Avengers Age Of Ultron Ultron

Ultron helped Disney investors forget about 2014's Frozen bonanza. However, he couldn't overcome weakness in sports platform ESPN. Image source: Disney.

What's happening: Shares of Walt Disney (NYSE:DIS) are trading 9% lower at 2:40 p.m. Wednesday, and briefly plunged all the way down to a 10% drop. The drop was sparked by Tuesday night's second-quarter report, which beat Wall Street's earnings targets (as usual) but also delivered a rare miss against top-line revenue estimates.

Why it's happening: Led by a 13% year-over-year boost to the studio entertainment department's sales, Disney's four largest segments all reported healthy gains. The interactive business saw sales plunge 22% lower, but that operation is largely irrelevant to the big picture since it represents just 1.6% of Disney's overall revenues.

These gains boiled down to an overall sales increase of 5.1%, or $13.1 billion. Analysts had set their sights at $13.2 billion. On the bottom line, earnings rose 13% to land at $1.45 per diluted share. Here, the Wall Street consensus was set at $1.42 per share.

Shrinking ad sales for Disney's ESPN network shocked many investors, although that drop was caused by some unique line items. The 2014 World Cup of soccer aired on ESPN, setting the network up for a difficult year-over-year comparison. Excluding that event, alongside the benefit of an extra NBA finals in the 2015 period, the sports network's ad sales would have increased by 5% instead.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

All told, Disney's management didn't complain about tough comparisons or flagging ad sales.

"We are realists about the business and about the impact technology has had on how product is distributed, marketed, and consumed," said Disney CEO Bob Iger on a conference call with analysts. "ESPN has experienced some modest sub losses, though those have been less than reported by one of the prominent research firms. And the vast majority of them, 80%, were due to decreases in multichannel households with only a small percentage due to skinny packages."

In other words, if ESPN is losing subscribers, it's more likely due to American households dropping cable TV services altogether than opting out of ESPN specifically.

"We feel great about our third-quarter results," clarified CFO Christine McCarthy. And why not? It's not easy to deliver solid growth in the face of the Frozen phenomenon's stellar performance in the year-ago period.

Anders Bylund owns shares of Walt Disney. The Motley Fool both recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days.

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