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Can NBC force YouTube TV to carry Peacock?

Comcast's NBCUniversal and Google's YouTube TV are locked in a carriage battle as the terms of their current deal are set to expire on Thursday (September 30). But this is much more complicated than your standard carriage clash, as it reaches deep into the business metrics driving new streaming services and competitive streaming platforms, reckons LightShed Partners analyst Richard Greenfield.

While baseline pricing always matters in these sorts of deals, NBCU and Google did not go into great detail about the sticking points. However, Greenfield believes the "two big issues" here involve the distribution of NBCU's Peacock streaming service and most favored nation (MFN) clauses that outweigh wrinkles, such as the carriage of NBCU's regional sports networks.

"NBCU is trying to force YouTube TV to bundle and pay for Peacock Premium as part of a new affiliation agreement for the NBCU channels," Greenfield explained in this blog post (registration required), believing that NBCU might try to do the same with other pay-TV operators if it's successful here with Peacock.

"With NBCU struggling with marketing Peacock direct-to-consumer (evidenced by their talking about 'registrations' vs. 'paying subscribers'), they are falling back on their legacy business model of wholesale bundling to drive distribution," he added.

But Greenfield also believes that YouTube TV or any other pay-TV provider would balk at such a deal, given that Peacock is available as a standalone streaming service that does not require a pay-TV service to be attached to it.

He also sees MFNs, which, in the pay-TV world, provide a distributor with access to the best distribution terms available, playing a role as YouTube TV continues to expand its subscriber base and gain more leverage at the negotiating table. On that point, YouTube TV's statement on the situation with NBCU does note that it "seeks the same rates that services of a similar size get from NBCU so we can continue offering YouTube TV to members at a competitive and fair price."

YouTube TV gaining size, gaining leverage

Google doesn't regularly release YouTube TV subscriber figures, but the service, launched in 2017, is getting big enough to throw some weight around. Greenfield estimates that the vMVPD now has about 4 million subscribers, pushing it past Hulu's live TV offering, which had about 3.7 million at the end of Disney's fiscal third quarter of 2021. Comcast still owns a third of Disney-controlled Hulu

The analyst also speculates about deeper competitive threads that might be being pulled here. He wonders if Comcast is considering developing a national vMVPD service (top execs at Comcast have previously shot down the notion, because there's not much money to be made in that business) that would compete more directly with YouTube TV. Meanwhile, Comcast is getting deeper into the streaming platform game with its Flex service for broadband-only customers. It's also reportedly getting close to launching a new lineup of connected TVs that run the operator's software, a move that would compete with Google's streaming platform strategy.

But with everything rolled up, Greenfield believes this is a battle that's going to be hard for NBCU to win, as YouTube TV distribution is too valuable to give up on for very long. NBCU, he predicted, ultimately will "cave and leave Peacock out of the agreement," which still leaves some of the questions around regional sports networks and MFNs up in the air.

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— Jeff Baumgartner, Senior Editor, Light Reading

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