In a regulatory filing last week, Disney (NYSE: DIS) disclosed that ESPN has lost nearly 7 million subscribers in the last two years, says the Hollywood Reporter. While Disney CEO Bob Iger disclosed “some subscriber losses” in an August earnings call, the total number was not cited at that time. ESPN currently has 92 million subscribers, a loss of 7% since 2013 when ESPN had 99 million subscribers. ESPN is currently Disney’s most profitable TV asset.

In last week’s filing, Disney said that its domestic Disney Channel and domestic Disney XD each lost 4 million subscribers and ABC Family lost 5 million. Other channels in which Disney has a 50% stake – Lifetime, History, A&E – are also down in terms of subscribers. On the plus side, Disney Junior and international versions of the Disney Channel and Disney XD experienced growth over the last two years, according to the Hollywood Reporter.Paul Sweeney of Bloomberg Intelligence chalked up the subscriber loss to the realities of cord-cutting:

“I think cord cutting is very much a reality. There is really no denying that any longer. We know that people on the margin are leaving the big pay TV bundle because there are more options. There are competitors such as Netflix, Hulu, CBS All Access and HBO Now…I think it will, generally, be a slow bleed-off of the pay TV bundle over time. There is still a lot of tremendous value in the bundle. Broadband is a big selling point for the cable companies to keep you in the big bundle that they are offering, so I think it is a longer term issue for a lot of these big media companies.”

Since the news hit late Wednesday, Disney’s stock has been up and down. On Wednesday, stock had increased about 1% to $118.68 per share, but stock tumbled on Friday to $115.11 per share, a 3% drop. As of this writing (11/30, 11:56 a.m. EST), stock had dropped to $113.67, down 4.2% from Wednesday’s closing stock price.As Disney’s most profitable network, this is big problem for ESPN, especially following its controversial shutdown of the popular Grantland earlier this fall. Market Watch estimates that each subscriber pays about $6 per month for ESPN, so a loss of 7 million subscribers means a loss of $42 million in monthly revenue to Disney. Ouch.In its latest financials, for the quarter ended October 3, 2015, Disney reported annual revenue of $52.5 million dollars, a 7% increase year-over-year. $23.3 million, or 44%, of this income came from its media networks, including ESPN. This represents a 10% increase year-over-year, despite the mass exodus of ESPN subscribers.Insider Take:As the cord-cutting revolution marches on, we anticipate more media companies will suffer the fate of Disney and its subsidiary ESPN. As we’ve seen over the last two years, cord cutters will leave their pricey pay TV bundles behind in favor of à la carte streaming services like Netflix and Hulu that cost them a fraction of their cable bills.Based on their financials, Disney is still experiencing revenue growth from its media networks, but it will need to make some changes at ESPN to sustain its current subscriber base and also generate revenue elsewhere.One way we are already seeing this is via Disney’s recent launch of DisneyLife, a subscription TV service in the U.K. Once licensing and current partnerships shift, we anticipate Disney will offer a similar service in the U.S. Disney has also announced that it will cut 350 jobs at ESPN.And, of course, Disney’s ownership of cash cows Lucasfilm and Star Wars, Marvel and Pixar will help Disney to be less reliant on cable TV subscriptions. Sure, a $42 million revenue loss hurts, but Disney is a smart company with lots of options for regrouping and restructuring its revenue streams.~ Dana E. Neuts, Subscription Insider