Disney Faces Weekly $30 Million Loss Due to YouTube TV Blackout, Says Morgan Stanley

Disney is currently experiencing a weekly revenue decline of $30 million stemming from an ongoing contract dispute with YouTube TV, according to an analysis by Morgan Stanley.

Fans of sports might feel particularly disadvantaged due to this negotiation stalemate. Since October 30, important networks like ESPN and ABC have been unavailable on YouTube TV, affecting access to major shows and games, including a key 'Monday Night Football' event.

Both Disney, often referred to as the 'Mouse House,' and Google are dealing with significant repercussions. Morgan Stanley's analyst Ben Swinburne highlighted that Disney could face a potential $60 million revenue gap if the blackout persists for 14 days, as expected from its current duration.

This translates to a significant loss of $30 million each week, which is approximately $4.3 million lost each day without their channels appearing on YouTube TV, Swinburne calculates.

Disney has prepared countermeasures to mitigate these losses, given their ownership of competing streaming services such as Hulu + Live TV, Fubo, and the stand-alone ESPN app. This provides a means to attract YouTube TV deserters and establish new subscriber relations.

As a result of these developments, Swinburne adjusted Disney’s quarterly net earnings by reducing his forecast by $25 million, bringing it down to $1.52 billion from an anticipated $1.55 billion—equating to a 1.6% drop or a reduction of 2 cents per share. Disney is expected to release their quarterly financial outcomes on Thursday.

Impact on YouTube TV

The blackout has repercussions for YouTube TV as well. In response, Google has proposed a $20 billing credit to affected YouTube TV consumers. However, this credit isn’t automatic and only applies to active subscribers.

If all of YouTube TV's estimated 10 million subscribers capitalize on the rebate, it could cost Google approximately $200 million. Nonetheless, not all subscribers may be aware of this offer, allowing Google some financial respite by not having to pay Disney for access to its channels.

In addition to offering credits, YouTube TV risks losing ongoing revenue from subscriptions that may be cancelled during the service interruption.

Disney has accused Google of not willing to meet standard industry rates for its networks. On the other side of the negotiation table, Google contends that accepting higher rates would necessitate further price hikes for YouTube TV services.

While eager sports enthusiasts using YouTube TV would like Disney channels back on their screens, at least they are not alone in their frustration.