Walt Disney Co. reported higher quarterly profit that beat Wall Street forecasts as cable networks, including ESPN, brought in higher advertising revenue and collected more fees from pay TV distributors.
Disney shares were roughly unchanged in after-hours trading. In August, the stock plummeted when the company acknowledged a decline in subscribers at ESPN, elevating fears across the pay television business about a shift to online video services.
For July through September, Disney's net income rose to $1.61 billion, or 95 cents per share, from $1.50 billion, or 86 cents per share, a year earlier. Excluding items, the company earned $1.20 per share, beating analysts' expectations of $1.14, according to Thomson Reuters.
Revenue came in slightly below analysts' estimates. The company also said it lost subscribers at certain cable networks while it gained customers from the SEC Network it launched last year.
Overall, the media networks unit that includes ESPN, the Disney Channels and ABC recorded a 27% increase in operating income to $1.8 billion.
Disney Chief Executive Officer Bob Iger said the company was sticking with the forecast it gave in August when the company lowered its cable profit guidance after saying ESPN had experienced "modest" subscriber losses.
On Thursday, Iger said he remained "bullish" about ESPN and "there was no reason to panic" about his earlier comments acknowledging changes in TV viewing habits.
"We like the environment because we think long-term it gives us more opportunities," Iger said.
The threat of "cord-cutting" or dropping of pay TV service, remains a key concern for investors.
On Wednesday, media stocks dropped when Time Warner Inc said it needed to take new steps to adapt to the television shakeup.
Disney's latest results for ESPN "should be comforting" to shareholders, CLSA analyst Vasily Karasyov said.
The company's total revenue rose 9.1% to $13.51 billion, but missed the average analyst estimate of about $13.57 billion.
Disney's theme parks unit posted a 7% rise in operating profit to $687 million, lifted by higher spending and attendance at its US parks.
At the movie studio, films "Inside Out" and "Ant-Man" helped profit more than double to $530 million.
The consumer products division recorded a 10% jump in profit to $416 million, driven by licensing revenue from "Frozen," "Avengers" and classic "Star Wars" merchandise, the company said.
