Disney earnings up but ESPN struggles continue

disney-coverv2NEW YORK: Disney reported higher second-quarter profit Tuesday despite lower earnings at its ESPN sports network, which has been under pressure with the rise of online streaming.

Net income for the quarter ending April 1 came in at US$2.4 billion, up 11.4% from the year-ago period.

Revenues were US$13.3 billion, up 2.8%.

Strong points included Disney’s parks and resorts business and a robust box-office performance for “Beauty and the Beast” that boosted studio entertainment profits.

But questions about ESPN, long a cash cow for Disney, dominated an analyst conference call late Tuesday afternoon.

Fewer consumers are subscribing to cable television, hitting ESPN viewership and advertising.

Earnings in cable networks fell 3.0% to US$1.8 billion.

Chief executive Bob Iger told analysts that “we are not sitting on our hands” with respect to technological changes that are roiling media, eroding the cable television business and pushing more consumers to mobile viewing.

“I would say the best thing that we can possibly do is to continue doing what we are doing, which is to make the mobile experience great, and we are,” said Iger.

Steps include offering ESPN programming on more “over-the-top” services such as Hulu, Sling and Youtube. Iger said ESPN is also taking steps to make programming more mobile-friendly.

And later this year Disney plans to offer an entirely online sports broadcast through BAMtech, a video streaming service in which Disney has a stake.

ESPN also recently cut about 100 employees, including many on-screen personalities, a figure Iger characterized as “not particularly significant” given ESPN’s 8,000-person staff.

Iger said he was “optimistic” about ESPN’s business in light of strong continued demand for watching live sports.

Disney shares fell 2.5% in after-hours trade to US$109.29.