A Disney downer

Starts streaming service as ESPN ails

Even a slew of big news announcements about a corporate shift toward online distribution couldn’t stop Wall Street from focusing on a weak quarter at Disney’s cable unit.

Segment operating income for cable networks fell 23 percent due to a decline at ESPN, the company said.

ESPN was hit with high programming costs related to the first year of a new NBA contract plus a contracting ad market in the fiscal third quarter. Ad revenue fell and ESPN had severance costs.

Overall, Disney beat earnings expectations but missed on revenue. Adjusted earnings per share were $1.58 versus a forecast of $1.55 — while revenue was $14.24 billion versus expectations for $14.42 billion.

In after-hours trading, Disney fell 4 percent from its closing price of $106.98.

Disney announced it will create a new ESPN-branded direct-to-consumer product in 2018 and will also shift its Disney and Pixar movies to its own direct service to launch 2019 and off of Reed Hastings’ Netflix.

CEO Bob Iger said the company is still deciding where Marvel and “Star Wars” content will be live online — on Netflix or elsewhere.

“It’s been clear to us for a while the future of this indus- try will be forged between content creators and consumers,” Iger said on the earnings call — emphasizing the need to have access to consumer data.

The company is set to begin a new round of talks with distributors and will have to make the case that ESPN is worth more in affiliate fees at the same time Disney is going it alone.

The new sports service would allow users to authenticate and watch ESPN and trade up to buy additional live sports inside the same application.

Pricing is yet to be determined.

Disney is also acquiring the balance of BAMTech for $1.58 billion.

BAMTech is a technology platform that collects viewing data and hosts advanced advertising offerings. It is owned by Major League Baseball’s interactive arm.