Why Disney Is Cutting Ties with Facebook and Twitter


Feb. 28 2018, Published 1:28 p.m. ET

Growing friction within the tech world

Walt Disney’s (DIS) relationship with tech companies now seems more complicated than it appeared when the media giant decided to pull its movies from Netflix’s (NFLX) platform. In another show of a sour relationship with the digital world, Disney has indicated that it is no longer happy having representatives of Facebook (FB) and Twitter (TWTR) on its board of directors.

As a result, Facebook COO (chief operating officer) Sheryl Sandberg and Twitter CEO (chief executive officer) Jack Dorsey will stop being members of Disney’s board after March 8. Disney cited growing conflicts of interest as the reason for parting ways with Facebook and Twitter.

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Digital companies going after pay-TV operators’ lunch

As media and digital worlds merge, the likes of Disney and Twenty-First Century Fox (FOX) (FOXA) are finding themselves in increasing in competition with digital companies such as Facebook, Twitter, and Alphabet’s (GOOGL) Google. For example, Facebook, Twitter, and Google are going after more video advertising dollars and, in the process, attacking the revenue base of pay-TV operators like Disney.

As the chart above illustrates, marketers now spend more on digital advertising than on television commercials—a trend that doesn’t look good for traditional pay-TV companies.

Battle for lucrative content

The foray of digital companies into video has also heightened competition for lucrative content, with the likes of Amazon.com (AMZN) and Twitter also bidding for rights to cover live sporting events.

In the case of Twitter, for instance, its video push has seen it work closely with some competitors of Disney, which could be a point of friction between these companies.


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