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Disney expected to have good quarter amid concerns

Bob Iger, chairman and CEO of the Walt Disney Company
Adam Jeffery | CNBC
Bob Iger, chairman and CEO of the Walt Disney Company

Disney is projected to have better results than last quarter, but there are some concerns brewing among analysts who cover the entertainment powerhouse.

The media company, which reports after Tuesday's closing bell, is expected to show adjusted earnings of $1.61 per share, according to the Thompson Reuters consensus. Revenue for the fiscal 2016 third quarter is estimated at $14.152 billion.

The figures are slightly higher than last quarter, when it had an EPS of $1.36 per share on $12.97 billion in revenue. It was the first time in 13 quarters that the media company did not beat expectations.

Deutsche Bank rated Disney stock as a hold and reduced its estimates slightly due to the projected box office hits "Alice Through the Looking Glass" and "The BFG" not bringing in as many ticket sales as expected. However, it noted that other films released earlier in the year — "Captain America: Civil War," "Junglebook," "Zootopia" and "Finding Dory" — may help the company achieve the highest revenue quarter to date for its studio sector.

Broadcast ad sales revenue from Disney's ABC TV network is expected to be high, despite low viewer ratings. Deutsche said an extra game during the NBA finals will contribute to the quarter's success.

But investors are curious about the future of ESPN. Live TV, especially sports, remains one of the biggest draws for traditional television. But last quarter, Disney CEO Bob Iger admitted fewer people were opting to purchase the sports network through their cable subscription. With the announcement that Hulu — which is owned by Disney, 21st Century Fox, Comcast and Time Warnerwill be announcing a skinny OTT offering in the near future, it seems the networks are recognizing cord-cutting is a real phenomenon.

There's already been talk of a potential over-the-top bundle of ESPN, allowing consumers to purchase a sports package without the cable subscription. Disney was reported to have come to an agreement to buy a stake in MLB Advanced Media, the technology that powers streaming services like HBO Now and The Blaze, but the company has not commented. It could potentially give it the power to create its own OTT platform. Iger told "Squawk Box" in July 2015 he could see an ESPN stand-alone service in the future.

Other things to note this quarter include Disney's park sector, in particular the newest offering, Shanghai Disney Resort, which opened on June 16. The park cost about $5.5 billion to construct, and a new "land" is under construction with reports that the company will add second gate to accommodate more visitors by 2021, according to Deutsche Bank.

Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC and CNBC.com.

Correction: An earlier version of this story said that Disney had bought a stake in MLB. No deal has been disclosed.