'Alamo' could be fiscal disaster

By Gary Gentile
Associated Press

Patrick Wilson, left, Billy Bob Thornton and Jason Patric star in "The Alamo." The $140 million Disney film took in $9.2 million in its box-office debut, leading some analysts to trim second-quarter earnings estimates for Disney. Associated Press

The much-hyped historical film, which cost as much as $140 million to make and market, met box-office disaster during its opening weekend, pulling in only $9.1 million and leading some analysts to trim second-quarter earnings estimates for The Walt Disney Co.

"The Alamo" is unlikely to recoup its costs, even at the international box office and in DVD release, some analysts said yesterday.

That's bad news for Disney, which has had a string of box-office disappointments this year, including its animated "Home on the Range," as well as "Hidalgo" and "Ella Enchanted."

"I have no excuse. The movie just underperformed," Disney head of distribution Chuck Viane said Sunday. "Now we just have to see if the movie has any legs."

Analysts still believe the company will meet its near-term financial targets based on a recovery at its theme parks, growing profits at its ESPN cable sports network and strong DVD sales from last year's films, including the Pixar Animation Studios production "Finding Nemo."

But the survival of Disney Chief Executive Michael Eisner is predicated on the company meeting its goal of 30 percent earnings per share growth this year, as well as double-digit growth through 2007.

And an unsolicited bid from cable television giant Comcast Corp., which some analysts believe will be withdrawn soon, might be given new life if Disney continues to stumble.

Yesterday, in the face of analyst concerns and bad press surrounding "The Alamo," Disney issued a confident statement, saying it expected even better earnings growth than it previously forecast.

"Given the performance we're seeing in our businesses, we remain confident in our ability to deliver attractive growth in our earnings," said chief financial officer Thomas Staggs.

"In fact, assuming a continuation of the favorable economic conditions and trends we're seeing, we believe that we will deliver earnings growth from continuing operations of more than 40 percent for this fiscal year, versus the 65 cents per share we reported last year."

Shares of the company were down 34 cents to close at $25.70 yesterday on the New York Stock Exchange.

"The Alamo," which was expected to be one of Disney's big "tentpole" releases this year, finished fourth at the box office after Fox Searchlight's "Johnson Family Vacation," which debuted in far fewer theaters and cost only about $21 million to make.

Disney could write off much of the film's cost against its second-quarter earnings, however, even though "The Alamo" was released during the third quarter of its fiscal year, analysts said. The company might also wait until the third quarter to take a writedown, hoping for a box office recovery during the next few weeks.

Disney could write off as much as $80 million on "The Alamo" alone, in addition to a $70 million combined writedown for "Home on the Range," and the Coen Brothers film, "The Ladykillers," according to Jordan Rohan, an analyst at Schwab Soundview Capital Markets.

It didn't help that "The Alamo," which opened to mixed reviews, arrived in theaters on Easter weekend, a traditionally slack time for movies.

It was also up against "The Passion of the Christ," which led the weekend's box office returns with $15.2 million in revenue. The Mel Gibson-produced film about Jesus Christ's last hours has earned more than $350 million since its February release.

Disney still has high hopes for such forthcoming films as the Jerry Bruckheimer epic "King Arthur" and Pixar's "The Incredibles."