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Q2 earnings more beauty than beast, but ESPN drags on Disney’s stock price

Last updated: 09:54 10 May 2017 EDT, First published: 04:54 10 May 2017 EDT

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The live action remake of Beauty and the Beast drove film profits in the last quarter

Shares in The Walt Disney Company (NYSE:DIS) slipped on Wednesday despite the media and entertainment giant posting-than-expected second quarter earnings.

Earnings per share for the three months ended March came in at US$1.50, ahead of the US$1.41 Wall Street analysts had forecast, although revenues of US$13.34bn narrowly missed expectations.

Strong performances from Disney’s theme parks and film studio divisions – which saw profits climb by 20% and 21% year-on-year – helped to bolster the New York-listed giant’s quarterly numbers.

The live action remake of Beauty and the Beast earlier this year was a hit at the box office, with the fairy tale earning enough to become the highest-grossing PG-rated movie of all time in the US.

Similarly, the new theme park in China also contributed to the earnings beat. Attendance at the park in Shanghai is expected to surpass 10mln visitors within the next few days, faster than Disney had anticipated.

ESPN a concern for investors

If that was the beauty side of the report, ESPN and the rest of the media and networks division was definitely the beast.

This side of the company – which is by far and away the biggest – has long been Disney’s profits engine, but it is starting to slow down.

Operating income in the media division, which includes ESPN, fell 3% year-on-year to US$2.22bn, which was below the market consensus.

Despite increased advertising sales and upping subscriber fees, Disney said the sports network had been hampered by dwindling user numbers and higher programming costs.

In an earnings call, long-time chairman and chief executive Bob Iger said he was still “bullish” about the outlook for the division adding that ESPN executives were aggressively controlling costs.

Shares in Disney shed 3% on Wednesday morning to trade at US$109.

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