Apparently, it only takes two words to ease concerns about declining pay-TV subscribers: Star Wars.

Walt Disney Co. (DIS) - Get Report reversed an initial drop in after-market trading on Thursday, Oct. 9 when CEO Bob Iger said the world's largest entertainment company was readying a fourth "Star Wars" trilogy in addition to a "Star Wars" TV live action series. By Friday, shares were rising 2.9% to $105.68, poised for a 6.4% gain for the week.

The upward trajectory in Disney stock was further fueled by Iger's comment that pay-TV subscriber declines in the quarter ended Sept. 30 were not as large as in previous quarters. The overarching drop in cable- and satellite-TV subscribers has dogged Disney's stock for much of the past two years.

Iger credited the improved subscriber picture on gains from relatively new online pay-TV services such as DirectTV Now from AT&T Inc. (T) - Get Report , and SlingTV from Dish Network Corp. (DISH) - Get Report .

"While we lost some subs in the quarter, the losses were not as deep as they have been in prior quarters," he said. Despite subscriber declines, Disney was able to generate a 4% increase in so-called affiliate fees, money that pay-TV operators pay to carry ESPN, ABC and the Disney Channel, among other networks.

As for "Star Wars," the director Rian Johnson has been hired to work on new trilogy of films for 2020 and beyond while a new live action series based on the franchise would run on a Disney-branded streaming service scheduled to launch in 2019, Iger said. The service, he added, would be priced "substantially below where Netflix Inc. (NFLX) - Get Report is," a comment that buoyed investor optimism that the Disney-branded platform will become a staple of U.S. homes.

The lower price is a result of service having much less volume than Netflix, Iger said.

Disney is also preparing another sequel based on "Monsters Inc." as well as a TV series based on "High School Musical," currently shown on the Disney Channel.

Disney cited hurricanes in Florida and Texas, and weaker advertising sales, as the chief reasons that revenue for the quarter ended in September totaled $12.8 billion, falling short of average analyst estimates for $13.3 billion. Net income of $1.07 per share also missed forecasts, a bad sign for a company that historically beat Wall Street expectations quarter after quarter.

Once again, Disney's media group, its largest unit, underperformed expectations as net income fell 1.2% to $1.24 billion amid sluggish ad-sales and the increasing cost of sports programming, primarily for the National Football League and Major League Baseball. Disney is preparing to layoff 100 employees, Sports Illustrated reported on Thursday, a sign that the network is attempting to remake itself around digital platforms amid accelerating declines in pay-TV subscribers.

ESPN is expected to launch a direct-to-consumer streaming service early next year. Declines in pay-TV subscribers during the three-month perriod, Iger said, weren't as large as previous quarter, without citing a number.

Disney's film slate, like much of Hollywood, slumped in the quarter as the U.S. movie business suffered one of its worst summer seasons in years. Disney cancelled the film "Gigantic" during the quarter.

Disney also wrote-down its valuation for BAMTech, the technology company for which it took a 75% stake over the past two years. Revenue at the company's broadcasting group led by ABC fell 11%. The hurricanes cost Disney roughly $100 million in revenue as its amusement parks in Florida were closed for two days and three cruise line trips were cancelled, finance chief Christine McCarthy.

The worsening picture for Disney's TV businesses follows a CNBC report on Monday that Disney executives recently met with their Fox counterparts about buying Fox's TV and film production studios, cable networks such as FX, the Star India networks and the company's 39% stake in European satellite TV operator Sky plc.

If accurate, such deal conversations would indicate that Iger is admitting he needs more content if Disney is to roll out a truly dynamic streaming service in 2019 that can compete with and even surpass Netflix Inc. (NFLX) - Get Report . Disney is planning to launch an ambitious streaming service in roughly 18 months aimed at offsetting declines in pay-TV subscribers that have cut into revenue at ESPN, its largest unit.

The new service is also expected to compete directly with Netflix.

Cord-cutting is putting the squeeze on cable network owners such as Disney and Fox while technology players are fast entering the content business. Amazon.com Inc. (AMZN) - Get Report already has jumped into the film and TV business, and Apple Inc. (AAPL) - Get Report is building a production studio having hired top executives from Sony (SNE) - Get Report Pictures earlier this year.

In addition, Facebook Inc. (FB) - Get Report just launched its Watch tab, and Alphabet Inc.'s (GOOGL) - Get Report Google started YouTube TV, its digital television platform, in July.

Fox and Disney representatives declined to comment on reports of a possible deal.

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