Disney Faces Heavy Revenue Loss Amid YouTube TV Conflict

The Walt Disney Company is reportedly losing around $30 million in revenue every week due to its ongoing dispute with YouTube TV, according to analysis from Morgan Stanley. This conflict, now in its second week, has heightened the urgency as the situation unfolds.

This outage began on October 30 when negotiations fell apart, leading to channels like ESPN and ABC being unavailable to YouTube TV’s approximately 10 million subscribers.

The standoff comes at a prime time for sports, with events like Monday Night Football and college games being greatly impacted.

Morgan Stanley analyst Ben Swinburne relayed in a note over the weekend that if the blackout continues for two weeks, it could result in an overall revenue decrease of $60 million for Disney, translating to around $4.3 million in losses daily.

Additionally, Swinburne has revised his projection for Disney’s quarterly net income down by $25 million, anticipating it will reach $1.52 billion. This situation could also lead to a decrease of about 2 cents in earnings per share.

The bank’s insights highlight how reliant Disney is on the income generated from ESPN and advertising, especially in an era marked by cord-cutting and rising sports rights fees.

The absence of these networks on YouTube TV poses a threat to both viewership and the financial agreements linked to live sports broadcasts.

On the other hand, YouTube TV is working to manage subscriber dissatisfaction stemming from the loss of ESPN and ABC. Over the weekend, the streaming service informed users they would receive a $20 credit as compensation for the disruption, though users must claim it manually and it only applies to active accounts.

If all subscribers claim their credits, Google could face costs nearing $200 million; however, analysts suggest some users might either overlook the offer or choose to switch providers.

This back-and-forth has been heated for over a week now. Disney executives communicated in a memo on Friday that discussions have stalled despite offering what they described as “substantial savings” compared to past agreements.

Disney has accused YouTube TV of insisting on “below market” rates and not providing fair compensation.

In response, Google contested this claim, stating that Disney seeks rates higher than what competitors such as Charter and DirecTV are charged.

A spokesperson for YouTube accused Disney of engaging in public negotiations and misrepresenting facts through paid talent.

Disney has faced similar blackout situations before, including a notable disagreement with Charter lasting 11 days in 2023 and a 13-day dispute with DirecTV in 2024. However, the current battle with YouTube TV is particularly significant given the platform’s rapid subscriber growth and focus on sports content.

This deadlock has led many fans to miss important sports events, including a recent NFL matchup between the Green Bay Packers and Philadelphia Eagles.

Swinburne suggested that Disney might mitigate losses by attracting disaffected YouTube TV subscribers to its own live TV services, including Hulu + Live TV, Fubo, and the ESPN apps.

Despite this potential, he cautioned that damage in the short term seems unavoidable unless both companies can agree on terms soon.

Disney’s quarterly results are set to be released on Thursday, and company leaders are expected to answer questions regarding the impact of this outage and the possibility of ESPN and ABC returning to YouTube TV in time for the next “Monday Night Football” game.

As of 10:30 a.m. ET on Tuesday, Disney’s stock rose by 0.77%, approximately $0.86 per share, reaching $113.10.