A smartphone with a displayed "Disney" logo is seen on the keyboard in front of displayed "Streaming service" words in this illustration taken March 24, 2020.
Image: REUTERS/Dado Ruvic/File Photo
Walt Disney signalled on Thursday it was gearing up for a potentially prolonged fight with YouTube TV over the distribution of its television channels, worrying investors about the outlook for its already declining TV business and pushing its shares down 6.6%.
The company also missed quarterly revenue expectations as the cable weakness overshadowed strong growth in the company's streaming and parks businesses that powered a profit beat.
On a post-earnings call, Chief Financial Officer Hugh Johnston told analysts Disney has "built a hedge" into its forecasts, assuming the negotiations could drag on.
Disney's networks disappeared from YouTube TV - the fourth-largest pay-TV provider in the U.S. with about 10 million subscribers - on October 30 in the latest carriage rights dispute between the Alphabet unit and a major media company. NBCUniversal also had a similar dispute with YouTube TV earlier this year.
Morgan Stanley analysts estimate a 14-day blackout on YouTube TV would cost Disney about $60 million in revenue.
The tense discussions underscore YouTube TV's rapid growth as well as Google's vast financial resources, which give it greater leverage in negotiations with media companies.
"The deal that we have proposed is equal to or better than what other large distributors have already agreed to," Disney CEO Bob Iger said, referring to the talks with YouTube TV.
"And while we've been working tirelessly to close this deal and restore our channel to the platform, it's also imperative that we make sure that we agree with a deal that reflects the value that we deliver, which both YouTube, by the way, and Alphabet have told us is greater than the value of any other provider," he noted.
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