Disney Sports Unit Loses $110 Million in Profits Following YouTube TV Blackout
Disney's sports business suffered a $110 million operating profit loss due to a temporary blackout of its channels on YouTube TV last fall, according to financial results disclosed Monday. The two-week disruption, which ended in November, equated to a daily loss of approximately $7.8 million for the media giant's sports segment.
The standoff left YouTube TV subscribers without access to ESPN networks, ABC, Disney Channel, Freeform, FX, and National Geographic. The sports division's operating profit fell 23% to $191 million for the quarter. Beyond the YouTube TV dispute, profits were also affected by the consolidation of Star India and rising programming costs from new sports rights deals, partially offset by timing benefits related to NBA and college sports agreements.
Disney's entertainment segment saw operating profit decline 35% to $1.1 billion. While combined profits for Disney+ and Hulu grew 72% to $450 million, profits from linear networks and other entertainment businesses dropped 55% to $650 million. The company did not specify the YouTube TV dispute's exact impact on the entertainment side.
The new multi-year carriage agreement restores all previously blacked-out channels to YouTube TV. Notably, it includes making the upcoming ESPN flagship streaming service, ESPN Unlimited, available at no extra cost to YouTube TV's base plan subscribers by the end of 2026. The deal also provides flexibility for future bundled offerings, including potential integration of the Disney+-Hulu bundle into YouTube TV packages.
Analyst Perspective: "This $110 million hit is a stark reminder of the fragile economics of the carriage model," said Michael Torres, a media analyst at Beacon Advisory. "While resolved, it underscores the leverage distributors now hold as consumer viewing habits fragment."
Viewer Reaction: "It's outrageous that corporate disputes always leave paying customers in the dark," said Lisa Chen, a small business owner and sports fan from Denver. "We pay for these services to watch live events, not to be used as pawns in negotiations. This lost $110 million? That's just a line item for them. For us, it was missing crucial games."
Industry View: "The resolution, including future streaming integrations, points to a hybrid model emerging," noted David Park, a former cable executive and industry consultant. "Both sides are pragmatically building bridges between linear and digital, which is the inevitable path forward."