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Sat, Aug 02, 2003 - Page 12 News List

Disney profits on media; parks lose

UNHAPPIEST PLACE Weak tourism in Europe, combined with labor strikes in France, deflated the profitability of the company's theme parks


Profits rose nearly 10 percent at The Walt Disney Co in the second quarter on strong results from its movie and television divisions, although weak attendance at Disney's theme parks hurt the company's performance.

Disney reported net income of US$400 million, or US$0.19 per share, in the quarter ended June 30, compared to US$364 million, or US$0.18 per share, in the same period last year.

The results beat the expectations of analysts surveyed by Thomson First Call, who had been looking for per-share earnings of US$0.16.

Revenues increased more than 6 percent to US$6.2 billion compared to US$5.8 billion in the same quarter last year as the animated film Finding Nemo, produced in conjunction with Pixar Animation Studios, set box office records.

The Burbank, California-based company also posted a profit of US$16 million on the sale of its Anaheim Angels baseball team, although the gain was offset by other one-time restructuring charges.

A weak European tourism market, combined with a series of labor strikes in France, have a led to a drop in attendance and profits at Euro Disney's two theme parks.

Earlier Thursday, Euro Disney said it does not expect to meet previously forecast levels of attendance and hotel occupancy and will consequently not meet certain bank obligations, despite Disney's promise to waive all royalty and management fees from Jan. 1 through Sept. 30.

Disney has a 39 percent stake in Euro Disney SCA The company has begun negotiations with banks and Disney to obtain waivers or modifications as well as supplementary financing.

"That has happened before, several times, and they were able to secure waivers," Disney chief financial officer Thomas Staggs said Thursday on a conference call with analysts. "They have said and we concur that those conversations will likely be successful."

Disney's Media Networks division, which includes the ABC Television network as well as cable channels such as ESPN and the Disney Channel, showed a gain in revenue to US$2.5 billion from US$2.1 billion in the same quarter last year.

Operating income also improved to US$384 million, driven by lower programming costs at ABC and higher ad revenues.

Cable results slipped due to the cost of televising NBA games on ESPN.

Revenues rose 5 percent at Disney's studio to US$1.4 billion and operating income increased to US$71 million from US$22 million in the same quarter last year. The results were driven by strong box office performance as well as an increase in home video sales.

Disney chairman and chief executive Michael Eisner said the studio continues to concentrate on financing less expensive films along with larger budget franchise movies such as Pirates of the Caribbean. Disney also has been acquiring international distribution rights to movies, such as the recent horse racing film Seabiscuit.

Eisner said negotiations are ongoing with Pixar for a new contract, but declined to speculate on the timing or terms.

Disney took a US$15 million restructuring charge in the quarter for the closing of some unprofitable Disney Stores. Earlier, Disney said it was seeking a buyer for its chain of retail stores and would continue to close stores and personnel in anticipation of a sale.

For the first nine months of the year, Disney's net income slipped to US$885 million, or US$0.43 per share, compared to US$1.06 billion, or US$0.52 per share in the same period last year.

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