ABC Up, Cable Down at Disney


Earnings declined 42 percent at The Walt Disney Co. for the fiscal first
quarter ended Dec. 31, fueled by declines at its broadcast and cable networks
and a one-time charge for an investment in United Air Lines Inc.

Revenue increased 6 percent in the period to $7.5 billion, while operating
income rose 3 percent to $778 million.

Net income slid to $256 million (13 cents per share), compared with $438
million (21 cents) a year ago, mainly because of an $83 million write-off of an
investment in aircraft leveraged leases with UAL.

Net income in the prior year also included a one-time gain of $216 million
from the sale of shares in Knight-Ridder Inc. held by Disney. Without the
airline charge and the Knight-Ridder gain, net income for the recent quarter
would have been 17 cents per share, versus 15 cents for the prior year.

Disney's cable networks -- including Disney Channel, ESPN and ABC Family --
normally a top performer for the company, saw cash flow drop 39 percent from
$340 million in the prior year to just $209 million in the recent quarter.

Disney attributed the falloff to higher sports-programming costs for National
Football League, National Basketball Association and Major League Baseball
games. Revenue for the cable networks was up 11 percent to $1.7 billion.

In a conference call with analysts, Disney chairman Michael Eisner said he
believed the quarterly results were an indication that the company's strategy is

"We have a number of challenges ahead of us, but we remain dedicated to our
realistic approach of building upon each success," Eisner said.

He added that the company is targeting earnings-per-share growth of 25
percent to 35 percent for 2003 and 2004. Eisner said in the call that Disney can
achieve that goal through continued strong performance at its theme parks and
movie studios and the strong position of its cable and broadcast networks.

One bright spot is Disney's ABC broadcast network. Although once mired in low
ratings and a past drag on performance, the network is beginning to show

"I believe we have turned the tide at ABC," Eisner said. "We are totally on
top of the reality craze, and we have extremely strong offerings in that