Former ESPN President and Meadowlark Media co-founder John Skipper weighed in on the ongoing carriage dispute between The Walt Disney Company and YouTube TV during an appearance on Pablo Torre Finds Out, offering a window into how Disney could approach negotiations without violating contractual protections.
According to a report by Awful Announcing, a spokesperson for YouTube TV says the company is not asking for the lower rates immediately from Disney, but wants to codify lower rates once YouTube TV surpasses the three other distributors in subscribers [Comcast, Charter, DirecTV]. In the interim, the Google-owned service suggests it’d pay the same rates as other distributors.
Currently, while YouTube TV says it has upward trajectory in subscribers compared to dwindling numbers for cable and satellite. It’s unclear whether or not waiting until YouTube TV is the largest distributor in the country to give the service lower rates would trigger the “Most Favored Nation” clauses for other distributors. Skipper explained the concept of a “Most Favored Nation” (MFN) clause. A common feature in media carriage agreements designed to prevent one distributor from receiving better terms than others.
“It’s a protection against somebody getting a better deal than you. The MFN, traditionally—I don’t know what’s in these agreements—traditionally has been about price,” Skipper said. “It’s not about a bunch of other things. It’s not a general everything in this contract. You get an MFN on price.”
Asked whether Disney should adjust its programming rates specifically for YouTube TV, Skipper was firm.
“Disney can’t give in on that. First of all, at least at ESPN—there’s no scale-based rate difference. Everybody pays the same thing,” he said. Skipper noted that giving a discount to YouTube TV, which has been taking subscribers from traditional pay-TV providers like Comcast and DirecTV. Could violate fairness principles inherent in MFN protections.
On the question of negotiating through the press, Skipper expressed some skepticism, but acknowledged the tactic might be necessary.
“I never liked negotiating in the press. That might be what they’re doing…Disney has to figure out a way to get them something that doesn’t trip MFNs that is not essentially unfair,” he explained.
He suggested Disney focus on areas where only YouTube TV could provide value, rather than adjusting rates for all distributors. Skipper further elaborated on potential strategies for keeping pricing intact while still incentivizing YouTube TV.
“If you’re Disney, what you’re trying to figure out is, how can I actually help myself here on something that is a priority for me. I would think ESPN, the new direct-to-consumer service, would be at the top of my list. Can you help me with that somehow? Can I then reward you [YouTube TV] for that in a way which doesn’t trigger the MFN and gets you the same amount of money?”
Despite the tensions, Skipper expressed confidence that a resolution is near.
“I think that there will be a resolution to this in the not too distant future. Because both parties actually want to come to some resolution. I don’t think there’s any reason that Google will want to embarrass Disney by saying we won. We’ll see a resolution either before the next Monday Night Football game or right after. Before college football next weekend.”
Earlier today, Walt Disney Company CEO Bob Iger addressed the ongoing carriage dispute with YouTube TV. Telling investors during Disney’s quarterly earnings call that the company remains committed to reaching a fair agreement while emphasizing its responsibility to both consumers and shareholders.
“While we have been working tirelessly to close this deal and restore our content to their platform, it is imperative that we make sure we agree to a deal that reflects the value that we deliver, which both YouTube and Alphabet have told us is greater than the value of any other provider,” Iger added.
Before the earnings call on Thursday, Walt Disney Company CFO told CNBC that the company prepared for this dispute earlier in the year, and is set to go on as long as it takes.
“We’re in the middle of negotiations right now. Things are live. They’re happening,” said Hugh Johnston, Walt Disney Company CFO to CNBC. “Obviously as we entered the year, we knew this was going to be a challenging battle. We prepared ourselves for it. We’re ready to go as long as they want to. So, beyond that I’d rather not comment on that.”
The blackout of Disney’s networks — including ESPN, ABC, and FX — is entering its third weekend, leaving millions of YouTube TV subscribers without access to some of sports and entertainment’s most popular programming.
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