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ESPN parent company Disney said that its carriage standoff with YouTube TV, which reached a 14th day Thursday, “could go for a little while.”
The company provided no specific update on its contract talks with the No. 4 U.S. pay-TV distributor, calling it an “active negotiation,” but it said it has built a financial hedge in preparation for a potentially extended blackout.
“In terms of our [financial] guidance, we built a hedge into that with the expectation that these discussions could go for a little while,” Disney CFO Hugh Johnston said Thursday morning during a call with analysts to detail the company’s fiscal fourth-quarter earnings.
The YouTube TV–Disney blackout, which began Oct. 31, had been a closely watched issue as Disney approached its earnings report. There are still active negotiations happening between the two sides, YouTube TV has started issuing $20 credits to subscribers, and Federal Communications Commission chair Brendan Carr is beginning to apply public pressure, as he has in other carriage disputes. There remains no deal in place, though.
The company’s 10K filing with the U.S. Securities & Exchange Commission also listed the YouTube TV dispute as one of its stated risk factors and said “the company cannot predict how long this service blackout will last.” Morgan Stanley estimated Disney is losing $30 million per week from the dispute.
Disney CEO Bob Iger ended the analyst call on a somewhat more optimistic note regarding YouTube TV, but reiterated that it is “not trying to break any new ground” with the distributor compared to its pacts with other providers.
“It’s imperative that we make sure we agree to a deal that reflects the value that we deliver. … We are trying hard and working tirelessly to close this deal, and we are hopeful we will be able to do so on a timely enough basis to give consumers the opportunity to access our content over their platform,” Iger said.
Initial ESPN DTC Pickup
As planned, Disney did not break out in the earnings report its subscriber totals for the direct-to-consumer version of ESPN that debuted in August. Iger, however, lauded the initial consumer adoption of the service, both in raw volume and in accessing the array of included features. He also said that about 80% of the ESPN DTC subscribers are also signed up for the entire Disney streaming bundle.
“In almost every way you look at it, it’s worked,” Iger said. “As we look ahead, we believe we’ve created a product that is very, very consumer-friendly and very advertiser-friendly. … It’s a very positive step for the future of ESPN.”
Third-party data provider Antenna said last month that the ESPN DTC service garnered 2.1 million sign-ups between the Aug. 21 start and Sept. 30.
Broader Results
Disney, meanwhile, closed out its fiscal year with a mixed set of financial results, but still a hopeful outlook. The company posted flat revenue of $22.5 billion for the fiscal fourth quarter, while operating income fell 5% to $3.48 billion.
The company’s sports segment, which is dominated by ESPN, had similar results. Revenue grew 2% during the latest quarter to $3.98 billion, and operating income decreased 3% to $908 million, due in part to an increase in programming and production costs for its sports content, as well as marketing around the ESPN DTC debut.
For the full year, the sports segment was flat in revenue at $17.67 billion in revenue, while operating income grew 20% to $2.88 billion.
There were other bright spots for Disney, though. Its total number of Disney+ and Hulu subscribers increased by 12.4 million during the quarter, reaching a combined total of 195.7 million and beating Wall Street expectations. Disney is projecting growth in many of its operating segments, including sports, during its fiscal 2026.
Johnston, meanwhile, said “I wouldn’t expect us to make any significant move” in mergers or acquisitions. TNT Sports parent company Warner Bros. Discovery is up for sale, but Disney hasn’t been widely mentioned in a group of suitors that includes Paramount, Comcast, and Netflix.
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