TV blurbs, park attendance ding Disney

Profit plummeted 31% in Disney’s latest quarter, felled by continuing TV ad woes and lingering Sept. 11 fallout on movie and theme park operations.

Mouse House posted $364 million in fiscal third-quarter net income Thursday — in line with expectations — compared with $523 million in year-earlier profit on a pro forma basis recognizing changes in accounting rules. The profit drop was a less severe 7% on an as-reported basis.

Mouse posted its June-ended financials after the close of market trading, with shares shedding 90¢, or 5%, at $16.83 following a broadly downbeat market sesh. But the stock will bear watching today following Disney execs’ conference call warning that profit will decline in the fiscal fourth quarter.

Disney shares have been struggling to climb from a 52-week low of $15.63 set July 23. The stock has slid 22% this year.

“It was a disappointing call,” said David Miller of Sanders Morris Harris. “I thought the tone of the call was pretty morose.”

Conglom-watchers were particularly taken aback by the prospect of further profit slippage in the fiscal fourth quarter — the period that included the immediate economic aftermath of Sept. 11 last year. But though the tragedy’s shock was fresher a year ago, the fallout continues, including a 10% reduction in advance bookings at Disney theme parks by international visitors.

Head Mouseketeer Michael Eisner suggested the tough times will pass eventually, with Burbank conglom well positioned to bounce back strongly.

“Challenging times consistently create future opportunities for Disney, which has the staying power of global brands, leading market share, efficient operations and solid financials,” Eisner said.

Pro forma revenue fell 6% to $5.8 billion in the latest quarter, or 3% on an as-reported basis.

B’cast revs dip 16%

Mouse’s media networks division saw a 10% decline in pro forma revenue to $2.13 billion as ABC attempts to raise ratings and revitalize recession-hampered ad sales. Broadcast TV revenue fell 16% to $1.2 billion.

“I am confident we are not only a past but (also) a future leader in broadcast television,” Eisner insisted.

Cable-webs revenue inched up 1% to $923 million in the quarter, despite some rev loss due to financial problems at cable-system operator Adelphia.

Noting one bright spot, Mouse execs touted signs of improvement in recent TV and radio ad pacings. But lingering storm clouds loomed in conglom’s forecasting for the immediate future.

Economy hurts

“We had targeted the fourth quarter as the period in which we would enjoy the most significant improvement over the previous year,” Disney prexy Robert Iger told Daily Variety. “But with booking trends the way they are at theme parks and the economy as tentative as it is — I think that’s the best way to put it — we are looking at a fourth quarter that’s not as solid as we had expected. We are experiencing an improved advertising marketplace, however.”

Studio entertainment — including both theatrical film releasing, homevid and syndie TV ops — managed a 3% uptick in quarterly revenue to $1.37 million. But operating income was down a dramatic 66% at $22 million. Domestic theatrical and international homevid were the worst revnue performers in the division, while domestic television provided an offsetting gain.

Quarterly movie releases included Tim Allen laffer “Big Trouble” and Anthony Hopkins-Chris Rock actioner “Bad Company,” both bounced from late 2001 when post-Sept. 11 sensitivities raised concerns over films’ content. Toon “Lilo & Stitch” bowed late in the quarter and has gone on to good box office.

Eisner said “Lilo” reps a potential new franchise for Disney.

The film “introduced title characters with widespread and — we expect –enduring appeal that will foster revenue growth across our business units for years to come,” topper said.

Tourists AWOL

Theme parks-and-resorts revenue slid 5% to $1.85 billion, largely due to international patrons going AWOL at Disney’s domestic properties.

“Despite significant discounting by airlines, the traffic has not picked up,” senior exec VP-chief financial officer Thomas Staggs said.

The consumer-products division, site of a long-running effort to turn around laggard ops, absorbed a 13% decline in revs to $457 million.

Disney execs said they welcomed the stiffer financial-reporting requirements recently passed by Congress. Burbank conglom favors integrating costs of exec stock options into its balance sheet but will use a supplementary table to show such expenses until “consistent and clear guidelines” emerge industrywide, Eisner said.

“Our financial reporting is as solid and as quality-driven as our brand,” he said.

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