Google's YouTube TV and Paramount Global Reach Agreement, Averting Blackout
The YouTube TV logo adorns a smartphone screen. (Jaque Silva / Getty Images)
Google's YouTube TV and Paramount Global have reached a new distribution contract, preventing a potential blackout of CBS and other TV channels for nearly 8 million YouTube TV subscribers. The deal was finalized on Saturday night, approximately 48 hours after the previous agreement expired.
The extension of a deadline allowed negotiations to continue, ensuring the availability of almost two dozen Paramount channels for YouTube TV customers. These channels include CBS Sports, BET, Comedy Central, Nickelodeon, TV Land, and Los Angeles broadcast stations KCBS-TV Channel 2 and KCAL-TV Channel 9.
"Under this agreement, YouTube TV will continue to provide over 100 channels and add-ons, including Paramount+ with Showtime, and empower users with more viewing options in the future," stated YouTube. "We value the patience of our subscribers during the negotiations."
The terms of the contract remained undisclosed.
Extended Negotiations and Partnership Reinforcement
Negotiations spanned several days, with discussions focusing on terms and fees that Google would pay for the broadcast rights to Paramount channels. Both parties recognized the significance of avoiding service disruptions for YouTube subscribers.
As part of the deal, YouTube will offer Paramount's streaming services, such as BET+ and Paramount+ with Showtime, as an add-on option within the streaming service.
"We are delighted to extend our long-standing partnership and grant audiences greater access to their preferred content," Paramount stated.
Clash of Programmers and Distributors
Conflicts between programmers and distributors have become increasingly prevalent as the television industry's business model undergoes revisions. A dispute between Google and The Walt Disney Company three years ago resulted in a temporary blackout of ESPN and other Disney channels on YouTube TV.
Pay-TV providers, such as Google, aim to control expenses to retain subscribers who have numerous streaming options. Meanwhile, Paramount and other Hollywood companies face challenges in maintaining revenue streams due to declining ratings and cable customer losses. Programmers prioritize preserving lucrative pay-TV distribution fees.
YouTube TV's Growth and Challenges
YouTube TV has emerged as a major player in the television industry, attracting younger viewers and sports fans. It ranks as the fourth-largest multichannel distributor in the U.S., following Charter's Spectrum, Comcast Xfinity, and DirecTV.
After becoming too costly for DirecTV, the longtime rights holder, YouTube TV acquired the NFL's "Sunday Ticket" subscription offering in 2023. However, the hefty annual cost of Sunday NFL games has impacted YouTube TV's operating expenses, leading Google to reassess its contractual expenditures.
Last month, YouTube TV increased its monthly subscription fee from $72.99 to $82.99.
Paramount's Strategic Objectives
Paramount was equally motivated to avoid a prolonged confrontation. The media company's controlling shareholder, Shari Redstone, initiated a deal last summer to divest the family's 40-year-old enterprise to the Larry Ellison family. The plan involves Skydance Media, led by David Ellison, absorbing Paramount in a transaction valued at $8 billion.
The transaction is targeted for completion by early April. However, the Skydance deal has encountered challenges at the Federal Communications Commission, which must approve the transfer of CBS television licenses to Ellison for the sale to proceed.
Additionally, Paramount faces a $20 billion lawsuit from former President Donald Trump over alterations made to a "60 Minutes" interview of Vice President Kamala Harris. CBS is also engaged in a separate battle with Sony Pictures Television to retain distribution rights for the popular game shows "Jeopardy!" and "Wheel of Fortune."