Shares of Walt Disney (DIS 0.63%) fell on Monday, as the shift away from cable TV took a toll on the entertainment giant's profits.
By the close of trading, Disney's stock price was down more than 7%.
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Cord-cutting continues to cut into Disney's earnings
Disney's revenue rose 5% year over year to $26 billion in the quarter ended Dec. 27. Yet the media titan's adjusted earnings per share fell 7% to $1.63, as higher costs dented its margins.
Operating income in the company's entertainment division -- which includes Disney's broadcasting and cable networks, film studios, and streaming services -- plunged 35% to $1.1 billion. Higher programming and production costs (some of which were related to Disney's deal to integrate Fubo's operations into its Hulu + Live TV business) contributed to the shortfall.
Meanwhile, operating profit in Disney's sports division, which houses its ESPN operations, sank 23% to $191 million. Rising costs for sports rights, combined with subscriber losses, drove the downturn.
NYSE: DIS
Key Data Points
Disney's leadership forecast solid growth, despite additional challenges
For the current quarter, Disney warned that slowing traffic trends at its domestic parks, pre-launch costs for a new Disney cruise line, and pre-opening costs for World of Frozen at Disneyland Paris would combine to slow operating income growth at the company's lucrative experiences division.
Still, management guided for double-digit growth in adjusted earnings per share in fiscal 2026, with much of the gains projected to come in the second half of the year. Disney also expects to generate $19 billion in full-year operating cash flow.
