If it can be said that a company that can lay claim to nearly 12% of all U.S. video consumption has been flying under the sports-media rights radar, then YouTube is cruising along at an undetectable altitude. But the Google-owned utility may be poised to make off with one of the few assets that still brings tens of millions of consumers in front of their TV sets, and if this should come to pass, at least one legacy partner may be liquidating its assets just a few years down the road.
As much as Amazon and Netflix have made the biggest waves with their respective sports-acquisition sprees, the largely dormant YouTube has the scale and capital to put one of the Big Four broadcasters out of business. As MoffettNathanson analyst Michael Nathanson writes in a new report, “YouTube [in 2024] was already the second-largest media company by revenue at $54.2 billion, trailing only Disney [at $59.7 billion].”
By Nathanson’s reckoning, this is the year that YouTube bullies its way into the top spot, “making it not only the leader in engagement but revenue as well.”
While a trip down a rung certainly won’t spell doom for the Mouse House, the acceleration of YouTube’s popularity and cash reserves could very well make the next few years a bit of a nightmare for the comparatively under-monetized Disney rivals Paramount and Fox Corp., co-stewards of the NFL’s most-watched TV window. Including the Thanksgiving Day games, the national Sunday afternoon window last season averaged 24.9 million viewers, keeping the shared package well out of reach of runner-up NBC (Sunday Night Football averaged 21.6 million viewers in 2024) and leaving ESPN/ABC (14.9 million) and Amazon (11.9 million) in the dust.
For all the impressions the NFL scares up on Sunday afternoons each week, one of those two partners may find themselves without a place to sit once the music stops playing. The league has yet to confirm its plans for 2029, when the opt-out clauses in its $110 billion rights deals are set to kick in with a vengeance. But commissioner Roger Goodell’s remarks during his annual “State of the League” likely spooked some of the NFL’s longstanding media partners.
Speaking in New Orleans on Feb. 3, Goodell characterized the current deals as “undervalued,” before acknowledging that the opt-outs were “incredibly valuable” to the league. As such, the NFL seems to be amenable to taking a long look at shifting more games—and, perhaps, complete TV packages—to the streaming arrivistes.
“We’ll look at Netflix, we’ll look at YouTube, we’ll look at Amazon,” Goodell said just days before Super Bowl LIX kicked off. “Not just look. We’ll continue to work with them to improve what we’re doing with them. Amazon had another 40% increase in audience. Their ratings are now coming very close to broadcast audiences and about to cross over. I think they will very shortly.”
One NFL partner was quick to assert its intention to stay the course, although negotiating a new pact with the league will cost a small fortune. Speaking last month at the Morgan Stanley Technology, Media & Telecom Conference, Fox Corp. CEO Lachlan Murdoch said the company would seek to revise its $22.3 billion Sunday-afternoon package, should the NFL elect to trigger the opt-out option.
“The NFL is our largest partnership. They have an incredible product, and we’ve had a deep relationship with them for a very long time,” Murdoch told investors. “So, we see this ‘amend and extend’ provision, which is still some years out, as an opportunity for us to frankly deepen our relationship with the NFL.”
With a current market cap of $23.3 billion and having generated just shy of $14 billion in total revenue in its FY 2024, Fox is not the NFL’s most vulnerable ally. That unhappy distinction rests with Paramount, which has a relatively undersized $8.24 billion market cap, despite the $29.2 billion in revenue it whipped up last year. And while big-reach TV is the medium that grew the NFL into the world-striding colossus that it is today, the cost of remaining in business with the league after the opt-outs are triggered could be too great for the latter company’s CBS division to bear.
Thus far, YouTube’s foray into live sports rights has been limited to its seven-year, $14 billion deal for the out-of-market NFL Sunday Ticket package, which has played a significant role in the service’s growth. As Nathanson notes, YouTube “already generates over 3x the advertising revenue of its nearest competitor,” raking in a staggering $36.1 billion in ad bucks a year ago, eclipsing Disney and Comcast at $11.7 billion each.
While the pricey Sunday Ticket remains a bit of a drag on YouTube’s financials, Nathanson sees the package taking in over $900 million in revenue in 2027. The analyst also believes YouTube TV will eke out a profit sometime this year, with margins reaching 10% two years from now before settling into a “low-to-mid-teens margin business” down the road.
As Nathanson asserted during a March 23 appearance on John Ourand’s The Varsity podcast, YouTube accounted for “something like 24% of all consumption last year on connected TVs.” And while sports has yet to emerge as a cornerstone of the business model, Nathanson suggested that listeners would do well to avoid sleeping on the service.
“We can’t ignore YouTube here,” Nathanson said. “I know they’re not—yes, Sunday Ticket, they’re paying for content—they’re not considered a sports rights bidder, but they really have the potential to be very disruptive here.”
According to Nielsen’s monthly video-usage report (“The Gauge”), people who watched YouTube on TV in February represented 11.6% of total TV viewing—a record for the streaming category overall. Nearly 27% of time spent streaming in February was dedicated to watching YouTube, and the service captured nearly 40% more viewing than second-place streamer Netflix. By any metric you choose to deploy, YouTube is now the largest aggregate “TV” content source here in the U.S., and it’s poised to pass Disney as video’s top banana before the end of this calendar year.
With the amount of money it’s sitting on, YouTube could outflank one of the NFL’s less cash-rich legacy partners without breaking a sweat. Or as Nathanson advised investors earlier this week, “If YouTube was a standalone business, public comps suggest the business would be worth $475 to $550 billion, or about 30% of Alphabet’s current valuation.”
Of course, the NFL is aware of what the loss of one of its TV packages would do to a legacy media partner in this day and age—we’re in a different world than the one CBS had to reckon with in 1994, when it fumbled the bag on the NFC package—and decades-long relationships aren’t the sort of thing to be dismissed with a stoic thumbs-down motion. The NFL for the last two decades has made a point of celebrating the reach of traditional television—not to mention the unparalleled production values that’ve been responsible for so many indelible moments over the generations—and in 2023, the league accounted for a record 93 of the top 100 most-watched TV programs here in the U.S.
As such, it’s not out of the realm of plausibility to suggest that the NFL may restructure its current deals in such a way that might see some of the league’s most loyal backers continue to carry a slate of games—although the rejiggered packages may be considerably diminished in scope. But if you’re a digital disrupter that has the resources to further destabilize one of the more defenseless networks, there’s arguably no better way to administer the coup de grâce than by pulling even more ad dollars out of the linear TV ecosystem.
Anything can happen between now and 2029, but the threat to one of traditional TV’s last remaining bulwarks is about as real—and potentially devastating—as an old-school forearm shiver to the jaw.
