•                                             Atelier 3, article 15



     Frank Ahren :
    (©, The Washington Post, November 9, 2002)

                                                        New dawn at Disney?

        Strong yearly results provide bright spot amid theme-park slump and
        ABC-TV's woes
        How fares the Mouse? Investors wonder if its stock is irreparably battered by poor
        theme-park attendance, heavy debt, and an unrelenting media recession. Or is the
        revered rodent gamely fighting out of its corner, punching back with new hit TV shows
        and surprising growth projections?

        Thursday marked the end of the financial year for Walt Disney Co., a year that was
        "difficult on many fronts," according to its chief executive, Michael Eisner, but one that
        he said ended with the company in better position to grow than it was a year ago.

        The media Goliath - which owns Disney studios, Touchstone Pictures, ABC television
        and radio, the ESPN sports networks and several theme parks worldwide - did report
        a profit of $1.3 billion for the year, up from $891 million a year earlier. And for the
        quarter just ended, Disney had earnings of $222 million, compared with $188 million a
        year earlier.

        Lurking behind those numbers, though, is a troubling slump at the theme parks and the
        inability thus far of ABC to pull itself out of third place in the network wars. In fact,
        losses in the parks, media and consumer products divisions were offset only by
        double-digit gains in the surging motion picture division.

        Eisner said the company expected earnings to grow more than 20 percent in the
        current financial year as a result of companywide cost-cutting, the release of low-cost,
        high-return animated movie sequels and a turn away from new capital expenditures and
        toward marketing what Disney has already built.

        He cited the success of some of ABC's prime-time shows, such as the new John Ritter
        comedy, "Eight Simple Rules for Dating My Teenage Daughter," and the so-called
        reality series "The Bachelor." Ratings among core male viewers of ESPN channels
        were higher, and hits such as "Signs" and "Lilo Stitch" pushed movie revenue up 11
        percent over the previous year.

        The company's long-sliding consumer products division continues to lose money, but
        executives said it had "turned the corner," citing the division's line of merchandise
        featuring many of the studio's animated heroines, which accounted for $140 million in
        revenue last year, a number projected to grow to $1.3 billion by the end of next year.

        Bolstering Eisner's optimism, the stock has climbed over the past month from about
        $14 a share to more than $18. Late Friday in New York, Disney shares were 74 cents
        lower at $17.52.

        "With the assets now in place, our transparent and solid balance sheet, our world-class
        brands and world-class management and an action plan that is realistic, we will see the
        return to growth we've had since 1984," Eisner said. That was the year he was hired to
        head the company.

        The stock price, though, is still well off its peak of more than $40 in early 2000. Some
        analysts said much of any Disney stock turnaround would depend on rebounds in two
        key areas: the company's theme parks and its ABC television network, which will earn
        Disney nearly $2 billion in advertising revenue for its 2002-2003 prime-time shows -
        less than the ad income at rival networks.

        Revenue from Disney's four theme parks accounted for 26 percent of the company's
        bottom line during the year. Money from the company's media assets such as ABC,
        ESPN and the Lifetime network made up 39 percent.

        In the wake of the terrorist attacks in the United States last year, the company has
        seen about a 5 percent overall drop in attendance at its Disneyland and Walt Disney
        World resorts, which have been its most predictable revenue engines. For the year,
        theme-park revenue was down 8 percent to $6.5 billion.

        During Disney's third quarter, attendance by visitors from abroad at the U.S. parks
        was down 35 percent. During the quarter just ended, the company said Thursday,
        foreign attendance fell 20 percent.

        Disney executives have "made as many cuts as they possibly could," said Tom
        Wolzien, a media analyst for Sanford C. Bernstein in New York. "It's just a case of
        how the wind is blowing at the time," he said, because there is little Disney can do
        about park attendance.

        The company recently opened a new park, California Adventure, and will break
        ground on Hong Kong Disneyland in January. The current climate is "a terrible time to
        open a park," Wolzien said, but he said attendance at California Adventure had
        mitigated a slump in revenue at the established parks.

        Meanwhile, over at ABC, the autumn prime-time lineup has produced only mixed

        One highly promoted show, "Push, Nevada," a viewer-interactive mystery, was
        canceled after seven of its 13 scheduled episodes as yawning viewers evidently were
        not enticed by the chance to win more than $1 million if they solved the mystery before
        the show's characters did.

        Overall, ABC still trails the other big U.S. networks. So far this season, ABC's
        prime-time shows are averaging 9.8 million viewers a night, compared with 13.1
        million for CBS, 12.4 million at NBC and 10.5 million for Fox. ABC's average also is
        down from 10.2 million a year earlier, according to Nielsen Media Research.