Disney Profits Hit By Declining Ad Sales

May 10, 2016, 9:02 PM UTC
A statue of Walt Disney and Mickey Mouse stands in front of
UNITED STATES - FEBRUARY 11: A statue of Walt Disney and Mickey Mouse stands in front of the Cinderella's castle at Walt Disney World's Magic Kingdom in Lake Buena Vista, Florida, Wednesday February 11, 2004. Growing attendance at the Walt Disney Co.'s theme parks and an increase in advertising sales at ESPN, ABC Family and the Disney Channel may help CEO Michael Eisner rebut claims that he's mismanaged Disney. (Photo by Matt Stroshane/Bloomberg via Getty Images)
Photograph by Bloomberg

Walt Disney Co (DIS) reported smaller-than-expected quarterly profit and revenue, hurt by lower ad sales in its media business which includes sports network ESPN and the Disney channels.

The company’s shares fell 6.19% in extended trading on Tuesday.

Revenue in the cable networks business fell 1.86 percent to $3.96 billion in the second quarter ended April 2.

However, operating income in the division rose 12.34 percent, mainly due to lower programming costs and higher fees from pay TV distributors.

Disney and other media companies have been hit by the trend of “cord-cutting” as younger viewers increasingly opt for streaming services over cable and satellite TV channels.

Studio revenue for the quarter increased 22 percent to $2.1 billion, powered by the box-office success of “Star Wars: The Force Awakens” and animated movie “Zootopia.”

“Zootopia,” about a rabbit who joins the police force, was Disney’s biggest debut weekend animation launch in 2016, raking in $73.7 million in its first weekend.

Revenue in the company’s theme park business rose 4.5 percent to $3.9 billion.

The net income attributable to company rose to $2.14 billion, or $1.30 per share, in the second quarter ended April 2, from $2.11 billion, or $1.23 per share, a year earlier. Excluding items, the company earned $1.36 per share.

Revenue rose to $12.97 billion from $12.46 billion.

Analysts on average had expected profit of $1.40 per share and revenue of $13.19 billion.