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Disney's Earnings Down 41%

January 31, 2003|Richard Verrier | Times Staff Writer

Walt Disney Co.'s net income dropped 41% in its fiscal first quarter as the Burbank entertainment giant took a hit from a bad airline-lease investment and a write-down from its animated box-office flop "Treasure Planet."

Disney said it posted a profit of $256 million, or 13 cents a share, on revenue of $7.5 billion in the quarter ended Dec. 31. In the year-earlier quarter, profit was $438 million, or 21 cents, on revenue of $7 billion.

The results included an $83-million after-tax charge for the write-off of an investment in aircraft leases with United Airlines. Disney was among several large corporations, including General Motors Corp., that invested heavily in airlines in the last decade only to take financial write-downs when the industry slumped after the Sept. 11 attacks.

However, excluding the charge and the gain last year from a sale of shares to Knight Ridder Inc., Disney's income in the quarter rose 13% to 17 cents a share, driven by stronger-than-expected results from its theme parks and an improvement in the ABC television network, which has gone from fourth place to second in ratings in key demographics.

Analysts polled by Thomson First Call had been expecting 15 cents.

Operating income at Disney's parks and resorts rose 20% to $225 million, a jump skewed by the double-digit attendance declines Disney faced a year ago after the terrorist attacks. Disney credited new marketing and promotions and a rise in international travel at both Walt Disney World and Disneyland.

Chief Executive Michael Eisner said the results reflected Disney's ability to weather tough times and the strength of its brands.

"Our most recent quarter's results, especially the strength of the Disney parks in the face of continued economic softness, are further evidence of the soundness of our strategic plan," he said.

Disney reiterated its estimate that the company's earnings would grow 25% to 35% this year because of growth from theme parks, ABC, the cable business and toy merchandise.

Operating profit at Disney's consumer products unit increased 9% to $190 million.

However, Disney's media networks group, which includes ABC and ESPN, saw its operating income fall 7% to $225 million, reflecting higher programming costs for broadcasting NFL, MLB and NBA games.

The Disney studio's operating income dropped 7.4% to $138 million as successes were offset by the poor performance of "Treasure Planet," which took a pre-tax write-off of $74 million.

Disney shares closed at $16.35, down 71 cents, in regular New York Stock Exchange trading amid a broad sell-off on Wall Street. The stock rose to $17 in after-hours trading after the earnings report.

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