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Disney (NYSE:DIS) stock has gained more than 25% in last 12 months on the back of rock-solid financial performance and promising prospects over the year ahead. On the other hand, ESPN is losing subscribers due to the cord-cutting revolution, and this could be a major drawback for the company going forward. Is now a good time to invest in Disney?

A fairy tale for investors
Disney is clearly one of a kind. The company owns the rights to many of the most popular fictional characters and franchises in the entertainment industry, and it gets to capitalize on its assets via multiple platforms at the same time: Movies, video games, live shows, merchandising, and theme parks, among others.

Management is doing a great job at translating the company's strengths into growing sales and earnings for investors. Disney had a record year in fiscal 2015, meaning the 12-month period ended on Oct. 3, 2015. In fact, the company has delivered record performance over the last five years, showing a level of consistency which is quite unusual in the entertainment business.

Total sales during fiscal 2015 came in at $52.5 million, a year-over-year increase of 7%. Profit margins are expanding, so earnings are outgrowing revenues and segment operating income jumped by 13% during the year. Adjusted earnings per share increased by a vigorous 19% versus fiscal 2014, so the key financial variables are moving in the right direction across the board.

Importantly, the best may be yet to come. Disney will launch the new Star Wars movie, The Force Awakens, on December 18, and the movie promises to be a major blockbuster. This should benefit the studio division substantially, and the merchandising business is already profiting from avid demand for Star Wars products around the world.

In spring of 2016 Disney is planning to inaugurate its first theme park in Mainland China, Shanghai Disney. This will be one of Disney's biggest projects ever, and it could open the door to exciting growth opportunities overseas. 

Will ESPN drop the ball?
The networks division brings in over half of Disney's operating profits, and ESPN is the crown jewel in this much important segment. The sports network has been losing subscribers due to changing consumer habits, as many viewers are moving away traditional pay TV toward online streaming options. ESPN has approximately 92 million subscribers as of October 3, this represents a considerable a decline from 95 million last year and 99 million subscribers two years ago.

Cord-cutting is a very real phenomenon, and Disney is not immune to technological change. According to financial reports for the third quarter of 2015 Netflix (NASDAQ:NFLX) has over 69 million members across the world, a significant increase versus 53 million members in the same period last year. Netflix has recently decided to accelerate its international expansion plans due to encouraging global demand, so many consumers around the globe seem to be embracing the online TV paradigm.

On the other hand, content is king in the business, and a content powerhouse such as Disney can find the right venues to continue thriving in an always dynamic environment. In fact, Disney and Netflix can be considered competitors in some way, but they are also partners to a good degree. 

In 2012 Netflix and Disney made an agreement that gives Netflix the exclusive rights for all new Disney releases once they leave theaters and the Disney back catalog, starting in 2016. This includes content from Marvel, Pixar, and Lucasfilm, so Netflix and Disney seem quite committed to joining forces in online streaming.

When it comes to ESPN in particular, the network is the undisputed leader in sports, and many subscribers want to watch the main sports events live, so sports is a very particular niche when it comes to streaming. Disney will need to implement the right strategies and build the technological capabilities to adapt to a changing industry, but the company has the resources and the competitive strength to do so successfully.

The main point is that Disney as a whole business is doing great in spite of the challenges ESPN is facing. Besides, there is no reason to believe the leading sports network in the world won't be able to adapt to changing consumer demand and new technological developments. If anything, recent concerns about ESPN and the cord cutting revolution could provide a buying opportunity for long-term investors in Disney stock.

Andrés Cardenal owns shares of Netflix and Walt Disney. The Motley Fool owns shares of and recommends Netflix and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.