Walt Disney said on Thursday that it is preparing for a potentially long dispute with YouTube TV over the distribution of its television networks. The warning raised concerns about Disney’s already declining TV business and pushed its shares down 8%.
Disney also missed quarterly revenue forecasts. Weakness in its cable business overshadowed strong gains from streaming and theme parks, which helped lift quarterly profit.
During the post-earnings call, Chief Financial Officer Hugh Johnston said the company has “built a hedge” into its outlook, assuming the negotiations may continue for some time.
Disney’s channels were removed from YouTube TV on October 30. The Alphabet-owned service, which has about 10 million subscribers, is now in a new carriage rights dispute with a major media company. NBCUniversal faced a similar conflict with YouTube TV earlier in the year.
PP Foresight analyst Paolo Pescatore said that “users are ultimately the losers” in these standoffs.
Morgan Stanley estimates that a 14-day blackout on YouTube TV would cost Disney around $60 million in revenue. The tense negotiations highlight YouTube TV’s rapid expansion and Google’s financial strength, which give Alphabet considerable leverage in talks.
Disney CEO Bob Iger said the company’s offer is equal to or better than deals accepted by other large distributors. He added that Disney is working hard to restore its channels but must also secure a deal that reflects the value it delivers.
Buybacks and Dividend Plans
Disney also announced a 50% dividend increase and plans to double its share buyback program for fiscal 2026.
The company reported adjusted earnings of $1.11 per share for the fourth quarter ending in September. This was down 3% from last year but slightly above analyst expectations.
Profit rose in the parks division, supported by growth in U.S. cruise operations and higher attendance at Disneyland Paris.
Streaming earnings also surged 39% to $352 million. Disney added 12.5 million combined subscribers to Disney+ and Hulu during the quarter, bringing the total to 196 million. Johnston said a new distribution deal with Charter Communications helped attract new streaming users.
Disney+ saw strong engagement from the release of “Lilo & Stitch,” which generated 14.3 million views in its first five days.
Disney has been restructuring its business in response to the decline of traditional TV. It is investing in new attractions, cruise ships, and streaming products to strengthen long-term growth.
Iger said the company is exploring partnerships with artificial intelligence firms. Disney is looking at ways to use AI to protect its characters and enable Disney+ subscribers to create short-form content. He said AI could make Disney’s platforms more dynamic and create new tools for users.
Iger cut costs aggressively after returning to Disney in 2022. His contract runs through the end of 2026, and Disney plans to announce his successor early next year.
Traditional TV Continues to Decline
The latest earnings report showed another drop in TV fees and advertising revenue. Still, Disney expressed confidence in its outlook for the next two years. The company expects double-digit adjusted earnings growth for fiscal 2026 and fiscal 2027.
Disney’s board approved a dividend of $1.50 per share, up from $1. It also doubled its stock buyback plan to $7 billion for 2026.
Quarterly revenue held steady at $22.5 billion, slightly below analyst estimates of $22.75 billion.
Operating income at the entertainment division fell by more than one-third to $691 million, as this year’s film slate did not match the success of “Inside Out 2” and “Deadpool & Wolverine.” Profit in the traditional TV unit dropped 21% to $391 million, and ESPN revenue also declined.
The experiences division, which includes theme parks, reported operating income of $1.88 billion, up 13% from a year earlier. Growth came partly from increased passenger days on Disney cruise ships.
In a statement, Iger said Disney made significant progress this year by strengthening its creative assets and advancing its direct-to-consumer strategy.
