Disney Stock Drops—Will Earnings Pave Way for a YouTube TV Truce?

Core Viewpoint - The Walt Disney Company is experiencing a decline in stock value due to a mixed earnings report, highlighting progress in some areas but significant structural challenges, particularly in its linear TV business and ongoing disputes affecting live sports streaming [2][9]. Financial Performance - Disney reported quarterly revenue of $22.46 billion, missing estimates of $22.78 billion and lower than the previous year's $22.57 billion [4]. - Adjusted earnings per share (EPS) were $1.11, surpassing forecasts of $1.03 but below the $1.14 from Q3 2024 [4]. - The direct-to-consumer (DTC) segment, which includes Disney+, Hulu, and ESPN+, saw an 8% revenue growth to $6.25 billion [5]. Subscriber Growth - Disney ended the quarter with 132 million Disney+ subscribers and 196 million combined subscribers for Disney+ and Hulu, both figures exceeding expectations [4]. Theme Parks and Experiences - The theme parks and experiences segment showed continued momentum, helping to offset weaker results in linear networks [5]. Distribution Challenges - The ongoing carriage dispute with YouTube TV is reportedly costing Disney between $4 million and $5 million per day in lost affiliate fees and advertising revenue, emphasizing the importance of distribution for profitability [3][6]. - The dispute highlights the fragility of content distribution in the transition from cable to streaming, with control over sports rights and distribution platforms being crucial [9].