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Walt Disney warned investors of a potentially long-running dispute with YouTube TV over distribution of its channels, following the removal of its networks from the platform on October 30. Despite strong growth in streaming and theme parks, Disney’s traditional TV unit missed revenue expectations, leading to an 8.3% drop in shares.
Disney has been reducing reliance on cable providers as the industry shifts toward direct-to-consumer streaming services. The company’s focus on Disney+ and Hulu offsets the decline in traditional TV, while ongoing carriage disputes, similar to NBCUniversal’s earlier this year, highlight challenges in negotiating with rapidly growing platforms like YouTube TV.
YouTube TV Dispute: Disney’s networks disappeared from YouTube TV, the U.S.’s fourth-largest pay-TV provider with ~10 million subscribers. CFO Hugh Johnston said the company has “built a hedge” assuming negotiations could be prolonged.
- Financial Impact: A 14-day blackout could cost Disney around $60 million in revenue (Morgan Stanley estimate).
Quarterly Performance:
- Total revenue: $22.5B (missed $22.75B forecast)
- Traditional TV profit: $391M, down 21%
- ESPN income declined
- Streaming earnings: $352M, up 39%
- Theme parks: $1.88B, up 13%
- Added 12.5M Disney+ and Hulu subscribers, total 196M
Strategic Moves:
- Dividend increased 50% to $1.50/share
- Share buyback doubled to $7B
- Exploring AI integration to enhance Disney+ user experience and enable short-form content creation
“The deal we have proposed is equal to or better than what other large distributors have agreed to,” said CEO Bob Iger, emphasizing the value Disney brings to YouTube and Alphabet.
Streaming Growth: Disney continues investing in streaming and parks to offset declines in traditional broadcast and cable TV, signaling a shift in long-term strategy.
