Walt Disney Co (NYSE:DIS) lowered profit guidance for its cable networks unit and reported quarterly revenue slightly below Wall Street forecasts, sending its shares down 6 percent on Tuesday.
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The media company now expects annual operating income growth at the unit in the mid-single digits for fiscal years 2013 to 2016, Chief Financial Officer Christine McCarthy said on a conference call. It previously had forecast growth in the high single digits.
The company cut its forecast because it expects lower revenue from a decline in subscribers and the impact of foreign exchange rates, McCarthy said. Sports network ESPN has experienced "modest" subscriber losses as viewing habits have shifted to digital platforms, Disney Chief Executive Officer Bob Iger said.
"That's where some of the concern lies," Diedrich said of the cable outlook. Overall, the company produced "a good solid quarter."
Disney posted record profit in the June quarter, but its revenue missed Wall Street expectations for the first time in two years. It had net income of $2.48 billion, up 11 percent from a year earlier, and revenue of $13.1 billion, just shy of the $13.23 billion projected by industry analysts.
The weaker euro cut revenue at the Disneyland Paris theme park by about $100 million, McCarthy said.
Operating profit at theme parks rose 9 percent to $922 billion in the third quarter as attendance and spending rose at U.S. parks.
Operating income at media networks rose 4 percent to $2.38 billion in the quarter as cable channels brought in higher fees from distributors.
The media networks segment includes ESPN, the Disney Channels and the ABC broadcast network. Iger said he has "enormous confidence in ESPN's future no matter how technology disrupts the media business."Disney's movie studio recorded a profit of $472 million, up from $411 million a year earlier, helped by the success of "Avengers: Age of Ultron".
The company's overall net income climbed to $2.48 billion, or $1.45 per share, from $2.25 billion, or $1.28 per share last year. Revenue rose to $13.10 billion from $12.47 billion.
Analysts on average expected a profit of $1.42 per share on revenue of $13.23 billion, according to Thomson Reuters I/B/E/S.
Disney's shares had risen 29 percent this year, making it the best performer among the 30-member Dow Jones industrial average <.DJI>.
(Reporting By Arathy S Nair in Bengaluru; Editing by Savio D'Souza, Bernard Orr)