This story was updated at 1:55 p.m. EDT.

Shares of Dow component Walt Disney were sinking Tuesday after the media and entertainment giant reported a rare earnings miss. The world's best-known entertainment company saw its stock price fall 4.5 percent to $101.82.

The media company is an investor favorite for consistently beating Wall Street earnings targets, but it reported a rare miss on Tuesday as advertising and subscriptions declined at sports channel ESPN and theme park revenue came in weaker than expected.

The home of Mickey Mouse got a boost from animated hit film "Zootopia," but it announced an exit from the console video game business as it dropped the Infinity title it launched less than three years ago.

Disney and other media companies have been hit by the trend of cord-cutting as younger viewers opt for streaming services over cable and satellite TV channels. Investors are particularly focused on how ESPN, one of the strongest cable brands, weathers the storm.

"Cable networks continue to face meaningful headwinds and Disney has yet to really answer how they are going to restore growth," BTIG analyst Richard Greenfield said.

Excluding some items, Disney earned $1.36 per share, missing analyst average expectation of $1.40 per share. Revenue rose to $12.97 billion from $12.46 billion, below the Wall Street target of $13.19 billion, according to Thomson Reuters I/B/E/S.

Chief Executive Bob Iger told analysts he does not "currently have any plans" to stay at Disney beyond his contract's expiration in June 2018.

The company's board is searching for Iger's successor after the unexpected departure of Chief Operating Officer Tom Staggs. Some industry analysts believe Iger could be asked to stay longer.

On Tuesday, the S&P 500 index and the Dow Jones Industrial Average notched their biggest daily percentage gain since March 11, and the Nasdaq composite saw its biggest gain since April 13, helped by a jump in oil and a rally by Amazon.

Tuesday's gains appeared to breathe new life into a two-month rally that had petered out in mid-April and left the S&P 500 with an increase of just about 2 percent for 2016.

Data from Reuters were used to report this story.