Posted on: Friday, November 9, 2001
Disney suffers dismal fourth quarter
By Gary Gentile
Associated Press
LOS ANGELES — Profits at The Walt Disney Co. dropped 68 percent to $53 million in the fourth quarter, reflecting soft advertising revenues and lower attendance at its theme parks after the Sept. 11 terrorist attacks.
The fear of terrorism hit Disney, the world's second-biggest media company, harder than its competitors because of its reliance on advertising revenue and tourism.
Attendance at the Walt Disney World Resort in Orlando, Fla., dropped 25 percent in the quarter ended Sept. 30, the company said. Profits declined at the ABC Television Network because of low ratings combined with a drop in ad revenue and a sharp increase in the cost of news coverage of the war on terrorism.
Disney also warned that operating income in the first quarter could be "somewhat less than half" of the first quarter of 2001 and that income for the second, third and fourth quarters could be off by between 10 percent and 15 percent.
"We're in businesses that are either advertising-supported or tourism-supported," said Robert Iger, Disney president and chief operating officer. "Instead of being hit in one business, we were hit in both. The impact in terms of both businesses suffering is likely to continue, which is why we gave the guidance we gave."
Excluding one-time charges, accounting changes and allowing for the repurchase of Go.com stock, Disney would have earned 6 cents per share based on net income of $132 million, compared to net income of $328 million, or 15 cents per share for the same period last year. The results missed analyst expectations by 1 cent.
On an as-reported basis, including one-time charges and the effect of accounting changes, Disney reported net income of $53 million, or 3 cents per share, compared with $167 million, or 11 cents per share for the same quarter last year.
Analysts said Disney is being conservative with its guidance and that the company, which has shed 4,000 jobs in the past year, closed money-losing Disney Stores and closed unprofitable Internet businesses, is well poised to benefit from an economic rebound.
Disney said that 50 percent of the conventions that canceled at Walt Disney World in the weeks after the Sept. 11 attack have rebooked for later dates.
The company's cable television channels have also shown strong growth during the quarter. The company's share of income from cable networks it owns or has investments in increased 27 percent during the quarter.
Disney purchased Fox Family Worldwide during the quarter and expects the additional domestic and international channels to increase its margins by allowing it to air shows on more than one channel.
Disney also said it will benefit from the success of its latest animated feature, "Monsters, Inc.," which generated $62.5 million in ticket sales during its opening weekend.
During the year, the company shuttered its money-losing Go.com portal and repurchased outstanding Go.com shares. Accounting for that change, Disney reported net income of $63 million, or 3 cents per share, compared with $348 million, or 16 cents per share in the same quarter last year.
Revenues for the quarter decreased 5 percent to $5.8 billion from $6.1 billion in the same period last year.
Adjusting performance to account for the shuttering of Go.com and the repurchase of Go.com stock, and excluding one-time charges, Disney reported net income for the year of $879 million, compared with $1.5 billion the previous year.
