Disney said its ESPN network grew revenue by 4 percent in the first quarter, a number analysts said is too low and driven by rate increases, not subscriber growth.
The most expensive channel in the pay-TV ecosystem has faced a steady drum beat of subscriber losses in recent quarters. Disney shares were down 6 percent in the immediate aftermath of the company's earnings report Tuesday.
"While the fact that the number is stable at 4 percent for a couple of quarters is positive, we note that this comes in an environment where Fox, Time Warner Inc. and Discovery Networks grew domestic affiliate revenues by 7 percent, 15 percent and 7.7 percent, with the growth rate in all three expected to be high single or low double digits for the rest of the year and even next year," Barclays said in a note to investors this morning.
The 4 percent revenue growth missed analysts' consensus expectations by nearly 4 percent.
ESPN also saw a 4 percent year over year drop in advertising revenue, mainly because New Years Day college football bowl games were shifted over to Disney's ABC broadcast network this year.
The downer performance by ESPN poured cold water on an overall Disney earnings picture, which included a big chunk of the global box office receipts ($1.129 billion to be exact) taken in by Star Wars: The Force Awakens.
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