ESPN is crushing Disney

Disney reported third-quarter earnings that missed analysts’ expectations as ad revenues from ESPN fell.

The media and entertainment giant said Thursday that its adjusted earnings per share was $1.10, but analysts had expected $1.16 according to Bloomberg. Sales totaled $13.1 billion, short of the forecast for $13. 5 billion.

ESPN advertising revenue fell because of fewer impressions and lower rates, Disney said in its earnings statement. Programming costs were also higher, escalated by the costs of Olympics programming, rights to air the World Cup of Hockey, and higher rates for college sports.

And like other cable networks, ESPN is grappling with a consumer shift towards cheaper streaming services and away from cable and satellite bundles.

In all, operating income at Disney’s cable networks fell 13% year-on-year to $1.4 billion. Income at parks and resorts was also lower after attendance at Hong Kong Disneyland Resort fell, and weakness at Disneyland Paris.

Walt Disney Walt Resort in Florida experienced sales growth after cost cuts and higher ticket prices.

“Fiscal 2016 was our sixth consecutive year of record results, highlighted by the opening of Shanghai Disney Resort, the phenomenally successful return of Star Wars, and our Studio’s record-breaking $7.5 billion in total box office,” said CEO Robert Iger in the earnings statement.

Disney shares fell by as much as 3% in after-hours trading. They slumped 9% this year through the market close on Thursday.

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