Disney vs YouTube: Channels Off Air, Stocks Fall 8%
Synopsis
Disney shares fell 8% Thursday after warning its dispute with YouTube TV could last a long time. Disney channels disappeared from YouTube TV on October 30 affecting 10 million subscribers. A two-week blackout could cost Disney $60 million. The company missed revenue targets as cable TV declined. But streaming added 12.5 million subscribers and theme parks grew 13%. Disney raised its dividend 50% and doubled stock buybacks to $7 billion showing confidence despite current challenges in the traditional television business.
Disney is in an intense battle with YouTube TV, and things might get worse before they get any better. The company warned investors on Thursday that the battle could be lengthy. After that statement, Disney's shares fell 8% in after-hours trading, showing Wall Street investors are concerned. Disney warns of a potentially long distribution dispute with YouTube TV, shares fall as the entertainment giant gears up for extended negotiations.
The issue began on October 30, when Disney channels stopped appearing on YouTube TV. About 10 million people subscribe to YouTube TV to watch television, making it the fourth biggest TV service in America. Those customers now can't tune into ESPN, ABC, or any other channel Disney offers through the service.
What the Fight Is Really About
The reason is money. Disney wants YouTube TV to pay more to carry its channels. YouTube TV doesn't want to pay what Disney is asking. Disney's Chief Financial Officer Hugh Johnston said the company has already planned on this fight lasting a while, building backup plans into their financial predictions if the channels stay off YouTube TV for weeks or months.
Disney chief executive Bob Iger said they offered YouTube TV the same deal that other big TV providers already accepted. He thinks Disney's channels are worth more than any other provider's channels. Iger said both YouTube and its parent company Alphabet have told Disney their channels deliver the most value. Experts say a two-week blackout would cost Disney about 60 million dollars in lost revenue. But this fight shows something bigger happening in the television industry.
Disney's Money Problems and Wins
Disney declared its financial results for the 3 months ending in December. The company made less money than Wall Street expected. Traditional television is dying slowly and that hurts Disney's overall numbers. However, some parts of Disney's business are doing really well. The streaming services like Disney+ and Hulu added 12.5 million new subscribers during the quarter. Now Disney has 196 million people paying for its streaming services. Profits from streaming jumped 39% to $352 million.
Disney’s theme park made money as the income reached $1.88 billion, which is 13% higher as compared to last year. But Disney movies did not perform as expected this year. Last year’s "Inside Out 2" and "Deadpool & Wolverine” were very profitable. Entertainment division profits declined by more than a third to $691 million. Traditional TV profits declined 21% to $391 million. Even ESPN made less money than it had.
What Disney Plans to Do Next
Disney had some good news to announce for investors. It will increase the cash it pays to shareholders by 50 per cent. The dividend will rise from $1 per share to $1.50 per share. Disney also intends to buy back $7 billion worth of its own stock next year, double what it had planned.
Disney forecasts double-digit growth in profit for both 2026 and 2027. And Disney is pinning hopes on streaming and theme parks to offset the dying cable television business. Chief Executive Bob Iger spoke about using AI to revamp Disney+. He said AI might allow subscribers to create their own short videos using Disney characters. Disney warns of a potentially long distribution dispute with YouTube TV, but the company says it's hoping streaming, parks, and new technology will be its path into a profitable future.
___________
For more business news and updates from the entertainment industry, check out Inspirepreneur Magazine.
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
