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Google Lines up CBS, Disney, Fox for Unplugged Streaming Video Service

Alphabet‘s (GOOGL) Google unit has reached a final agreement or one in principle with CBS (CBS) , Disney (DIS) , Viacom (VIAB) and 21st Century Fox  (FOXA) and could launch its streaming video service as soon as February, according to people with knowledge of Google’s plans.

Time Warner (TWX) is in talks as well, but they haven’t yet progressed as far as the others, said one person with knowledge of the situation.

The video streaming service, Google Unplugged, will be operated by Google’s YouTube service and will join a growing number of subscription video-on-demand offerings lining up to offer consumers so-called skinny bundles of networks that are less expensive than those offered by cable or satellite operators.

The service initially was expected to be announced at the Consumer Electronics Show that begins in Las Vegas on Jan. 5, but unspecified technology delays and the need to finalize contracts have pushed it back to February or later, according to two knowledgeable people.

The crowded field of cablelike streaming services includes DirecTV Now, which AT&T‘s (T) DirecTV satellite service launched in November, as well as Sony‘s (SNE) PlayStation Vue service and Dish Network‘s (DISH) Sling TV.

Hulu, a streaming service owned by Fox, Disney, Comcast‘s (CMCSA) NBCUniversal and Time Warner, also is expected to launch a cablelike service in early 2017 with channels from its owners and possibly others.

In addition, Amazon (AMZN) is exploring the idea of selling subscriptions to a service that would stream live sporting events as part of its Amazon Prime Video service, according to a recent Wall Street Journal story.

The Journal first reported the CBS agreement with Google in October. 

Google Unplugged is expected to be offered for less than $40 a month in a bid to undercut some of the existing over-the-top services. Sony’s Vue, for instance, charges from $45 to $55 for three levels of service. DirecTV Now launched a few weeks ago at a promotional price of $35 a month for its 100-channel package, but that offering will retail for $60 per month once the promotion ends, with the service’s offerings costing anywhere from $35 to $70 per month based on the number of channels.

Google is lining up channels by paying their owners more in so-called affiliate fees than they get from cable and satellite operators, according to one person with knowledge of the deals. CBS, for instance, signed for about $4 a month for each Google subscriber, compared with the approximately $2 a month it gets from cable and satellite operators.

In return, Google Unplugged wants unspecified abilities to provide its subscribers with data related to the programming, such as team statistics that could be called up during sporting events. Negotiations on how to access the data have slowed final agreements with some of the media companies, according to one person with knowledge of the talks.

Time Warner is also said to be separately negotiating for the rights to offer its HBO premium channel through Google Unplugged as it does with DirecTV Now.

The CBS agreement does not include its Showtime premium channel.

A YouTube spokeswoman said the company “does not comment on rumor and speculation.”

Representatives of CBS, Disney, Viacom, Fox and Time Warner all had no comment. A representative from NBCUniversal was not immediately available.

Jim Cramer and Jack Mohr, who co-manage the Action Alerts PLUS portfolio as a charitable trust, wrote in a recent post that “Google’s businesses, both core and long-term initiatives, remain strong.” They also noted Comcast “has positioned itself well to deal with competition given its diversified portfolio, and [we] expect shares to slowly command higher multiples under the shifting macro and potential for deregulation.”

To read their full analysis, click here for a free 14-day trial membership to AAP, which holds Alphabet and Comcast shares.


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