Walt Disney posted a steeper earnings fall than Wall Street anticipated on Tuesday as the corporate poured cash into its ambitious dive into streaming media and began folding in assets bought from Twenty-First Century Fox.
Shares of Disney, which had climbed 27% this year and reached an all-time high last week, declined up to 5% in after-hours trading to $135.
Excluding certain products, Disney gained $1.35 per share for the quarter that resulted in June, below average analyst estimates of $1.75 a share, according to IBES information from Refinitiv.
Disney, the owner, and operator of ESPN, a movie studio and theme parks, is investing closely in digital media platforms to challenge the dominance of Netflix.
Its highest digital bet, a family-friendly subscription service known as Disney+, is programmed to debut in November. Shows aimed at adults will be targeting Hulu, which Disney now controls.
The direct-to-consumer and international unit reported a working loss of $553 million from April to June, wider than the $441 million loss analysts had been anticipating, and up from a $168 million loss from a prior year. Costs piled up from consolidation of Hulu and spending on Disney+ and the ESPN+ service, Disney mentioned.
Future digital purchases will result in a roughly $900 million operating loss in the direct-to-consumer unit in the quarter that concludes in September, the corporate said, in contrast with expectations of a $593 million loss.
For the recently ended quarter, executives said Fox’s movie studio performed worse than anticipated.