Disney has warned that its big fight with YouTube TV over channel fees may last for a while. This has made investors nervous because Disney’s TV business is already struggling, and this fight is only causing more trouble.
The company also reported quarterly results, and even though Disney’s parks and streaming business did well, its TV problems resulted in low numbers. Disney’s revenue was $22.5 billion, slightly lower than what analysts expected, and its stock fell more than 8% on Thursday.
Disney Vs YouTube feud explained
Disney’s channels disappeared from YouTube TV on October 30, leaving around 10 million subscribers in the dark. Disney-owned networks like ESPN, ABC, FX and National Geographic were nowhere to be accessible. This type of blackout is becoming common, NBCUniversal had a similar issue with YouTube TV earlier this year.
Variety reported that the fight is mainly about money. Google says Disney is asking for a huge increase in retransmission fees. Meanwhile, Disney says Google refuses to pay a fair price for the channels. The timing is terrible because ESPN is missing during peak football season. According to Variety, Disney is losing an estimated $30 million per week from its networks being pulled from YouTube TV.
Ross Benes from Emarketer explained the issue to Reuters, “Disney is reducing its reliance upon cable companies to distribute its channels. But cutting out video distributors will take time. YouTube TV is one of the leading cable TV providers, so its absence is a big hole for sports fans.”
Morgan Stanley estimates that a 14-day blackout would cost Disney around $60 million in lost revenue. This shows how powerful YouTube TV has become as it continues to grow with the support of Google’s massive financial strength.
Disney CEO Bob Iger said the deal they offered YouTube cTV is “equal to or better than” deals signed with other distributors. He also said Disney must make sure the final agreement reflects the value their channels bring. Iger’s contract ends in 2026, and Disney is expected to announce his successor next year.
“And while we’ve been working tirelessly to close this deal and restore our channel to the platform, it’s also imperative that we make sure that we agree with a deal that reflects the value that we deliver, which both YouTube, by the way, and Alphabet have told us is greater than the value of any other provider,” Iger told Reuters.
Disney says it planned for a long dispute
During the earnings call, Disney’s Chief Financial Officer, Hugh Johnston, said that the company has “built a hedge” into its forecasts. Simply put, Disney has already prepared for the possibility that the talks with YouTube TV may drag on for some time.
Disney’s revenue stayed mostly the same as last year at $22.5 billion, but missed the expected $22.75 billion mark. Profit from traditional TV fell 21% to $391 million. ESPN’s income also dropped. Streaming did better, with earnings up 39% to $352 million.
Disney has now announced that it will increase its dividend by 50% to $1.50 per share. Double its share buyback plan to $7 billion for fiscal 2026. According to Reuters, Disney posted adjusted earnings of $1.11 per share, which is slightly down from last year but still higher than what analysts expected.
The theme parks business profit rose 13% to $1.88 billion. Disney+ and Hulu gained 12.5 million new subscribers, bringing the total to 196 million. However, operating income in Disney’s entertainment division dropped sharply to $691 million.