / month with ads and $ 10 / month without ads on iOS / Android, tvOS, etc.
When asked by Ars, a Google spokesman confirmed that NBC had asked YouTube TV to bundle Peacock and said the request would force NBC subscribers to pay twice for the same content. Google also told Ars that subscribers would have to download and use the Peacock app independently from YouTube TV, though this proposed bundling agreement will cost users more. With that in mind, a Peacock subscription would simply be an added benefit of subscribing to YouTube TV without providing any special integration that makes it easier to share the two services.
An NBC source familiar with the negotiations told Ars that NBC’s Peacock request was “out of negotiations” for now. But the source didn’t completely rule out a Peacock / YouTube TV bundle from a definitive deal as negotiations are fluid and could change by the last minute.
NBC is sticking to the “old business model”
LightShed Partners analysts say they “see the main reason” [for NBC’s demand] is that Peacock has not been overwhelming to date beyond use on Comcast / Cox set top boxes, where it effectively acts as an updated version of on-demand programming for cable subscribers … This is illustrated by the talking of “Registrations “As opposed to” paying subscribers “), they fall back on their old business model of wholesale bundling to drive sales. If they can force YouTube TV to broadcast Peacock, they suspect they will try to force other vMVPDs and MVPDs to do the same. “
The controversy is meant to be a reminder that the bundling practices common in cable and satellite television may not be eliminated with the advent of online streaming services. In this case, however, LightShed Partners believes NBC is losing out and will ultimately lower its demand:
While carriage fights almost always end with hollowing out the distributor, it just feels different. NBCU … wants[s] to show investors that Peacock is a “hit” as streaming success is now all that matters to media investors (thanks to Disney’s incredible success in launching Disney +) and their increasingly questioned legacy broadcast / cable network Maintain assets. However, battling a technology platform whose investors are not interested in the broadcast / cable networking business and who likely view YouTube TV as a hobby with little to no profitability will be tough for Comcast / NBCU to win. Google clearly believes in the importance of YouTube TV in increasing YouTube ad sales because of its aggressive marketing spending. However, the leverage in this negotiation seems skewed on Google. Ultimately, we expect NBCU to buckle and let Peacock out of the deal.
NBC may have stopped its Peacock demand after LightShed released its post based on what NBC source Ars said.
Although YouTube TV is delivered over the Internet, it is similar to traditional cable TV in that it offers a bundle of live channels, on-demand video, and DVR services. Google obviously wants YouTube TV to continue to offer NBC channels without having to bundle Peacock, and that’s likely a better outcome for users who might be forced to pay more for YouTube TV if NBC’s bundling demand succeeds.
Comcast CEO Brian Roberts said in July that Peacock has “54 million signups and over 20 million active monthly accounts”. This also includes people who are committed to the free tier, and it’s not clear how many people are paying for the $ 5 and $ 10 levels. As noted by LightShed, the user number also includes people who will receive the ad sponsored ad $ 5 peacock free in a bundle with Comcast or Cox cable service. Comcast’s newest quarterly earnings announcement said the media department’s findings include a “$ 363 million loss related to Peacock”.
Google will cut the price by $ 10 if the dispute continues
Google announced in a blog post on Tuesday that if the NBC deal expires without a new agreement, the monthly price of YouTube TV will be reduced from $ 65 to $ 55 until NBC channels are available again. Google noted that customers can sign up separately for Peacock “to continue watching NBCU content like Sunday Night Football.”
NBC made a similar request for Peacock bundling to Spectrum TV operator Charter earlier this year, but “it failed in trying to get Charter to broadcast Peacock Premium … and decided to give Charter a short-term attempt – Submarines, “wrote LightShed Partners.
“We can’t understand why YouTube TV would pay for Peacock when they can simply tell subscribers to sign up for Peacock Premium through Google Play or another app store,” the investment research firm said in the blog post. One of the strangest aspects of NBC’s request, LightShed wrote, “is that YouTube TV subscribers can’t even access Peacock through the YouTube TV app; they would have to download Peacock and use the Peacock app. In addition, Peacock has many next-day linear programs from NBCU that you already get if you subscribe to YouTube TV (or any other MVPD / vMVPD). “
Channels that could be removed from YouTube TV if the dispute is not resolved include NBC, Bravo, CNBC, E !, Golf Channel, MSNBC, Oxygen, SYFY, Telemundo, The Olympic Channel, Universal Kids, Universo, and USA Network. Access to NBCs is also at stake regional sports networks in the Bay Area, Northern California, Boston, Chicago, Philadelphia, New York, the Northwest US, and Washington, DC.
YouTube TV wants to be treated “like any other TV provider”
A sticking point in the negotiations is allegedly YouTube TV’s demand that NBC agree to a most favored nation (MFN) clause. LightShed noted that other TV providers have been demanding MFN agreements for years, and “[g]Given the size and growing importance of YouTube TV in the industry, it’s hard for us to understand why they can’t protect themselves with an MFN. “Another point of contention is what YouTube TV NBC has to pay for regional sports channels, but the contribution from LightShed said the Peacock and MFN disputes were the “two big problems”.
“Our request is that NBCU treat YouTube TV like any other TV provider,” Google said on its blog post in an obvious reference to negotiating a most favored nation clause. In other words, YouTube TV is aiming for the same tariffs that similar sized services receive from NBCU for the duration of our agreement so that we can continue to offer YouTube TV to our members at a competitive and fair price. ”Google informed Ars that NBC would not was ready to offer contractual safeguards that ensure that YouTube TV does not pay more for NBC channels than similarly large TV providers.
A blog post by Google states that “NBCU is an important partner for us” and it is “hopefully that we can overcome this impasse to keep their content available on YouTube TV”. NBC took an aggressive stance and set up “You need channels“Website warning users,“ YouTube TV may delete your favorite channels. ”This NBC website encourages users to express their dissatisfaction by contacting YouTube TV and provides a list of alternative TV providers that consumers could switch to.
NBCUniversal provided Ars with a statement stating: “NBCUniversal is demanding fair pricing from Google for the continued promotion of YouTube TV’s only portfolio of entertainment, Hispano, news and sports channels. Unfortunately, Google refuses to accept a deal on these fair prices and is willing to withhold entertainment, news and sports programming from their paying customers. NBCUniversal is committed to informing our fans that they risk losing their favorite shows if Google continues their claims. “
Analyst: Comcast should stick with broadband
Comcast continues to operate both a cable network and a media business, thanks to the purchase of NBCUniversal in 2011. In contrast, AT&T plans to outsource WarnerMedia and focus more on its core telecom competencies, while Verizon does so through the sale of Yahoo and AOL Media business gives up.
LightShed analysts say Comcast should focus on broadband instead of media – but they don’t expect it to happen.
“Given that Comcast investors are really only interested in Comcast broadband, we are finding it increasingly difficult to understand why Comcast still owns NBCU, let alone Sky in the UK,” wrote LightShed. “Not to mention why Comcast is still in the video bundling business in the first place, trying to force Peacock to succeed instead of just offering third-party vMVPDs and SVOD / AVOD services on top of its incredible broadband line? If Comcast leaves NBCU, Sky and the video bundling business, its shares would skyrocket. Unfortunately, for Comcast investors, it doesn’t seem like this is likely anytime soon. “
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