Disney (DIS - Get Report) CEO Bob Iger was ready for the question.

When asked on the company's quarterly conference call Tuesday about a recent The Wall Street Journal report that he might extend his contract beyond a previously planned retirement date of June 2018, Iger demurred, and then read a carefully prepared statement.

"I'm going to do what's in the best interest of this company which is something that the board is clearly going to help determine," said Iger, who turns 66 on Friday. "While I'm confident that my successor will be chosen on a timely basis and chosen well, if it's in the best interest of the company to extend my term, I'm open to that."

And with that, Iger, who has been CEO for nearly 12 years, removed an elephant from the room. He did, however, insist that the company's succession process continues apace, which is what Disney said back in the spring when former COO Tom Staggs abruptly left the company, ending any speculation that he might be Iger's heir apparent.

As for Disney's fiscal first quarter that ended in December, ESPN remained the central focus. That's because revenue at Disney's Media Networks unit, which includes ESPN, other cable networks and ABC, fell 2% to $6.23 billion, and trailed a consensus forecast of $6.42 billion. As might be expected, the unit's operating income also fell, dropping 4% to $1.36 billion. Media Networks is Disney's largest division.

As for a silver lining, affiliate revenue for ESPN actually grew in the quarter as Disney was able to charge pay-TV operators higher rates for the sports network, helping to offset a drop in subscriptions. And that's really ESPN's strength. Despite a 1% to 2% decline in total cable-TV subscriptions, ESPN remained a core offering for millions of households.  

Iger said the four-year decline in ESPN's subscriber base would eventually be offset by the growth of so-called "over-the-top" digital pay-TV platforms such as AT&T's (T - Get Report)  DirecTV Now and Dish Network's (DISH - Get Report)  SlingTV. Later this quarter Hulu, which is part-owned by Disney, plans to introduce its own digital pay-TV service.

Disney has also done a deal with another digital pay-TV service that Iger wouldn't name but is widely assumed to be Google Unplugged from Alphabet (GOOGL - Get Report) . All of the new subscriptions from these services, he said, have yet to be recognized by Nielsen (NLSN - Get Report) , the ratings agency which helps to set advertising rates for the industry.

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"Clearly, the deals we have done with new platform owners, mostly over-the-top, have already yielded some nice gains from those services in [subscriptions]," Iger said. "So, it seems like we're on the cusp of some significant growth for new entrants in the multi-channel marketplace."

Iger said that because the digital pay-TV services charge less than traditional pay-TV bundles, he's confident that over time, ESPN's subscription base can stabilize. One important detail that Iger emphasized is that ESPN is included in the basic package of these new digital pay-TV platforms. In other words, subscribers will get ESPN even in most skinny bundles. (SlingTV does have a basic package that offers 21st Century Fox's (FOXA) Fox Sports 1 instead of ESPN.) 

All told, Disney's adjusted earnings fell 10% in the quarter to $1.55 per share, which still beat consensus analyst projections of $1.49 per share, according to FactSet. Revenue declined 3% in the quarter to $14.78 billion, falling short of Wall Street forecasts for $15.27 billion.  
 
The results sent shares lower by as much as 2.5% but the conference call helped to trim those after-hours loses to a decline of 0.4%. Disney closed on Tuesday at $109 per share.

The results weren't a total surprise given that Iger back in November asked investors to look further down the road to late 2017 and 2018 when Disney promises to show "more robust growth." By then, he said, Disney would have on tap two new installments of the Star Wars franchise along with two films each from Pixar and Marvel.

Iger's long-term guidance was unusual for Disney, which has rarely deemed it necessary to offer investors much enticement beyond the current quarter. But Disney investors have been unusually antsy of late, their ire piqued by concerns about lower ad sales and subscribers at ESPN, which during recent quarters has accounted for more than half of the company's profits. 

Later this year, Disney said it would unveil a standalone ESPN subscription service that would most likely offer subscribers additional or special events not available on its flagship network. Iger wouldn't say when the service would launch or how much it will cost. Comparisons have been made to CBS's ( CBS - Get Report) All-Access, which offers a deep library of the network's programming going back many decades.