It’s raining red ink at Euro Disneyland, even though the sun is shining on coffers at its Walt Disney parent headquarters in Burbank.
Today in Paris, the beleaguered French theme park is expected to announce first-quarter losses of more than $ 90 million. That means the park is losing about $ 1 million per day.
Walt Disney Co., however, reported record earnings late yesterday for the three months ended Dec. 31. Net income climbed 25% to $ 260.3 million (48 cents per share) from $ 208.1 million (39 cents) for the same period a year ago. Revenues also soared 25% to $ 2.39 billion from $ 1.92 billion for its fiscal 1992 first quarter.
However, as healthy as Disney’s bottom line is, it wasn’t left unscathed by its Paris operation. The company reported its 49% stake in Euro Disney resulted in a loss of $ 42.9 million for the quarter, after royalties and other income related to the investment were deducted. That makes the loss equal to about 16% of Disney first quarter net income, a considerable amount.
Disney shares fell 88 cents yesterday on the New York Stock Exchange to $ 43. 38, on rumors of Euro Disney’s red ink. Disney didn’t release its earnings until the stock market was nearly closed, so the full impact of its news–for good or bad–is likely to be felt on share prices today.
In its fiscal 1992, in which the theme park operated for less than a half year, Euro Disney reported a loss of $ 35 million. But the result seemed negligible to its parent’s bottom line. Disney merely deferred its annual $ 21 million management for the park until at least fiscal 1994.
Still, the mounting losses in France have been “shocking,” according to a Disney insider, even for the most seasoned Disney exex. There are concerns that Euro Disney shares, which ended the year in the 70 franc ($ 13) range, may tank to 40 francs ($ 7.40) after the announcement today.
According to Disney spokesman Tom Deegan, the French company isn’t even required to report quarterly earnings. He said Euro Disney figures expected to be issued in Paris were prompted by concerns in Burbank that the company’s global investor base needs more information about the nature of the $ 42.9 million loss.
Overall, Disney reported operating income climbed 44% in its first fiscal 1993 quarter to $ 502.3 million from $ 348.3 million last year.
Results were boosted by film revenues from blockbusters “Beauty and the Beast ,””Sister Act” and “Aladdin.” Revenues for the segment soared to a record $ 1.2 billion for the quarter, a 25% increase from $ 965.8 million the year before. Disney listed the success of the domestic homevideo release and international theatrical distribution of “Beauty and the Beast,””Sister Act” and “Aladdin” in the domestic theatrical market as factors.
In the U.S., Disney reported its theme park business is going strong, with revenues for that segment up 16% to $ 745 million, compared to $ 642.1 million in 1992.
Revenues for the company’s consumer products segment grew 42% to $ 437.1 million from $ 308.4 million in the prior year. Disney said the results were driven by strong sales for film character merchandise, primarily from “Beauty and the Beast,””The Little Mermaid” and “Aladdin.”
Disney’s board also announced yesterday it voted to increase its quarterly cash dividend from 5.25 cents to 6.25 cents per share. The dividend is payable May 20 to shareholders of record April 12 and represents an annual increase of 19%.