World events dim Disney’s forecast

Theme parks, ABC's war coverage weigh on co.

HOLLYWOOD — Disney has reiterated its concerns over the Iraq war’s impact on its operations and added a first-time caution that the ongoing health scare over severe acute respiratory syndrome (SARS) could hurt its business and results of operations.

Mouse had said at its annual meeting last month that war and terrorist concerns were hurting theme parks and other operations. As a result, conglom said, it no longer believed in previously stated growth projections.

Now, in a new filing with the Securities and Exchange Commission, Disney said it can’t predict the extent to which the various events will affect its business. The war and SARS woes have made people reluctant to travel or make vacation plans, impacting Disney theme parks and resorts, it said.

“This tends to adversely affect our resort locations, and in particular our largest resort location, Walt Disney World, where our guests tend to travel from farther away and stay longer,” the company said in its filing.

The World Health Organization has reported 2,781 SARS infections worldwide, with 111 deaths. The Centers for Disease Control and Prevention said there were 166 suspected cases in the U.S. in 30 states as of Thursday.

Alphabet in the soup

The developments in Iraq also have affected Walt Disney’s ABC television network, which has devoted significantly more airtime to news coverage since the U.S. launched the action March 18.

“We have experienced increased costs and a reduction in advertising revenues as a result of the extended news coverage, as well as the effects of the general economic uncertainty, which will continue if the conflict in Iraq is prolonged,” Walt Disney said in the filing.

Standard & Poor’s Ratings Services cited the possible effects of international tensions when it placed Walt Disney’s long-term triple-“B”-plus credit rating on watch for possible downgrade March 20, the company said in the filing.

Walt Disney included its SARS and war warning in prospectus for a $1.15 billion offering of senior convertible notes.

(Dow Jones contributed to this report).

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