News Charge Hits Disney

4/29/2001 8:00 PM Eastern

On the heels of scrapping its expensive foray into the Internet portal space, The Walt Disney Co. Inc. reported a second-quarter loss of $567 million, or 26 cents per share, mainly from a $1 billion charge for shuttering its Web site.

Despite the poor performance — the company reported a profit of $77 million, or 8 cents per share, in the same period last year — Disney exceeded analysts’ expectations.
Disney, which closed its portal last month, reported a revenue decline of 4 percent to $6 billion in the quarter. Operating income rose 14 percent, to $1 billion.

Earnings, excluding a $1 billion charge for the restructuring of, were $391 million, or 19 cents per share, compared with $294 million, or 14 cents per share in the same period last year.

The analysts’ consensus estimate for Disney, minus the special charges, was about 13 cents per share.

Disney’s share price fell by $1.45, to $28.58, after its earnings were released last Tuesday. But it regained that ground and more on Wednesday, closing at $30.81, up $2.23 each.

The sinking advertising market appeared to be the main driver for the declines. But Disney chairman Michael Eisner said he expects a rebound.

“Of course, economic downturns are never good news, but historically, our company has always emerged from them stronger than ever,” Eisner said in a statement. “With this in mind, we remain confident in meeting or exceeding our fiscal goals for this year and about the long-term prospects for The Walt Disney Co.”

Broadcast properties — mainly the ABC television network and its owned-and-operated broadcast television and radio stations — led the decline. Broadcast revenue fell 15 percent in the period, to $1.4 billion, while operating income dropped 30 percent, to $174 million.

At the cable networks, including Disney Channel and ESPN, the picture was brighter. Revenue rose 8 percent, to $801 million, and operating income rose 9 percent, to $319 million.

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