Disney Dismal in Second Fiscal Quarter

02 May 2003

Walt Disney’s group earnings fell in its second fiscal quarter (to March 30) from $0.13 (€0.116; £0.081) a share to $0.11 – a decline of 15.38% and in line with analysts’ expectations. Net income fell by twelve percent.

The epicentre of Disney’s woes was its theme parks and resorts division where revenues for the quarter fell 3% to $1.5 billion. Divisional earnings sagged from $280m to $155m.

Worst affected was the Orlando, Florida site which is heavily dependent on overseas visitors. It was a different story at the two-park complex in southern California – a location that historically attracts a higher percentage of regional customers – where both room occupancies and park admittances improved.

There were mixed fortunes at Disney’s media division, which includes the ABC broadcast and cable networks. This did well with a 13% rise in advertising revenues; and badly when it came to operating profits, down 25% from $309 million to $232m. The fall was attributed to higher programming costs and the build-up to the war on Iraq. The latter reduced operating earnings by some $32m during the quarter, Disney estimates.

Studio business earnings were up spectacularly year-on-year from $27 to $206, around fifty per cent of which was due to home video. Whereas consumer products performed poorly, with profits down 38% to $53m - attributable partly to the closure of the Disney Store operations in Japan.

In a quarter of mixed fortunes, chairman/ceo Michael Eisner declared his confidence that Disney remains in a strong position to rebound when economic conditions improve.

Data sourced from: Financial Times; additional content by WARC staff