Walt Disney warned on Thursday that its standoff with YouTube TV over the distribution of its television networks could drag on, unsettling investors already concerned about the company’s weakening traditional TV business. The company’s latest quarterly results also fell short of revenue expectations, overshadowing strong performances in its streaming and parks divisions and sending shares down 8.3% in afternoon trading, reports Reuters.
On a post-earnings call, Chief Financial Officer Hugh Johnston said Disney had “built a hedge” into its forecasts, anticipating that negotiations with YouTube TV might extend for some time.
Disney’s networks went dark on YouTube TV—America’s fourth-largest pay-TV provider with roughly 10 million subscribers—on Oct. 30, marking the latest high-profile carriage dispute between the Alphabet-owned service and a major media company. NBCUniversal faced a similar standoff earlier this year.
“Disney is reducing its reliance on cable companies to distribute its channels, but cutting out video distributors will take time,” said eMarketer senior analyst Ross Benes. “YouTube TV is one of the leading cable TV providers, so its absence is a big hole for sports fans.”
Morgan Stanley analysts estimated that a 14-day blackout would cost Disney about $60 million in revenue. The tense negotiations underscore both YouTube TV’s rapid rise and Google’s considerable financial muscle, which provide the platform with strong leverage in talks.
CEO Bob Iger said Disney’s offer to YouTube TV was “equal to or better than what other large distributors have already agreed to,” stressing that any final deal must reflect the value Disney provides. Iger’s current contract expires at the end of 2026, and the company is expected to name a successor early next year.
Quarterly revenue came in at $22.5 billion, slightly below analysts’ $22.75 billion estimate and essentially flat year-over-year. Profit at the traditional television unit fell 21% to $391 million, with ESPN earnings also slipping. These declines offset gains in other areas, including Disney’s streaming segment, where earnings rose 39% to $352 million. The company has continued to pour investment into streaming and its parks division to counter the broader industry decline in linear TV.
Disney said it will raise its dividend by 50% to $1.50 per share and double its share buyback program to $7 billion for fiscal 2026. Adjusted earnings per share for the quarter were $1.11, down 3% from last year but 6 cents ahead of LSEG estimates.
The theme parks unit posted a 13% increase in profit to $1.88 billion, helped by growth in its U.S. cruise business and improved performance at Disneyland Paris.
Across Disney+ and Hulu, the company added 12.5 million subscribers in the quarter, bringing the combined total to 196 million. A new distribution deal with Charter Communications also helped attract fresh streaming customers, Johnston told Reuters.
However, operating income at Disney’s entertainment division fell more than one-third to $691 million, with this year’s film slate failing to match the major hits “Inside Out 2” and “Deadpool & Wolverine” from the previous year.
Iger also said Disney is in discussions with artificial intelligence companies as it explores new technologies that allow innovation without compromising its characters and stories. The company is examining ways to use AI to let Disney+ subscribers create short-form content.
“There are phenomenal opportunities to deploy AI across our direct-to-consumer platforms,” Iger said, “both to make them more dynamic and engaging, and to give consumers new creative tools.”
Bd-pratidin English/ Jisan
