Disney said ESPN took a chunk out of its operating income this past quarter, largely due to higher programming costs.
However, the sports network may also be the media company's way to grab the attention of digital audiences if deals with over-the-top services pay off.
Disney reported its quarterly earnings on Tuesday after the bell. The company beat analyst estimates for earnings per share, but revenue of $13.34 billion trailed the average estimate of $13.45 billion. The stock fell about 2 percent following the announcement.
While cable network revenue for the quarter rose 3 percent to $4.1 billion, operating income decreased 3 percent to $1.8 billion. The company said it was due to ESPN's higher programming costs, including the shift of timing in college football playoff games and rate increases for NBA programming. ESPN also laid off about 100 staffers in late April.
Disney CEO Bob Iger acknowledged the rising costs of sports content in an interview with CNBC. He also pointed out another factor currently hurting ESPN: dwindling cable subscriptions.
Audiences no longer have to go to TV, let alone ESPN, to get their sports fix. Twitter announced at its first Digital Content NewFront presentation to advertisers it would have rights to WNBA and MLB games, as well as the PGA Tour. Amazon will air NFL's Thursday Night Football this upcoming season.