CNBC Sport: As Disney and YouTube TV battle over carriage fees, it's unclear who has the upper hand

Published Thu, Nov 6 202510:45 AM EST

Alex Sherman @in/alex-sherman @sherman4949

Contessa Brewer @contessabrewer

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Key Points

Disney programming, including ESPN, is still dark on YouTube TV until the two sides can reach a carriage agreement.
These carriage-dispute blackouts happen from time to time, but this one may be better matched than most.
YouTube and Disney are both behemoths and may be able to swallow short-term pain for long-term gain.

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. YouTube TV subscribers know by now that all of Disney's programming has been removed until the two sides reach a new carriage agreement. That means no ABC and no ESPN for about 10 million households until a new deal is struck. The key sticking point here is the rate at which Disney charges YouTube TV for its networks – the most valuable of which is ESPN, which charges more for carriage (more than $10 a month per pay-TV subscriber) than any other network in the U.S. Disney has successfully negotiated deals with the largest two U.S. pay TV providers – Comcast and Charter – and is offering YouTube TV terms commensurate with those deals, according to people familiar with the matter. But YouTube TV wants better rates than the third-largest pay-TV provider would typically get, because YouTube TV is the only distributor of size that's actually growing, according to people familiar with the talks between the companies, who asked not to speak publicly because the discussions are private. In other words, while YouTube TV may be No. 3 today, by the time a two- or three-year carriage agreement concludes, it could be No. 1, and it wants rates that reflect that. These carriage-dispute blackouts happen from time to time, but I find this one particularly interesting, because I honestly don't know which side has the leverage. That wasn't the case for some of YouTube TV's recent negotiations, such as with Fox and NBCUniversal, where YouTube TV could more easily push around smaller traditional media companies. Fox and NBCUniversal — both significantly smaller than Disney — wanted to avoid weeks or months of lost subscription and advertising revenue from an extended blackout. Those potential losses would have been meaningful to future operations and could even ultimately affect the stock price (more likely in Fox's case than NBCUniversal's, as NBCUniversal is a part of Comcast, and shareholders of Comcast largely don't care much about the media business relative to broadband internet). The most-watched and most-valuable programming on Fox and NBCUniversal is live sports on broadcast networks Fox and NBC, which can be accessed for free outside of the cable bundle with a digital antenna. That gives YouTube TV customers an easy, legal way of watching that programming if either media company were to go dark and pull its content from YouTube TV. This tilts leverage in YouTube TV's favor. Subscribers don't have to cancel service – the biggest trump card for the media companies, themselves. Disney, on the other hand, has ESPN. There is not a free available solution to access live sports on ESPN, such as college football and Monday Night Football. That makes the carriage dispute a classic case of short-term vs. long-term calculus. YouTube TV is a small part of a giant, $3.3 trillion company in Alphabet. If YouTube TV loses some customers while pushing for higher rates that will help the company in the long term, do shareholders of Alphabet care at all? No, they do not. That gives YouTube TV plenty of runway to live with a blackout. Disney, of course, would also prefer not to lose revenue – but Disney has considerably more leverage than either Fox or NBCUniversal did during their renegotiations. For one, Disney owns its own version of YouTube TV – Hulu with Live TV, which just closed its merger with Fubo (another alternative to YouTube TV) last week. If a customer were to cancel YouTube TV to watch ESPN on Hulu with Live TV, that's a win for Disney. An ESPN blackout may also trigger a YouTube TV customer to opt out of cable TV in general. This would be a loss for Disney, but it does present Disney an opportunity to market its new bundle of Disney+, Hulu and ESPN for $29.99 per month as an alternative. It's a tool Disney has never had at its disposal in a blackout before. This isn't to say Disney wants a YouTube TV subscriber to drop the service for the ESPN direct-to-consumer product, but it does have a safety net that didn't previously exist. The point here is Disney has some good options for frustrated YouTube TV customers who cancel. While Alphabet shareholders may not care if YouTube TV drops a million subscribers or so, the executives that run YouTube TV certainly do. I'm sure they have a breaking point. Of course, Disney also has a breaking point. The longer a blackout occurs, the more money Disney stands to lose from the millions of YouTube TV users who do stick with the service. With pressure on both sides, it's a pretty safe bet to think this conflict won't last too much longer. But with Disney having multiple soft landings in the near term, and YouTube TV having little long-term pressure to rush an agreement, finding the sweet spot in the middle will be the key to getting a deal done. For many years, consumers blamed the big bad cable company for these carriage disputes, because they were paying money directly to them for TV, and they weren't getting the channels they paid for. I always felt that blame was misplaced. The programmers – particularly Disney/ESPN – were pushing enormous rate increases, and the cable providers didn't want to pass on all of those increases to consumers. Now – in part because YouTube has a strong consumer brand and in part because consumers have gained education that media companies have been jacking up prices on their content for decades – the sympathies may be shifting, with the average person anecdotally blaming Disney for this dispute more than YouTube TV. (A quick scroll of the responses to retired NFL star JJ Watt 's recent posts on X suggests as much.) And yet, one can feasibly argue YouTube TV is the actual bully here, with a multitrillion-dollar balance sheet to fall back on if a deal doesn't get done. To quote an executive who spoke to me several weeks ago on background , YouTube TV "needs to make an example out of someone" to show it means business – literally and figuratively. I guess the "someone" is Disney. On the record With WTA CEO Portia Archer ... The Women's Tennis Association (WTA) Finals are currently taking place in Riyadh, Saudi Arabia. The Saudi Arabian Public Investment Fund has become a major player in American sports, frequently investing in and sponsoring leagues including LIV Golf, Formula 1, and Zuffa Boxing. Last year, it struck a multiyear partnership with the WTA. This week, I spoke with WTA CEO Portia Archer , live from Riyadh, about why she feels comfortable with the PIF partnership when Saudi Arabia has a long history of female discrimination. "What got me comfortable was just a clear understanding that sport is a vehicle for progress," Archer told me. "Sport can often be a vehicle for change. And I think coming here, our players were very clear that they wanted to come here and not only play tennis, they wanted to come here and to make an impact." The PIF and the WTA announced earlier this year the introduction of the PIF WTA Maternity Fund Program, allowing more than 320 eligible WTA players to get up to 12 months of paid maternity leave. Still, former women's tennis stars Chris Evert and Martina Navratilova penned a Washington Post Opinion piece last year in opposition to playing the WTA Finals in Riyadh. "We fully appreciate the importance of respecting diverse cultures and religions. It is because of this, and not despite it, that we oppose the awarding of the tour's crown jewel tournament to Riyadh," wrote Evert and Navratilova. "The WTA's values sit in stark contrast to those of the proposed host. … A country whose long-term record on human rights and basic freedoms has been a matter of international concern for decades." Archer also told me she's supportive of the WTA and the men's ATP tour eventually merging. "We've been in discussions for some time, and there's still some challenges and things that we have to overcome and work out and get alignment on, but I think we're making good progress," Archer said on merging the tours. "And I am optimistic, because I think that it's one of the best things we could do for the sport. I also think it would be a positive change, and our sport really isn't known for making a lot of changes. So yeah, I'm a big proponent." 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 Another week. Another betting scandal. This time the spotlight lands on UFC. UFC President Dana White told TMZ Sports he got alerted by IC360, a gambling integrity monitoring service, that wagers on Saturday's fight in Las Vegas between Isaac Dulgarian and Yadier Del Valle appeared fishy. Sources tell me the sportsbooks also spotted unusual (aka suspicious) betting activity and notified the companies in charge of gambling integrity. White said that before the match, he asked Dulgarian if he was injured, if he owed anyone money, or did he do anything illegal, but Dulgarian said "no." I'm no expert on ultimate fighting, but a lot of fans said they thought it looked like Dulgarian took a dive. White said he immediately alerted the FBI. Dulgarian's been cut by UFC. A UFC spokesperson said: "We take these allegations very seriously, and along with the health and safety of our fighters, nothing is more important than the integrity of our sport." White was a bit more colorful: "We will be your worst enemy. We will immediately go after you, guns-a-blazin' - with the FBI," White told TMZ. "We will do everything we can to make sure you go to prison." Stay tuned – I'm told there are more investigations into improper gambling in other sports. Any future probes would only add to growing scrutiny by regulators, lawmakers and the American public. *** There was, of course, plenty of legal wagering last week . In the stock markets, triple-witching leads to a spike in trading volume. In sports, the equivalent is when the NFL, college football, MLB, NBA and NHL all play at the same time, as happened at the end of October. Ergo, a major spike in betting volume. New York state set a new record for the amount wagered on sports in a single week: $655.7 million for the week ending Oct. 26. One week. In one state. There's been a lot of hype around the surge of prediction platforms. But for comparison, for the entire month of October, Kalshi and Polymarket are reporting sports volumes of about $1.5 billion in total. We'll get more insight into the betting market in earnings reports in the coming days. Penn, which owns ESPNBet, reports Thursday morning; DraftKings goes Thursday afternoon and FanDuel's parent Flutter reports next Wednesday. Bank of America just downgraded DraftKings and Flutter, in part because of the projected threat of projections markets. I'm more curious about "customer-friendly outcomes." That's what the sportsbooks call it when fan favorites win. But it seems like it's happening a lot. Last year, NFL action favored the fans — and the sportsbooks took it on the chin. It happened again during March Madness, which dashed DraftKings' hopes for raising revenue and earnings guidance for the year. Once again this fall in NFL matchups the favorites are covering the spread more than the underdogs (about 56% v. 44%). Analysts are taking note. Bernstein predicts Flutter and DraftKings will miss full-year EBITDA guidance by at least $50 million. Bank of America lowered its price targets on both companies, with analyst Shaun Kelley writing that he's scrutinizing the model and how much the sportsbooks "hold," or how much of the total amount wagered they keep. My question: Is "the model" broken? Will we see the sportsbooks change the way odds are formulated or offers are delivered in a way that keeps customers from getting so lucky. CNBC Sport highlight reel The best of CNBC Sport from the past week: Fanatics CEO Matt King joined "Squawk Box" to discuss betting companies' responsibilities regarding the NBA betting scandal. King also weighed in on predictions markets, including his concerns about manipulation. I obtained a copy of Paramount's letter to WBD's board of directors outlining the media company's plan to buy TNT Sports-owner Warner Bros. Discovery – and also making the argument that its $23.50-per-share offer is much more appealing for shareholders than splitting the company. The NWSL is standing up a star-studded advisory board to help steer the league's growth. Club investors including Eli Manning, Alex Morgan and Magic Johnson will join the group, which will participate in marketing efforts, fan engagement initiatives and player mentorship. CNBC's Jessica Golden has the details. Is Ted Leonsis on the CNBC Sport payroll yet? (For the sake of journalistic ethics, my editors are making me note that no, he is not.) The Monumental Sports CEO and owner of the NBA's Washington Wizards, the NHL's Washington Capitals and the WNBA's Washington Mystics – and frequent CNBC guest – stopped by to talk about how sports teams are still undervalued even with the massive runups in valuations over the past few years. The big number: 27.3 million Some weeks, I think long and hard about what the week's Big Number should be. This was not one of those weeks. A mammoth 27.3 million average audience watched Game 7 of the World Series between the Los Angeles Dodgers and the Toronto Blue Jays across the U.S. The game peaked at 33.1 million viewers between 11:45 p.m. and midnight ET, according to Nielsen data. And add to that another 10.9 million who watched the game in Canada – those are numbers that MLB Commissioner Rob Manfred won't forget when he negotiates the league's next media rights deal after the 2028 season. Quote of the week "I wouldn't call it a teardown." New York Jets General Manager Darren Mougey , after tearing down the current team by trading its two defensive superstars Sauce Gardner and Quinnen Williams this week for a bounty of draft picks. To be fair, the Jets are 1-7 and should be torn down. Around the league All the way back in February, Drew Brees told CNBC Sport he'd like to join an NFL broadcast team as a game analyst. This week, as Brees used to do on the football field, he delivered. He'll join Fox on a full-time basis, potentially replacing Mark Sanchez , according to The Athletic's Andrew Marchand. Tennis stars Aryna Sabalenka and Nick Kyrgios will play a modern version of "Battle of the Sexes" in Dubai on Dec. 28, reports The New York Times. Kyrgios has publicly claimed women "can't return our serves." This could have been a big number for this week too: Total NIL spend on women's sports is projected to reach $663.3 million by 2027–28, up from $305.9 million in 2021–22, according to Opendorse .