NBC demanded YouTube TV package Peacock or lose access to NBC channels

Sculpture of a large peacock.
Enlarge / A giant peacock in front of 30 Rockefeller Plaza in New York City.

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NBCUniversal recently asked YouTube TV to include Peacock, NBC’s streaming service that apparently failed to garner many paying subscribers. Comcast-owned NBC wants Google-owned YouTube TV to pay for Peacock as a condition of continued access to NBC channels after the companies’ current contract expires.

Google opposed the lawsuit and NBC is apparently willing to drop it. But a dispute over how much Google should pay NBC is still pending, with both parties warning that YouTube TV subscribers could lose access to NBC channels.

NBC’s Peacock’s lawsuit came about during an ongoing transportation dispute between NBC and YouTube TV, according to a blog post yesterday by investor research firm LightShed Partners. The existing transportation contract between YouTube TV and NBC expires on Thursday, and about 15 NBCUniversal channels would be removed from YouTube TV if the companies do not reach a new agreement in time.

“NBCU is trying to force YouTube TV to bundle and pay for Peacock Premium as part of a new affiliate agreement for NBCU channels,” LightShed Partners wrote, noting that this is a strange lawsuit.

“Your initial reaction should be why Peacock is even part of this discussion as it is an exceptional direct-to-consumer streaming service,” LightShed Partners wrote. “You don’t need YouTube TV or any MVPD / vMVPD [Multichannel Video Programming Distributor] service to get Peacock – costs $ 5 / month with ads and $ 10 / month without ads via iOS / Android, tvOS, etc. The point of the DTC transmission is that you do NOT need the legacy multichannel packet. “

When contacted by Ars, a Google spokesperson confirmed that NBC asked YouTube TV to list Peacock and said that NBC’s lawsuit would force subscribers to pay twice for the same content. Google also told Ars that even though this proposed package arrangement costs users more, subscribers would have to download and use the Peacock app separately from YouTube TV. Given that, a subscription to Peacock would simply be an added bonus of subscribing to YouTube TV without providing any special integration that makes the two services easier to use together.

An NBC source familiar with the negotiations told Ars that the NBC Peacock lawsuit is “out” of the negotiations for now. But the source did not completely rule out a Peacock / YouTube TV package out of a final deal because negotiations are fluid and could change until the last minute.

NBC clings to “legacy business model”

Analysts at LightShed Partners say they “perceive the main reason [for NBC’s demand] is that Peacock has been disappointing to date beyond use on Comcast / Cox set-top boxes, where it works effectively as an updated version of on-demand programming for cable subscribers … with NBCU struggling with Peacock’s direct-to-consumer marketing (evidenced by talking about ‘registrations’ versus ‘paying subscribers’), they are turning to their legacy wholesale business model to drive distribution. If they can force YouTube TV to carry Peacock, we suspect they will try to force other vMVPDs and MVPDs to do the same. “

The dispute is a reminder that bundling practices common to cable and satellite television may not be eliminated by the rise of online streaming services. But in this case, LightShed Partners said it believes NBC is fighting a losing battle and will ultimately drop its lawsuit:

While carriage battles almost always end when the dealer collapses, this feels different. NBCU … I want[s] show investors that Peacock is a ‘hit’ as streaming success is now the only thing media investors care about (thanks to Disney’s incredible success in launching Disney +) and maintain their streaming network assets / cable legacy increasingly challenged. However, battling a tech platform whose investors don’t care about the broadcast / cable business and who likely think of YouTube TV as a hobby with little or no profitability will be a tough one for Comcast / NBCU to win. Google clearly believes in the importance of YouTube TV in driving YouTube ad sales given its aggressive investment in marketing. However, the influence in this negotiation seems to be biased towards Google. Ultimately, we expect NBCU to back down and knock Peacock out of the deal.

NBC may have dropped its Peacock lawsuit after LightShed published its post, according to what the NBC source told Ars.

Although YouTube TV is delivered over the Internet, it is similar to traditional cable television in that it offers a bundle of live channels, video on demand, and DVR service. Obviously, Google would like YouTube TV to continue to offer NBC channels without having to bundle Peacock, and that’s probably a better result for users who could be forced to pay more for YouTube TV if the demand for NBC packages is successful. .

Brian Roberts, CEO of Comcast said in july that Peacock has “54 million subscriptions and more than 20 million monthly active accounts.” That includes people who signed up for the free level, and it’s unclear how many people pay for the $ 5 and $ 10 tiers. As LightShed pointed out, the user number also includes the people who get the advertising. $ 5 free peacock tier in a bundle with Comcast or Cox cable service. Latest from Comcast quarterly earnings announcement It said its media division results include a “Peacock-related loss of $ 363 million.”

Google will reduce the price by $ 10 if the dispute continues

Google Announced in a blog post Tuesday that if NBC’s deal expires without a new deal being reached, it will lower YouTube TV’s monthly price from $ 65 to $ 55 until NBC channels are available again. Google noted that customers can sign up for Peacock separately “to continue watching NBCU content, such as Sunday Night Football.”

NBC made a similar demand for Peacock packages to the Spectrum TV operator Charter earlier this year, but “failed to get Charter to offer Peacock Premium … and settled for a short-term trial for Charter subs,” he 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 any other app store,” read the research firm’s blog post. investments. One of the strangest aspects of NBC’s lawsuit, LightShed wrote, “is that YouTube TV subscribers wouldn’t even be able to access Peacock from the YouTube TV app; they would have to download Peacock and use the Peacock app. Plus, Peacock has a lot of Linear Next Day NBCU programming you already get when 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 NBC 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”

One sticking point in the negotiations is reportedly YouTube TV’s demand that NBC accept a most-favored-nation (MFN) clause. LightShed noted that other television providers have required MFN agreements for years and “[g]Given the scale of YouTube TV and the growing importance of the industry, we have a hard time understanding why they couldn’t protect themselves with an MFN. ”Another area of ​​contention is over what YouTube TV has to pay NBC for regional sports networks, but the publication said the Peacock and MFN disputes are the “two big problems.”

“Our request is that NBCU treat YouTube TV like any other television provider,” Google said in its blog post, in an apparent reference to negotiations on an MFN clause. “In other words, for the life of our agreement, YouTube TV seeks the same rates that services of a similar size obtain from NBCU so that we can continue to offer YouTube TV to members at a competitive and fair price.” Google told Ars that NBC has been unwilling to offer contractual protections that ensure YouTube TV doesn’t pay more for NBC channels than similar-sized TV providers.

The Google blog post stated that “NBCU is an important partner for us” and that “we are hopeful that we can overcome this impasse to keep their content available on YouTube TV.” NBC took an aggressive stance and established a “You need channels“website that warns users,” YouTube TV may remove your favorite channels. “This NBC website encourages users to express their discontent by contacting YouTube TV and provides a list of alternative TV providers to which consumers can change.

NBCUniversal provided Ars with a statement, saying that “NBCUniversal is seeking fair rates from Google for ongoing YouTube TV transport of the only portfolio offering entertainment, Hispanic, news and sports networks. Unfortunately, Google is refusing to do a deal with these. fair rates and willing to deny entertainment, news and sports programming to their paying customers. NBCUniversal feels a responsibility to inform our fans that they risk losing their favorite shows if Google continues with its demands. “

Analyst: Comcast should stick to broadband

Comcast continues to operate a cable network and media business, courtesy of its 2011 purchase of NBCUniversal. In contrast, AT&T plans to spin off WarnerMedia and focus more on its core telecom expertise, while Verizon is similarly exiting the media business by selling Yahoo and AOL.

LightShed analysts say Comcast should focus on broadband rather than media, but they don’t expect that to happen.

“Since Comcast investors really only care about Comcast’s broadband, we are finding it increasingly difficult to understand why Comcast still owns NBCU, let alone Sky in the UK,” LightShed wrote. “Not to mention, why is Comcast still in the packet video business and trying to force Peacock to be a hit instead of just offering third-party vMVPD and SVOD / AVOD services in addition to their amazing broadband pipeline? if it exited NBCU, Sky and the video bundling business, its stock would skyrocket. Unfortunately for Comcast investors, this doesn’t seem likely any time soon. “


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