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Disney Revenue, Profit Drop as TV Business Suffers

The Walt Disney Co. reported financial results Thursday.

Shares initially fell 3% in after-hours trading but recovered to rise 1%, after the 1.48% gain logged during the day Thursday.

ESPN has struggled with declining viewership more than other networks, as it also contends with high costs for sports broadcasting rights.

Disney has outlined plans to sell its sports and entertainment programming directly to consumers, sidestepping traditional cable providers and streaming services such as Netflix Inc. For Disney, streaming services would provide a new source of revenue and help it reduce reliance on licensing fees from third-party distributors.

The company has already bet billions of dollars on this pivot. Earlier this year, Disney purchased a majority stake in BamTech for $2.58 billion to bolster its streaming initiatives. Disney has also held talks with 21st Century Fox to acquire its entertainment assets to strengthen its content library against rivals. The talks are no longer active and it isn’t clear whether they will resume.

Sales in Disney’s film-production and consumer-product businesses also fell in the latest quarter, suffering from comparison with a year-earlier period bolstered by the sale of Star Wars distribution rights and merchandise, and the “Finding Dory” animated film. Production-related operating profit plunged 43% compared with last year.

The company’s theme-park segment, where sales grew 6%, was the only business to post a sales increase.

In all, for the fourth quarter the California company reported a profit of $1.75 billion, or $1.13 per share, down from earnings of $1.77 billion, or $1.10 per share a year earlier. On an adjusted basis, earnings fell to $1.07 per share from $1.10.

Revenue dropped 2.8% to $12.78 billion.

Analysts polled by Thomson Reuters had forecast earnings of $1.12 on $13.23 billion in revenue.