Walt Disney Co fell the most in four years after posting third-quarter sales that fell short of analysts’ estimates and cutting its forecast for cable-TV profit.
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Operating results at ESPN, one of the larger components of the Media Networks segment, were driven by growth in affiliate revenue, partially offset by lower advertising revenue.
After Disney’s huge 9% loss on Wednesday, many of its media peers are following the company lower as markets weigh the implications of a cable-bundle legacy that could be facing a major shakeup, if not outright extinction.
“Until now, we’ve seen all the growth at Netflix, Amazon and others has not really cannibalized more traditional ways to view content”, said Robin Diedrich, an analyst with Edward Jones.
“That’s where some of the concern lies”, Ms Diedrich said of the cable outlook. Disney did say the company is expecting that all sectors of its business would operate at peak efficiency.
Priceline Group rose 6% after the travel company reported profit and revenue that beat analysts’ forecasts.
Earnings in consumer products jumped 27 percent to $348 million, while sales jumped 6 percent to $954 million.
Disney said weakness in the euro hurt revenue at Disneyland Paris. Parks and Resorts grew revenue 4% from the third quarter of 2014 for a total of $4.1 billion.
Operating income at media networks rose 4 percent to $2.38 billion in the quarter as cable channels brought in higher fees from distributors. The sport’s channels falling subscriber base has clearly concerned investors who are beginning to realise the dwindling influence of their once saviour. He added that because 96% of all sports in watched live, “we have enormous confidence in ESPN’s future no matter how technology disrupts the TV business”.
The company said its movie studio boosted earnings once again, with the debut of Avengers: Age of Ultron proving the continued strength of the Marvel superhero brand. During the same quarter last year, the company posted $1.28 earnings per share.
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Disney chairman, CEO Robert Iger said, “We’re very pleased with our performance in the third quarter, with record net income and diluted earnings per share of $1.45, up by 13 per cent from the prior year”.
