Walt Disney Q2 results miss Wall Street as ESPN ad revenue falls

Walt Disney Company missed Wall Street earnings targets for the first time in at least two years as its sports network ESPN posted a drop in advertising revenue and subscriptions and its theme parks and consumer division also lagged expectations.

Shares of the world's best-known entertainment company fell 4.5% in extended trading on Tuesday.

Disney and other media companies have been hit by the trend of "cord-cutting" as younger viewers opt for streaming services over cable and satellite TV channels, and investors are particularly focussed on how ESPN, one of the strongest cable brands, weathers the storm.

Excluding some items, the company earned $1.36 per share, missing analyst expectations of $1.40 per share. Revenue rose to $12.97 billion from $12.46 billion, missing the Wall Street target of $13.19 billion, according to Thomson Reuters I/B/E/S.

Revenue missed expectations at cable networks, theme parks, and consumer divisions, according to data from FactSet StreetAccount.

Revenue in the cable networks business fell 1.86% to $3.96 billion in the second quarter (Q2) ended April 2, said Disney.

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

ESPN subscriptions fell. Ad revenue also dropped, which Disney attributed to a change in timing of college football playoff games. 

The company's studio revenue for the quarter increased 22% to $2.1 billion, powered by the box-office success of "Star Wars: The Force Awakens" and animated movie "Zootopia", an unexpected hit which has grossed nearly $1 billion worldwide.

Revenue in the company's theme park business rose 4.5% to $3.9 billion.

Net income attributable to the company rose to $2.14 billion, or $1.30 per share, in the second quarter (Q2) ended April 2, from $2.11 billion, or $1.23 per share, a year earlier.