ESPN concerns drag on Disney, shares dip
By Lisa Richwine and Rishika Sadam
(Reuters) - A decline in subscribers and higher programming costs at cash-cow ESPN weighed on shares of Walt Disney Co (DIS.N: Quote) on Tuesday, overshadowing a quarterly profit that topped Wall Street estimates.
Investors have been closely watching how ESPN navigates the shakeup in television as viewers defect from traditional pay TV services and online services proliferate. Chief Executive Bob Iger told analysts that Disney added customers on new digital platforms, but not enough to make up for subscriber losses from expanded basic cable packages.
Shares of the world's biggest entertainment company dropped 2.4 percent in after-hours trading.
Disney's January through March profit beat analysts' estimates as the company benefited from the success of live-action fairy tale adaptation "Beauty and the Beast" plus a new theme park in China. Total attendance to date at the Shanghai park will cross 10 million visitors in the coming days, faster than Disney projected, Iger said.
For the quarter, adjusted earnings per share hit $1.50, ahead of analysts' projection of $1.41, according to Thomson Reuters I/B/E/S.
Overall revenue for the quarter rose 2.8 percent to $13.34 billion, but missed an analysts' estimate of $13.45 billion, according to Thomson Reuters I/B/E/S.
The cable division recorded a 3 percent drop in operating income to $1.79 billion.
ESPN lost subscribers during the quarter and was hit with higher programming costs, in part due to a new, more costly NBA contract, Disney said in its earnings report. Fewer subscribers means less revenue for ESPN, which is locked into sports programming contracts for several years. Continued...