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Earnings preview: Disney 3Q profit, sales seen up

LOS ANGELES (AP) -- The Walt Disney Co. reports its third-quarter earnings after the market closes Tuesday with analysts closely watching results at its flagship sports network ESPN.

WHAT TO WATCH FOR: Audience ratings at ESPN.

Morgan Stanley analyst Benjamin Swinburne trimmed his estimates because audience ratings fell at ESPN, in part due to the popularity of NBA games and soccer telecasts a year ago. Despite lower viewership, ESPN sold commercial time at higher rates.

Looking forward, Swinburne expects the company to book a $150 million loss on the movie "The Lone Ranger" in the July-September quarter. The big-budget action movie starring Johnny Depp as Tonto has racked up about $150 million in global ticket sales, far short of what's necessary to turn a profit with a budget larger than $200 million.

THE BIG PICTURE: Disney's TV networks such as ESPN and ABC are still benefiting from an advertising recovery helped by an expanding economy. Acquisitions of movie studio properties like Marvel and Lucasfilm are bolstering its movie slate. And big investments in its theme parks and cruise ships are now bearing fruit in the form of higher profit margins.

THE ANALYSIS: Swinburne sees the "Star Wars" franchise as boosting earnings in the next several years. He also expects Disney to benefit from the introduction this year of "MyMagic+," which allows theme park visitors to book rides, restaurants and pay for items with a high-tech wristband. Early tests have suggested guests spend more with the technology. He also expects ABC and ESPN to benefit in the coming years by securing higher fees in negotiations with TV distributors.

WHAT'S EXPECTED: Analysts polled by FactSet expect Disney to post adjusted earnings of $1.02 per share on revenue of $11.67 billion.

LAST YEAR'S QUARTER: Disney posted adjusted earnings of $1.01 per share on revenue of $11.09 billion.