Tough talk by President Trump on North Korea isn’t the reason the Dow Jones Industrial Average declined on Wednesday. Walt Disney (DIS)’s poor showing for its third quarter and its breakup with Netflix (NFLX) is having more of an impact. 

On Wednesday, the stock closed almost 4%  lower at $102.83 in its worst day since May 2016, when it lost 4.04%.The index closed down 37 points, or 0.2%, at 22,0480.70.  

Late Wednesday Disney weighed in with third-quarter results that showed its struggling cable sports network ESPN saw operating income decline 23% compared to a year. During the third quarter Disney said ESPN was hit hard by higher programming costs and lower revenue from advertisers. Also weighing on the unit was contract terminations and severance costs. The sports network fired staff recently to bring costs down. But it wasn’t only ESPN that suffered during the quarter.  For the three-month period ended in June, adjusted EPS came in at $1.58, topping the Wall Street consensus which stood at $1.55 a share. Revenue of $14.2 billion was lower than the $14.4 billion analysts were expecting. In last year’s third quarter the entertainment giant reported adjusted earnings of $1.62 on revenue of $14.3 billion.  (See more: Disney PT Slashed: ESPN Outweighs Anything Good.)

No to Netflix

While the results alone were enough to send the stock lower in after-hours trading, also pressuring shares is the news that Disney is pulling its content from Netflix (NFLX) the streaming video service and will launch its own direct-to-consumers streaming service in 2019. The service will broadcast Disney films exclusively. The company doesn’t have plans to pull Marvel shows from Netflix. (See more: Disney Sued for Spying on Kids Through Apps.)

The sell-off erased Disney shares' year-to-date gains. Geopolitical events also concerned investors after North Korea said Wednesday it is “carefully examining” a plan to hit Guam, the U.S. Pacific territory with missiles, responding to President Trump who said any threat against the U.S. will be met with “fire and fury.”


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