Slump at box office and parks hits Disney
By Laura M. Holson
Saturday, August 3, 2002
LOS ANGELES (International Herald Tribune/New York Times) -- Lackluster theme-park attendance and a poor showing at the summer box office and by its ABC television network continued to thwart earnings growth at Walt Disney Co., which said its third-quarter operating profit dropped 26 percent, sending its stock price falling 9.5 percent Friday.
The continued drop in Disney's theme park business, reported Thursday, surprised analysts. Many thought attendance was on the upswing, in part because of the prospects of a brighter economy. Operating profit at the parks dropped 17 percent to $467 million. Tom Staggs, the chief financial officer, also said current bookings for the fourth quarter were down 10 percent.
When asked by an analyst about the company's prospects for growth in 2003, Staggs said, "The economy is sending such mixed signals," adding later that he thought the company would show growth. When asked to quantify it, Staggs said it would be "perilous to predict specific numbers."
Tom Wolzien, an analyst at Sanford C. Bernstein Co., said Disney had done a great job of managing its parks business but added: "You worry this is a sign. You wonder if it is the economy coming back to bite us."
For the company as a whole, operating profit for the quarter that ended June 30 was $828 million, compared with $1.1 billion a year earlier.
Net income was $364 million, down 7.1 percent from a year earlier. Excluding a change in its accounting for goodwill, Disney would have earned $527 million in the year-earlier quarter. Revenue fell 2.8 percent to $5.8 billion.
The news sent Disney shares tumbling $1.60 to close at $15.23.
In addition to its theme park business, Disney reported disappointing results at its film division, where operating profit was down 66 percent to $22 million. This summer has been anything but stellar for Walt Disney Studios. Despite the success of "Lilo Stitch," an animated film about an alien that befriends a Hawaiian girl that has brought in $134 million at the box office, the company's live-action business has been struggling.
The producer Jerry Bruckheimer, who has delivered a string of moneymakers for Disney including "Pearl Harbor," bombed with "Bad Company," a thriller starring Anthony Hopkins and Chris Rock, which cost $80 million to make. The movie earned only $29 million at the box office, according to Nielsen EDI, which tracks movie ticket sales.
"Reign of Fire," a movie about dragons in a post-apocalyptic world, which the studio hoped would appeal to young teens, fared only slightly better, bringing in $36 million.
More recently, "Country Bears," one of the first movies based on a theme park attraction, brought in a paltry $5 million its first weekend.
Michael Eisner, the chief executive, said he was disappointed with the performance of "Bad Company."
But Disney's biggest problem - and the division that all eyes will be watching this autumn - is the ABC television network. Operating profit was down 40 percent to $288 million because of lower advertising revenue.
By Laura M. Holson
Saturday, August 3, 2002
LOS ANGELES (International Herald Tribune/New York Times) -- Lackluster theme-park attendance and a poor showing at the summer box office and by its ABC television network continued to thwart earnings growth at Walt Disney Co., which said its third-quarter operating profit dropped 26 percent, sending its stock price falling 9.5 percent Friday.
The continued drop in Disney's theme park business, reported Thursday, surprised analysts. Many thought attendance was on the upswing, in part because of the prospects of a brighter economy. Operating profit at the parks dropped 17 percent to $467 million. Tom Staggs, the chief financial officer, also said current bookings for the fourth quarter were down 10 percent.
When asked by an analyst about the company's prospects for growth in 2003, Staggs said, "The economy is sending such mixed signals," adding later that he thought the company would show growth. When asked to quantify it, Staggs said it would be "perilous to predict specific numbers."
Tom Wolzien, an analyst at Sanford C. Bernstein Co., said Disney had done a great job of managing its parks business but added: "You worry this is a sign. You wonder if it is the economy coming back to bite us."
For the company as a whole, operating profit for the quarter that ended June 30 was $828 million, compared with $1.1 billion a year earlier.
Net income was $364 million, down 7.1 percent from a year earlier. Excluding a change in its accounting for goodwill, Disney would have earned $527 million in the year-earlier quarter. Revenue fell 2.8 percent to $5.8 billion.
The news sent Disney shares tumbling $1.60 to close at $15.23.
In addition to its theme park business, Disney reported disappointing results at its film division, where operating profit was down 66 percent to $22 million. This summer has been anything but stellar for Walt Disney Studios. Despite the success of "Lilo Stitch," an animated film about an alien that befriends a Hawaiian girl that has brought in $134 million at the box office, the company's live-action business has been struggling.
The producer Jerry Bruckheimer, who has delivered a string of moneymakers for Disney including "Pearl Harbor," bombed with "Bad Company," a thriller starring Anthony Hopkins and Chris Rock, which cost $80 million to make. The movie earned only $29 million at the box office, according to Nielsen EDI, which tracks movie ticket sales.
"Reign of Fire," a movie about dragons in a post-apocalyptic world, which the studio hoped would appeal to young teens, fared only slightly better, bringing in $36 million.
More recently, "Country Bears," one of the first movies based on a theme park attraction, brought in a paltry $5 million its first weekend.
Michael Eisner, the chief executive, said he was disappointed with the performance of "Bad Company."
But Disney's biggest problem - and the division that all eyes will be watching this autumn - is the ABC television network. Operating profit was down 40 percent to $288 million because of lower advertising revenue.
