Walt Disney’s latest profit has failed to impress Wall Street, despite producing blockbuster movie hits including Avengers: Endgame and Toy Story 4.
Disney’s shares fell 5% in after-hours trading when the firm posted figures that missed analysts’ forecasts.
Profits at the entertainment giant fell 51% to $1.4bn in the last three months, despite revenues rising 33% to $20.2bn.
Avengers has become the biggest grossing movie ever, beating Avatar.
But profits from a string of movie hits, including Aladdin, failed to offset other costs at the company.
In March, Disney bought the TV and film assets of 21st Century Fox for $71bn.
Disney chairman and chief executive Robert Iger said the third quarter results “reflect our efforts to effectively integrate the 21st Century Fox”.
The company is also gearing up for a new digital streaming service, Disney+, which it is launching in November to challenge Netflix.
Costs to build online services will weigh on profits for several years, the company has said.
Streaming competitors from AT&T’s Warner Media and Comcast’s NBC Universal are expected next year.
Disney’s direct-to-consumer and international unit reported an operating loss of $553m, up from $168m a year earlier, from consolidation of Hulu and spending on Disney+ and the ESPN streaming service.
At the theme parks unit, overall operating income rose 4% to $1.7bn but fell at Disney’s US parks. The company attributed the drop to expenses for an ambitious Star Wars-themed expansion in late May at California’s Disneyland and lower attendance.
Media networks, which includes ESPN, the Disney Channels and FX, reported a 7% increase in operating income to $2.1bn.