Disney issues dire projection

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Standing on two businesses most sensitive to recession - TV advertising and
travel - The Walt Disney Co. warned that its earnings could plunge as much as
50%.

The disclosure came after the stock market closed Thursday, but Wall Street
executives said they were staggered by the amount of damage Disney's networks
and theme parks are sustaining.

'It's worse than even I expected,' said one analyst.

That guidance came as the company issued its earnings for the last quarter of
its fiscal year 2001 (ended Sept. 30).

For the fiscal year, Disney said its broadcast segment (ABC, TV stations and
syndication programming) showed a 30% drop in operating income to $728 million,
on a 9% dip in revenue to $5.7 billion.

For the quarter, the broadcast unit was down 55% in operating income, to $84
million on an 11% drop in revenue to $1.2 billion.

The cable networks unit, led by ESPN, showed a 5% operating income gain for
the year to almost $1.1 billion, on a 10% revenue gain to more than $3.8
billion.

For the quarter, the cable unit was up 25% in operating income to $264
million, on an 8% revenue gain to $1 billion.

Disney president Bob Iger said that ABC was redirecting much of its new
development to the family sitcom - a genre that ABC did well by in years past,
with shows like Roseanne and the TGIF lineup on Friday nights, but that
the network has largely abandoned in recent seasons.

Disney CEO Michael Eisner said that the company is taking a number of steps
to improve the economics of the network business overall.

Those steps, he said include changing the model to a dual revenue stream, eliminating station compensation, making lower-cost and dual-purpose programming and working to get a greater share of advertiser budgets. - Steve McClellan

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