Recently an interesting report came out saying that YouTube TV is paying about $35.72 a month for programming for every $35 a month subscription it sells.
Now take that with a grain of salt because this comes not from Google but from an analyst who studies the industry. The report comes from Colin Dixon who took a look at what cable networks are paying and projected it onto YouTube TV.
The issue with that is we do know several cable networks have given discounts to streaming services. For example, since launch reports have been floating around that ESPN is giving Sling TV a discount to carry ESPN over what Dish, for example, pays.
Yet we do know YouTube TV profit margins are at best thin. Time Warner recently said that Google turned down an offer to carry networks such as CNN because of concerns over having to raise its price for YouTube TV.
Is YouTube TV losing money? Possibly. Google may be hoping to get people to buy into the YouTube ecosystem whether that be buying YouTube Red or watching more YouTube ads. The question here would be could YouTube sell $1 or more in ads for every user who subscribes. (Something that is more than possible.)
Live TV streaming services have one tool that traditional cable TV services do not: The ability to sell more target ads at a higher ad rate. According to all reports this is something Sling TV has found to be profitable.
So it is possible that these services are being sold at a loss in an attempt to make up for that with the new targeted ad systems but more likely they are not losing money because these rates are based off of what people pay for cable not the reported discount streaming services are getting.
Source: FierceCable
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