Eisner Sidesteps Comcast's Bid, Sprinkles Pixie Dust On Disney Investors

Even as Comcast let loose a corporate takeover bid, Walt Disney Co. painted a picture of a recovery on the mend.

Chairman/CEO Michael Eisner gave an upbeat assessment of Disney as it struggled to bounce back from a double whammy--a downturn in the advertising economy and what had been lower attendance at its theme parks following the terrorist attacks of 9/11. Revenues jumped 19 percent in the quarter ended Dec. 31, from $7.17 billion in 2002 to $8.54 billion in 2003.

"It appears that we are pulling out of the shadow of the economic downturn of the last two years and the post 9/11 decline in tourism," Eisner told shareholders late Wednesday afternoon at a discussion of the earnings results at a special two-day meeting at Walt Disney World in Orlando, Fla. "Disney has prepared for the turnaround by building a stronger asset base in the company, in our parks, our film library, our cable holdings, our radio and our broadcast television."

He said Disney looked ahead to enhancing its legacy, remaining true to the company's core values: "Creativity and the innovative spirit that has made Disney great throughout the years"--then repeated those words again.



Disney's studio and media assets led the growth, with media revenues rising 6 percent to $3.1 billion in the quarter. It swung to a $344 million profit in the quarter ended Dec. 31, compared to a loss of $71 million in the quarter a year ago. ABC benefited from a better upfront, although fewer NFL broadcasts dragged revenues a bit. ABC's ad revenues rose 5 percent in the quarter, and prime time revenues were up 12 percent. A Disney executive said that pricing for scatter inventory remained competitive amid soft demand, with pricing up modestly in the current quarter with an option pickup of 80 percent, in line with expectations. Next quarter's options are pacing at 80 percent, the executive said.

"We move into what we think will be a break-even year at the network next year," he said.

ESPN's ad revenues rose 16 percent in the quarter, with Toon Disney reporting a modest profit and Soapnet at break-even last quarter.

William Drewry, an analyst with Credit Suisse First Boston, wrote Wednesday that Disney seemed to be in a turnaround in both advertising and the theme parks.

"The ABC network is a profit turnaround in progress, and there is a margin ramp/turnaround at ESPN, too--and that should drive very strong profit growth into 2005," Drewry said.

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