đź”»Disney Blackout: The Mouse Is Out of Cheese - Cypher News

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The Mouse is learning the hard way that legacy leverage does not work on streaming giants.

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Disney thought it could strong-arm YouTube TV. Instead, it bled cash while YouTube didn’t even flinch.

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Disney blinked first. The blackout proved who actually controls the modern cable bundle.

BRIEFING

Grant here. Disney stumbled into a fight they thought they could win with brand power alone, but now they’re leaking money faster than a rusty boat at Pirates of the Caribbean. When their standoff with YouTube TV rolled into its thirteenth day, the losses were piling up in a way even the Magic Kingdom couldn’t spin. Let’s break it down.

For a company that once assumed it could snap its fingers and dictate terms, this blackout is a harsh reality check. Morgan Stanley crunched the numbers, and the picture is ugly. A two-week outage wipes out roughly $60 million in revenue for Disney. That works out to around $30 million a week or about $4 million a day, all because Disney and YouTube TV were dug in so deep that meeting in the same universe on terms seemed impossible. And for a corporation already taking hits from shrinking cable numbers and weak box office performance, this was not a hit they could just shrug off.

SOURCESOURCE

ABC, ESPN and other Disney networks went dark October 30 on YouTube TV, which is now the No. 3 U.S. pay-TV provider with 10 million subscribers. Industry and subscriber hopes that a second week of Monday Night Football would hasten the end of the clash went by the boards. Thus far, two revenue-rich Saturday slates of college football and two Monday night contests have been wiped out, with a 21% hit to ratings on the November 3 game between the Dallas Cowboys and Arizona Cardinals.

Along with ratings, Disney also is not receiving any fees from YouTube in exchange for its programming. A report Tuesday from Morgan Stanley media analyst Ben Swinburne puts Disney under the spotlight as the media giant gets set to report quarterly earnings on Thursday morning. Swinburne pegs the losses to Disney from the carriage fight at about $60 million over a 14-day period, meaning about $4.3 million a day. While the media giant is transitioning to streaming, it still rakes in billions from its legacy pay-TV operation, so it can ill afford to sacrifice a large chunk of it.

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Granted now, the two entertainment giants, Google and Disney, have reached an agreement, but for Disney, this is still a hit they’re going to have a hard time getting up from.

SOURCE

Google and Disney finally ended their standoff, announcing a multiyear agreement Friday on pricing and terms for a renewed carriage deal for YouTube TV. Disney’s nets went dark on the internet TV service just before midnight ET on Thursday, Oct. 30, after the two sides remained far apart on a deal before the expiration of the previous contract.

Under the new agreement, ESPN’s full lineup of sports — including content from ESPN Unlimited — will be made available on YouTube TV to base-plan subscribers at no additional cost by the end of 2026. In addition, access to a selection of live and on-demand programming from ESPN Unlimited will be available inside YouTube TV.

The deal also lets YouTube include the Disney+ and Hulu bundle as part of “select YouTube offerings.” According to Disney, “select networks” will be included in various genre-specific packages that YouTube TV expects to launch in the future.

So for now, Disney is afloat, but the seas still look pretty rocky for the company. They’re not exactly operating from a position of strength right now.

Their latest quarterly earnings painted a clear picture of a company running on fumes. Revenue came in below expectations, their legacy TV division took another beating, and operating income in their core entertainment segment fell off a cliff.

According to the Associated Press, Disney missed financial forecasts big time while its linear TV business dropped double digits across the board.

In other words, this dispute with YouTube TV didn’t hit them during a boom. It hit them right as the floor was already submerged.

SOURCE

Disney’s fourth-quarter performance was mixed with a weaker performance from cable and the box office somewhat offset by strength in its streaming business and theme parks.

Disney is still trying to work out a new licensing deal with YouTube after its content went dark on YouTube TV two weeks ago, leaving subscribers of the Google-owned livestreaming platform without access to major networks like ESPN during the college football season.

Shares slumped 8% Thursday with executives saying those discussions could go on for some time.

The Walt Disney Co. earned $1.31 billion, or 73 cents per share, for the three months ended Sept. 25. It earned $460 million, or 25 cents per share, in the prior-year period.

Stripping out one time charges and costs, earnings were $1.11 per share. That’s better than the $1.03 per share that analysts polled by Zacks Investment Research predicted.

Revenue for the Burbank, California, company totaled $22.46 billion, short of Wall Street’s estimate of $22.86 billion.

DEBRIEFING

Disney keeps trying to present itself as the unshakeable giant of American entertainment, but the cracks are spreading faster than the company can patch them. This blackout is not an isolated stumble. It is part of a larger pattern that investors and audiences have been watching develop for years. Declining cable subscribers, weak theatrical releases, streaming that burns cash instead of generating profit, theme park attendance wavering, and now a carriage dispute that drained millions a day.

What this blackout really exposes is that Disney no longer holds the leverage it once did. A company that used to dictate the terms of the industry is now negotiating from a place of weakness.

But here’s the uncomfortable truth: if Disney doesn’t stop the bleeding, the future is not going to be full of more nostalgia and magic; it will instead be defined by financial triage. Cost cutting. Layoffs. More brand dilution. More desperate moves to force relevance. The entertainment megagiant that once built empires is now clinging to numbers that look worse every quarter.

NOW YOU KNOW

Disney thought it had leverage. The blackout proved it doesn’t.