Walt Disney Co. Thursday reported a fiscal fourth-quarter profit of $1.75 billion, but as with recent quarters, the Burbank, Calif., company's media networks unit, which includes ESPN, remained troublesome.
Disney's profit was down 1 percent from a year earlier on revenue of $12.78 billion.
Disney's media networks unit, which encompasses cable and broadcast networks, had a tough quarter, reporting segment operating income of $1.48 billion, which fell 12 percent from a year earlier. The unit's operating income declined on a year-over-year basis for the sixth quarter in a row.
Within the unit's broadcasting group, which includes ABC, operating income was down 15 percent to $229 million. In the cable networks group, home to ESPN, segment operating income declined 1 percent to $1.24 billion. Disney attributed the drop-off, in part, to lower advertising revenue at ESPN and higher programming costs for the network, which pays a premium to carry National Football League and Major League Baseball games.
ESPN has long been the profit engine for Disney. But ESPN has been squeezed by rising sports rights costs at a time when pay-TV revenue has been under threat because of cord-cutting. In 2010, ESPN was available in nearly 100 million homes in the U.S. Now, however, it is in about 87 million homes, according to Nielsen data.
ESPN, which has cut about 400 workers in the last two years, plans to lay off more than 100 employees, according to reports Thursday.
Partly in response to the changing media landscape, Disney recently outlined bold plans to launch two Netflix-like streaming services -- one for sports and another for films and television shows. The stand-alone subscription offerings are meant to appeal to younger audiences who are turning away from traditional media. The sports service is scheduled to debut next year, while the one for films and TV shows is to come online in 2019.
Disney's film studio had a weak quarter, posting operating income of $218 million, off 43 percent from a year earlier. And its consumer products and interactive unit delivered operating income of $373 million, a decrease of 12 percent from a year ago.
The company's parks and resorts business was a bright spot: Its operating income rose 7 percent, to $746 million.
Also Tuesday, the company reported full fiscal year results, which included profit of $8.98 billion, a 4 percent drop from a year earlier. Revenue for the year was $55.1 billion, down 1 percent.
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