The Disney-Google fight that sees Disney networks, including ESPN, off of YouTube TV is going to enter its third weekend. And it could go on for much longer if the comments from Disney CFO Hugh Johnston are to be believed.
On Thursday morning, Johnston appeared on CNBC’s Squawk Box to discuss Disney earnings that were released that day. In spite of some positive news on the sports front, including the launch of ESPN’s direct to consumer platform, the overall miss in revenue led Disney stock to plummet. It fell almost 10 points after earnings to bring the company back into the red for 2025.
But what everyone is talking about right now, especially in the sports world, is the ongoing carriage dispute with YouTube TV that is seeing by far Disney’s most important linear television property, ESPN, missing from 10 million subscribers. And that’s not to mention the millions of dollars Disney and ESPN are missing out on in carriage fees being blacked out from the platform.
In recent days there have been reports of “momentum” towards getting a deal done. But when asked by CNBC host Becky Quick about the prospects of a new agreement and problems with legacy broadcasting, Johnston held firm. And he signaled that Disney is ready to settle in for trench warfare in what is already one of the longest running major carriage disputes in company history.
“We’re in the middle of negotiations right now. Things are live, they’re happening. Obviously as we entered the year we knew this was going to be a challenging battle and we prepared ourselves for it. And we’re ready to go as long as they want to,” Johnston said.
Uh oh.
When it comes to who has the deeper well of resources to withstand a fight, YouTube TV parent company Alphabet dwarfs the market cap of Disney. We’re talking about a company worth trillions versus one worth mere billions. But Disney’s ace in the hole is the launch of the new ESPN Unlimited platform and the belief that eventually fans will need to subscribe some way, somehow in order to watch the games they are missing.
Those comments from Johnston happened on Thursday morning just as Disney CEO Bob Iger was telling investors on the company’s Q4 earnings report that he believed they were making a fair offer to YouTube TV and said “we’re not trying to break new ground” in negotiations.
In the best case scenario, maybe it’s a good cop, bad cop situation where Johnston was taking the hard line publicly as a negotiation tactic while Iger was trying a gentler approach. In the worst case scenario, the ESPN and Disney blackout for YouTube TV subscribers could be just getting started.
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