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Walt Disney is “exploring an exit” of ESPN from the UK, after the sports network incurred losses and lost key sports rights contacts.

ESPN, the largest sports broadcaster in the US, launched to great fanfare in the UK three years ago and made an immediate impact, buying a package of rights to live Premier League football and setting itself up as an alternative to British Sky Broadcasting, which holds most of the rights.

However, the network lost out in the auction for the next three seasons when it was outbid by BT. It also recently lost mobile rights when it was outbid to a rival offer from News Corp. Coverage included in ESPN’s current Premier League contract, which expires at the end of this football season, will not be affected, said a person familiar with the situation.

Jay Rasulo, Disney’s chief financial officer, said on Disney’s first-quarter earnings call that ESPN had “experienced losses” in the UK due to the ramping up of sports rights costs and was “exploring an exit”.

The cost to screen Premier League action soared by 70 per cent in last year’s auction, when BSkyB and BT snapped up the rights to the next three football seasons, bidding more than Pounds 3bn. ESPN’s departure would leave the UK sports market a less competitive field, although with John Malone’s Liberty Global bidding for Virgin Media, there could soon be another deep-pocketed buyer on the scene.

Disney reported first-quarter results that beat expectations and sent its shares up close to 3 per cent in after market trading. The company, which recently acquired Lucasfilm for $4bn – giving it the right to make sequels to the Star Wars films – revealed it was also planning spin-off movies based on popular Star Wars characters.

Profits across the group were lower than the comparable quarter last time, the result of higher programming costs – and increasingly expensive sports rights – at ESPN and declining home entertainment sales at Disney’s movie studio.

There was better news at Disney’s consumer products division, which reported better profits thanks to an improved performance by its merchandise licensing unit and at its retail unit.

Total revenues across the group rose from $10.8bn to $11.3bn. Net income slipped from $1.52bn to $1.44bn and earnings per share fell from 81 cents to 78 cents.

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