Disney's $30 Million-a-Week Showdown: YouTube TV Blackout Hits Fans Where It Hurts

This article first appeared on GuruFocus.

Disney (NYSE:DIS) could be losing millions each week as its channels remain dark on YouTube TVa standoff that's now testing the patience of sports fans and investors alike. Since October 30, YouTube TV subscribers have been locked out of Disney's networks, including ESPN and ABC, after both sides failed to agree on new carriage fees. Morgan Stanley estimates Disney's blackout losses at roughly $30 million a week, or $4.3 million a day, trimming its quarterly net income forecast by $25 million to $1.52 billion. Analyst Ben Swinburne said the dispute, if prolonged, could soften near-term earnings but might also redirect subscribers toward Disney-controlled platforms like Hulu + Live TV or ESPN+, potentially recapturing lost revenue elsewhere.

Warning! GuruFocus has detected 7 Warning Sign with DIS. Is DIS fairly valued? Test your thesis with our free DCF calculator.

Google (NASDAQ:GOOG), which owns YouTube TV, isn't walking away unscathed. To contain subscriber frustration, YouTube TV has rolled out a $20 bill credit, though only for active accounts that haven't been canceled or paused. With around 10 million users, that gesture could cost as much as $200 million if everyone claims it. Still, Google is also saving on fees it would otherwise pay Disney for its content, cushioning some of the financial blow. The risk, however, lies in attrition: as live sports vanish from screens, cancellations could start to outweigh savings, especially with high-profile broadcasts like Monday Night Football now out of reach.

At the heart of the conflict is price. Disney argues YouTube TV should pay the same market rate as other distributors, while Google insists that doing so would mean hiking subscription prices againsomething it's reluctant to do. The dispute has now morphed into a test of leverage between old media and Big Tech, with both sides signaling they can hold the line. For now, though, the biggest losers could be the viewers caught between a $30 million-a-week negotiation and a growing pile of missed games.

View Comments