Disney quarterly profit misses as programming costs surge

By Lisa Richwine and Vibhuti Sharma (Reuters) - Walt Disney Co missed Wall Street profit targets on Tuesday as it lost more subscribers at its cable sports network ESPN and invested in technology and programming to try and capture audiences migrating to streaming television. Shares of one of the world's biggest entertainment companies, which have gained nearly 9 percent this year, fell 1.9 percent to $113.66 after the bell. Disney reported earnings of $1.87 per share excluding certain items, an increase from a year earlier but below Wall Street's average forecast of $1.95, according to Thomson Reuters I/B/E/S. Operating income at Disney's media networks unit declined 1 percent to $1.8 billion. The division recorded a loss from its investment in streaming technology company BAMTech. ESPN, its biggest network, reported higher programming costs and a decline in subscribers, while the fees it collects from distributors rose. Disney is trying to transform into a broad digital entertainment company as its networks including ESPN are losing viewers to Netflix Inc and other online options. The company is scheduled to launch its own streaming service for family entertainment in late 2019. Disney also is on the verge of gaining new film and television properties in a $71 billion purchase of assets from Rupert Murdoch's Twenty-First Century Fox . The Fox properties would bring Disney new franchises such as "Avatar" and "The Simpsons" to mine for future subscription services. For its fiscal third quarter ended June 30, the company's theme parks division recorded a 15 percent profit increase to $1.3 billion with increases at domestic and international resorts. Disney's movie studio enjoyed blockbuster success with "Avengers: Infinity War" and "The Incredibles 2." Operating income at the studio rose 11 percent to $708 million. At consumer products, operating income declined 10 percent to $324 million. Net income attributable to Disney rose to $2.92 billion, or $1.95 per share, in the quarter, compared with $2.37 billion, or $1.51 per share, a year ago. Total revenue rose 7 percent to $15.23 billion, but missed analysts' average expectation of $15.34 billion. (Reporting by Vibhuti Sharma in Bengaluru and Lisa Richwine in Los Angeles; Editing by Arun Koyyur and Bill Rigby)