Flat revenue at its media networks division and a decline in ad sales at A&E and ESPN helped The Walt Disney Co. to slower than expected growth in the fiscal second quarter, as consolidated revenue rose 4% and net income increased 2% in the period.
The results were short of Wall Street expectations, which helped drive Disney shares down 6.4% ($6.85 per share) to $99.75 in afterhours trading.
At the Media Networks, revenue was flat at $5.8 billion, as a 3% gain in broadcast revenue as offset by a 2% decline in cable network revenue. Operating income at the unit was up 9% to $2.3 billion, as lower programming costs and higher affiliate fees at ESPN were partially offset by lower ad sales at the sports network and A&E. The conversion of its H2 channel to Viceland durg the period also had a negative impact on the quarter, Disney said.
“We’re very pleased with our overall results in Q2, which marks our 11th consecutive quarter of double-digit growth in adjusted EPS,” said Disney chairman and CEO Robert Iger in a statement. “Our Studio’s unprecedented winning streak at the box office underscores the incredible appeal of our branded content, which we continue to leverage across the entire company to drive significant value. Looking forward, we are thrilled with the Studio’s slate and tremendously excited about the June 16th grand opening of the spectacular Shanghai Disney Resort.”