Disney shares fell 9% following a dispute with YouTube TV that led to the blackout of ABC and ESPN for 10 million subscribers. This carriage fee standoff, which began on October 30th, is costing Disney an estimated $30 million per week and has impacted ABC's ratings. Specifically, ABC's "World News Tonight" lost to NBC's "Nightly News" in the key 25-54 demographic for the first time since August of the previous year, though it still leads in total viewership.
The financial implications of the YouTube TV blackout are significant, compounded by a 21% year-over-year profit decline in Disney's linear TV division, which includes ABC. Disney's Chief Financial Officer indicated the company is prepared for a prolonged negotiation. The overall company revenue missed Wall Street expectations, and operating income dropped. This situation occurs as Disney's streaming business shows growth, with operating income up 39%, nearing the profits from its traditional TV division.
The ongoing YouTube TV blackout is a major concern for investors, contributing to a broader cautious sentiment around Disney's transition to streaming and its stock performance. The company is implementing strategies like doubling share buybacks and increasing its dividend to regain investor confidence, while also reiterating guidance for future earnings growth. Disney faces other challenges including increased cancellations of its streaming services and mixed results in its film division.
