Disney

Walt Disney Co. reported first-quarter earnings that beat analysts’ estimates but its media networks segment continued to struggle, posting declines in revenue and operating income.

The company earned $2.5 billion, or $1.55 per share, down 14% from the year prior figure of $1.63, but better than the $1.47 that had been projected by analysts. Revenue fell 3% to $14.78 billion, missing estimates of $15.26 billion.

Disney noted that last year’s earnings included a $0.13-per-share gain related to its investment in A+E Networks. Excluding that gain, earnings for the quarter ended Dec. 31, 2016 decreased only 5%.

“We’re very pleased with our financial performance in the first quarter,” CEO Robert A. Iger said, citing, in particular, the results from Disney’s parks and resorts business and its film studio.

But the media network group saw operating income fall 4% to $1.36 billion as revenues dropped 2% to $6.23 billion. Cable network operating income fell 11% to $864 million with revenue dropping 2% to $2.428 billion.

Disney blamed higher programming costs and lower advertising revenue at ESPN for the declines.

“Questions persist about how ESPN will stem the flight of subscribers from traditional cable television packages, losses that were pegged last year at 2 million paying customers for the fiscal year ending last October,” Variety reported. “Overall, the sports network is down about 10 million subscribers from its 2010 plateau of 100 million.”

Disney is hoping to hang onto subscribers by starting its own streaming service for sports.

“A lot of value is still being reaped from traditional distribution relationships, but it’s our full intent to go out there with ESPN and other branded Disney properties,” Iger said in an earnings call.

The parks division saw a 6% increase in revenue, to more than $4.5 billion, with operating income jumping 13% to more than $1.1 billion. On the studio entertainment side, revenue dipped from $2.7 billion to $2.5 billion, but the first quarter of 2016 was boosted by the release of “Star Wars: The Force Awakens,” the third-ranking moneymaker of all time.

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