The company said ESPN continued to lose subscribers in the quarter that ended July 2.
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Disney also said it is acquiring a 33 percent stake in BAMTech, a video-streaming company formed by Major League Baseball, for $1 billion.
A large part of the deal would appear to be due to Disney’s interest in delivering a new online subscription product for its fully owned flagship sports network ESPN, which is described as a direct-to-consumer service that will include live regional, national and worldwide sporting events but interesting will not include content now featured on ESPN’s linear networks.
Iger said Disney plans to release the new ESPN streaming service this year.
For Disney, beating analysts’ predictions was a return to normalcy after the company failed to meet those expectations last quarter for the first time since 2011. Film studio earnings soared 62% to $766 million.
At the movie studio, revenue increased 39.6 percent to $2.85 billion, helped by a string of successful hit movies. Also, “Zootopia”, which was released in the prior quarter but did significant business during the most recent one, has grossed $1.02 billion. Disney shares are down 1.6% in post market trading. The stock is down about 8% in 2016.
The earnings report shows that the Cable Networks – including ESPN – saw a 1% increase in revenues to $4.2 billion and a similar increase in operating income to $2.1 billion.
With the new offering, ESPN wants to target customers that may no longer subscribe to cable, but are willing to pay for a la carte sports programming.
The price for those rights packages has comically ballooned in recent years: For example, ESPN and Turner Networks agreed to pay $2.4 billion a year for National Basketball Association rights in 2014, nearly triple the price paid in the previous contract.
Profit at the ABC network and affiliated TV stations fell 6% to $282 million.
Earnings adjusted to not include charges connected with shutting down global film operations were $1.62. Revenue for the group was also up 1% to $4.2 billion.
Current content on ESPN’s linear networks will not appear on the new subscription streaming service. Disney has the option to pursue majority ownership down the road, it said.
In June, Disney’s opening of its $5.5 billion Shanghai Disneyland was mired by tragedy when during the same week a child was killed by an alligator at a Disney World resort in Florida. But The Walt Disney Co.’s cable and broadcast channel revenue growth was weaker. The company serves 7.5 million paid subscribers. Revenue dropped 1% to $1.15 billion.
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The firm attributed the decrease in consumer products revenue to the exceptional performance of Frozen merchandise past year, an unfavorable impact from foreign currency translation, an increase in revenue share with the Studio Entertainment segment and higher marketing costs.
