Disney’s YouTube TV outage leads to significant losses for the company, analysts say

Disney’s Revenue Takes Hit Amid YouTube TV Conflict

The Walt Disney Company is reportedly losing around $30 million in revenue weekly as it continues its standoff with YouTube TV, according to recent insights from Morgan Stanley. This issue, which started on October 30 after contract negotiations fell through, has left channels like ESPN and ABC unavailable to roughly 10 million YouTube TV subscribers.

This situation unfolds during a crucial time in sports, impacting popular events such as Monday Night Football and various NBA and college games.

Ben Swinburne, an analyst at Morgan Stanley, indicated in a client note that if the standoff persists for two weeks, it could cost Disney a total of $60 million, which breaks down to approximately $4.3 million per day. He adjusted Disney’s quarterly net income forecast, reducing it by $25 million to $1.52 billion, predicting a potential earnings per share decline of about 2 cents.

These figures underline Disney’s reliance on ESPN and advertising revenue, especially as more people are moving away from traditional cable and sports rights costs continue to rise.

The absence of channels from YouTube TV not only threatens viewership but also the affiliate payments associated with live sports broadcasting.

On their end, YouTube TV is attempting to mitigate dissatisfaction among its subscribers who miss ESPN and ABC. As a temporary solution, the service has informed users that they are eligible for a $20 credit due to the disruption. However, claiming this rebate requires action from customers and only applies to active accounts.

If all affected subscribers redeem their credits, Google could face nearly $200 million in expenses. Although, analysts believe that some users might not take advantage of the offer or may switch to other services.

After more than a week of contentious discussions, executives from Disney—Dana Walden, Alan Bergman, and ESPN Chairman Jimmy Pitaro—communicated in a memo to staff that negotiations had come to a halt, despite Disney proposing significant savings compared to past agreements.

Disney has accused YouTube TV of seeking “below market” terms and not providing fair compensation for its networks, while Google countered that Disney is expecting higher rates compared to what competitors such as Charter and DirecTV pay.

A YouTube spokesperson pointed out last week that Disney is “publicly negotiating” and misrepresenting facts using paid talent.

Disney has dealt with similar disputes before, such as a lengthy argument with Charter in 2023 and another with DirecTV in 2024. However, the current situation with YouTube TV is particularly significant due to the platform’s fast-growing subscriber base and its focus on sports.

Swinburne suggested that Disney might offset some losses by attracting disaffected YouTube TV subscribers to its own live TV services, including Hulu + Live TV and other ESPN-related apps.

Nevertheless, he cautioned that short-term repercussions seem unavoidable unless an agreement is reached soon.

Disney is set to announce its quarterly results on Thursday, expected to reveal the financial impact of the blackout and whether ESPN and ABC will return to YouTube TV before the next Monday Night Football game.