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Disney Earnings Up 22%; Stock Split Planned

April 23, 1998| From Bloomberg News

Walt Disney Co.'s fiscal second-quarter earnings rose 22% as strong theme park attendance and ad sales at its ESPN network offset low ratings at ABC and a batch of weak films.

Disney also announced a 3-for-1 stock split and plans to boost its buyback plan to 133.3 million shares before the split. Disney had capped its repurchase program at 87.8 million.

Theme parks have paced Disney's earnings the last two quarters, and Chairman Michael Eisner is betting there's more to come with Wednesday's opening of the $800-million Animal Kingdom in Florida. Analysts said the new park can generate $685 million in annual revenue and $100 million in profit without taking business from its other three parks nearby.

"It's becoming much more clear how solid the theme park business is," said analyst Stewart Halpern of Furman Selz.

Disney shares rose $5.25 to close at $122 on the New York Stock Exchange.

Net income for the quarter rose to $384 million, or 55 cents a diluted share, from pro forma $316 million, or 46 cents, in the year-ago period. The most recent quarter included a gain of $24 million, or 3 cents, from the sale of Disney's stake in Scandinavian Broadcasting System. The company didn't say immediately whether the gain was before or after tax.

Disney had been expected to earn 52 cents a share, based on the average estimate of analysts. As recently as early March, it was expected to earn 56 cents a share. Most analysts subsequently lowered their estimates because of poor ratings at ABC and the disappointing box office.

The Burbank-based company's revenue rose to $5.24 billion from $5.22 billion. The year-ago results were adjusted to reflect the sale of some publishing businesses and a TV station.

Operating profit from resorts and theme parks, which include Disneyland in Anaheim, rose 15% to $271 million.

Disney's creative content division was hurt in the quarter from several box-office flops, including "Krippendorf's Tribe," "Kundun" and "Deep Rising." Operating income in the division fell 4% to $339 million.

ABC, meanwhile, continues to experience declines in prime-time ratings amid increased competition from CBS and Fox for younger viewers, whom advertisers pay the most to reach. "ABC is the soft spot," said Bishop Cheen, analyst at First Union Capital Markets.

Growth at the ESPN cable channel helped keep broadcasting profit at $239 million, little changed from $238 million a year ago.

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