Walt Disney has reported a bigger fall in third quarter earnings than expected, despite recent blockbusters.
The company blamed costs involved with its plunge into streaming and its acquisition of Twenty-First Century Fox, a deal which closed in March.
The direct-to-consumer and international unit reported an operating loss of $553m (£454m) from April to June, more than the $441m (£362m) loss analysts had anticipated, and up from a $168m (£137m) loss from a year earlier.
Future digital investments will lead to an operating loss of around $900m (£738m) in the direct-to-consumer unit in the quarter that ends in September, the company said.
Shares of Disney, which hit a record high last week, dropped as much as 5% to $135 (£110).
Operating income at Disney’s theme parks unit rose 4% to $1.7bn (£1.4bn) while the company’s media networks division, which includes ESPN, the Disney Channels and FX, reported a 7% increase in operating income to $2.1bn (£1.7bn).
Disney will launch its streaming service Disney+ on 12 November with subscriptions priced at $7 a month in the US.
A bundle of Disney’s three services – Disney+, ESPN+ and ad-supported Hulu – will be $12.99 (£10.65).
Disney expects between 60 million and 90 million subscribers by the end of the fiscal year in 2024, which is also when it expects the service to start making a profit.
The company aims to have its streaming service available in all major regions of the world within the next two years.
Disney chief executive Bob Iger said the focus is on integrating the Fox film and TV assets and using them with Disney’s businesses to move quickly into streaming video.
“Nothing is more important to us than getting this right,” he said. “We remain confident in our strategy and our ability to successfully execute it.”