Disney loses $5M every day it's off YouTube TV

3 hours ago 1

We’re now on Day 4 of the Disney blackout on YouTube TV. Sports fans that rely on the Google-owned pay TV service have already gone a full weekend without access to many key college football games on the networks of ABC and ESPN. And now, fans are at risk of missing out on a Monday Night Football game between the Arizona Cardinals and Dallas Cowboys, along with a full slate of college basketball games on the sport’s opening night.

Given the players involved — Disney, which owns much of the most-valuable live programming on television, and Google, owner of what soon projects to be the largest pay TV service in the country — almost everyone with even a tangential relationship to the conflict has weighed in. But to be frank, there’s not really a ton to say about what’s happening. It’s a story we’ve seen play out countless times over the years. Content owner wants to earn maximum value for its portfolio and leverage key live events to pressure the distributor. Distributor wants to pay a fair market rate. In the interim, consumers bear the burden.

Not much is different this time around, unlike some recent carriage negotiations that have centered around issues unique to the digital age, like Comcast’s recent dispute with YouTube TV over “ingestion” or Disney’s dispute with Charter in 2023 that opened the door for bundling streaming services into traditional cable offerings. This time, by all accounts, the primary issue at hand is how much YouTube TV will pay Disney per subscriber.

That’s both good and bad if you’re a YouTube TV subscriber hoping this gets resolved soon. It’s good in the sense that there’s nothing exceptionally complicated about this negotiation. But it’s bad in the sense that, no matter what happens, the price of YouTube TV is likely going up (again) at some point.

As usual in these disputes, there’s a sacrifice both sides make. While Disney networks are dark on YouTube TV, Disney is not getting paid its per-subscriber fees for the 10 million people that subscribe to YouTube TV. And for YouTube TV, every day that the service doesn’t have Disney-owned networks, more and more people unsubscribe in favor of alternatives.

And actually, it’s pretty simple to put a number on that equation for Disney. According to numerous reports, Disney generally receives about $15 per month per subscriber from pay TV providers for the right to distribute the ESPN family of networks. YouTube TV boasts approximately 10 million monthly subscribers. So for each month that Disney is not getting paid by YouTube TV, it loses about $150 million (and likely a bit more when accounting for non-ESPN networks owned by Disney). On a per day basis, that comes out to about $5 million, meaning Disney has already missed out on about $20 million in revenue for the four days its networks have been blacked out on YouTube TV.

This right here is the motivation. Sure, $5 million per day isn’t much for a company with an over $200 billion market capitalization. But it adds up quickly. Over the course of a full year, Disney will generate $1.8 billion in revenue by allowing YouTube TV to distribute the ESPN networks.

Disney, more than some of its other legacy media competitors, has the ability to weather this type of temporary loss in revenue. They also stand to benefit on the margins by converting some YouTube TV subscribers into Hulu + Live TV or Fubo customers, both of which Disney owns. But they certainly aren’t in a position to get into an extended blinking contest with Google, which has a $3.4 trillion market cap and doesn’t even need to be in the pay TV business if it doesn’t want to be. The scale of YouTube TV is too large for Disney to want to dig in for that long.

The question, of course, is just how long are they willing to go? The longer those $5 million bills keep flying out of their wallet, the more likely it is that an agreement is reached sooner rather than later. Will it be in time for Monday Night Football? Or will we be here next week writing the same article? Only Disney and Google know the answer.