Disney Stock Tumbles as Linear TV Collapse Accelerates – Streaming Can’t Save Mickey Now

Wall Street's magic kingdom is showing cracks in its foundation. Disney shares plunged after reporting weaker-than-expected earnings, with its legacy TV business dragging down the House of Mouse like an anchor.

The media giant's linear networks – once its cash cow – are bleeding subscribers faster than analysts predicted. Meanwhile, Disney+ growth fails to offset the decline, leaving investors questioning whether Bob Iger's second act can work miracles.

Here's the brutal truth: traditional media is dying, and even Disney's brand power can't stop the bleeding. The company now faces its toughest challenge since Walt first sketched Mickey Mouse – reinventing itself for the digital age while Wall Street watches the clock.

One analyst quipped: 'At this rate, they'll need to sell Pluto to private equity just to keep the lights on.' Ouch.

All in on ESPN: New NFL, WWE deals

Prior to its earnings update, Disney confirmed previous reports that ESPN has reached a preliminary deal to acquire key NFL Media assets, including NFL Network, NFL RedZone, and NFL Fantasy, in exchange for a 10% equity stake in the network.

Alongside the sale of NFL Network, the league and ESPN have also agreed to a second deal under which the league will license certain NFL content and intellectual property to ESPN for use across NFL Network and related assets. The announcement comes as ESPN confirmed an August 21 launch date for its new standalone service, which is set to cost $29.99 per month.

The NFL agreement comes ahead of another major rights deal unveiled this week: ESPN will become the exclusive US streaming home of WWE Premium Live Events, including WrestleMania and SummerSlam, beginning in 2026 — a MOVE seen as further strengthening the content lineup for its new DTC service.

The five-year deal will cost ESPN an average of $325 million per year, according to the Wall Street Journal. Disney declined to confirm the financials when asked by Yahoo Finance.

Analysts see the ESPN streaming debut as a key step toward more bundling opportunities with Disney+ and Hulu, as streamers across the industry work to retain subscribers and reduce churn.

The NFL deal had been previously reported by the Athletic. Ahead of its confirmation, Morgan Stanley analyst Ben Swinburne wrote in a Monday note, “With the NFL as an investor, ESPN’s long-term future is incrementally more secure.”

Legacy headwinds meet digital gains

Disney reported revenue of $23.65 billion for the quarter, roughly in line with analyst expectations of $23.68 billion and up 2% from the same period last year.

Adjusted earnings per share of $1.61 were ahead of the $1.46 expected by analysts polled by Bloomberg. Earnings increased from $1.39 per share a year ago.

However, ongoing weakness in Disney’s linear networks business weighed on the quarter. Revenue in the segment fell 15% year over year while operating income dropped 28%.

On the streaming front, Disney+ added 1.8 million subscribers in the quarter, falling short of the 2.05 million analysts polled by Bloomberg had expected.

Disney's direct-to-consumer segment, which includes Hulu and Disney+, posted a profit of $346 million, compared to a $19 million loss a year ago. The company continues to prioritize consistent profitability in streaming amid the ongoing shift away from traditional pay-TV. Disney is targeting approximately $875 million in streaming profits for fiscal 2025.

Theme parks power on

Meanwhile, the parks business continued to shine in the quarter, though analysts flagged potential headwinds ahead.

Revenue of $9.09 billion beat expectations of $8.87 billion, with the company posting a 22% rise in operating income at its domestic parks. Walt Disney World delivered record Q3 revenue, while broader gains were fueled by increased guest spending, higher hotel occupancy, and a rise in cruise volumes following the successful launch of the Disney Treasure late last year.

On the earnings call, executives said bookings for the Experiences segment are tracking about 6% higher so far in the current quarter, signaling continued strength across parks, cruises, and resorts.

Still, attendance growth at domestic parks came in flat compared to last year, suggesting intensifying competition in key markets like Orlando, where NBCUniversal's new Epic Universe theme park opened in May.

Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].