By Rishika Sadam and Lisa Richwine

(Reuters) - Chief Executive Bob Iger said he is open to extending his term as head of Walt Disney Co <DIS.N>, offering a sign of stability after the media company disappointed some investors with a drop in quarterly advertising at its ESPN sports network.

Investor favorite Iger's current contract ends in June 2018, and shareholders are eager to know that he will be replaced by a steady pair of hands. Iger said he was confident his successor would be chosen "on a timely basis" but that he was open to extending his term.

Disney reported lower-than-expected quarterly revenue, hurt by the drop in advertising revenue at ESPN and an unfavorable comparison in the movie business due to the record success of "Star Wars: The Force Awakens" a year earlier.

Shares initially fell more than 2 percent after the quarterly report but regained some ground after Iger's comments on his own future. They were down about 0.5 percent in after-hours trade.

Still, the unexpected drop in revenue overshadowed Disney's profit figure, which beat Wall Street expectations.

The decrease at ESPN was due to higher programming costs and lower advertising revenue, the company said.

"The cost increase there (at ESPN) was even maybe a little more than anticipated so I think that could be a disappointment for shareholders," said Edward Jones analyst Robin Diedrich.

The company's total revenue fell to $14.78 billion in the fiscal first quarter ended Dec. 31 from $15.24 billion a year earlier.

Analysts on average had expected revenue to rise slightly to $15.26 billion, according to Thomson Reuters I/B/E/S.

Revenue in Disney's cable networks business, which includes the company's cash cow ESPN and the youth-focused Disney Channels, fell 2.1 percent to $4.43 billion.

Analysts on average were expecting $4.53 billion, according to FactSet StreetAccount.

Disney's cable networks unit has been under pressure since 2015 due to subscriber losses at ESPN as a result of "cord-cutting", where people drop TV subscriptions for cheaper and more convenient online services.

Disney's movie business generated revenue of $2.52 billion in the latest quarter, down 7.4 percent from a year earlier, but in line with analysts' average estimate, according to FactSet StreetAccount.

The Burbank, California-based company's latest release in mid-December, "Rogue One: A Star Wars Story", has grossed more than $1 billion so far, according to tracking firm Box Office Mojo.

But that is still short of "The Force Awakens," which had grossed more than $2 billion at the box office.

Revenue from Disney's parks and resorts unit, the company's second-largest business, rose 6.4 percent to $4.56 billion, missing analysts' average estimate of $4.59 billion, according to FactSet StreetAccount.

The company in November promised earnings per share growth from this fiscal year onwards, betting ESPN would attract more online viewers and the new Shanghai theme park would lure visitors and on its new movie releases.

Net income attributable to Disney dropped to $2.48 billion, or $1.55 per share, from $2.88 billion, or $1.73 per share, a year earlier.

Excluding items, the company earned $1.55 per share, beating analysts' estimates of $1.49.

(Reporting by Rishika Sadam in Bengaluru; additional reporting by Narottam Medhora in Bengaluru; Editing by Savio D'Souza and Bill Rigby)