The Walt Disney Company warned Thursday that its TV network and theme park businesses, especially susceptible to the current weaknesses in the US economy, could see operating incomes dive by more than $600 million in its current fiscal quarter – over fifty percent below the Q1 figure of $1.3 billion. Operating income has fallen 12% to $348m.
In common with other media groups, Disney has been hurt by the worldwide slump in advertising. The situation is worsened by below-par ratings at its ABC TV network which slid to fourth place among the Big Four national broadcasters, accompanied by a revenue drop of 3%. Disney president Bob Iger reassured that immediate remedial changes are being made to ABC's programming schedules.
The company is also slashing costs at its theme parks, where revenues dropped 2% in the quarter and operating income fell 13% to $313m.
Said chief executive officer Michael Eisner: “By any measure, these are challenging times for American business … we will continue to manage our company in a way that carefully balances the need for near-term cost reduction with the equally compelling need to invest for future growth."
He expects operating income to improve later in 2002, albeit too late to stem an overall decline of between 10-15%.
News source: Financial Times