Disneys Net Falls 12%

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Despite gains at its cable networks, net income at The Walt
Disney Co. fell 12 percent in the third quarter ended June 30, driven down by losses at
its Disney Stores and higher network-television-production costs.

Disney reported net income of $367 million, or 18 cents per
share, in the third quarter, compared with $415 million (20 cents) in the same period last
year.

Revenue for the company was up 5 percent in both the third
quarter and the nine-month period, to $5.5 billion and $17.6 billion, respectively.

Charges due to its purchase of 43 percent of Internet
portal Infoseek Corp. also affected earnings. Without the Infoseek investment, Disney
would have posted net income of 20 cents per share in the quarter.

The broadcast division -- which includes cable-sports
network ESPN and premium-cable service Disney Channel -- saw revenue and operating income
rise by 4 percent each during the quarter, to $1.8 billion and $399 million, respectively.

For the nine-month period, revenue increased 6 percent to
$5.7 billion and operating income decreased 18 percent to $925 million.

Disney attributed the gains in its broadcasting division to
higher advertising revenue at ESPN and subscriber growth at both ESPN and Disney Channel.
However, those gains were partially offset by higher
network-television-programming-production costs and losses at company-owned television
stations.

In the nine-month period, revenue gains were offset by
higher sports costs associated with its National Football League contract.

Disney previously announced a realignment of its
home-video, television-production, international and Disney Store businesses that it hopes
will foster a turnaround.

Disney chairman Michael Eisner said in a prepared statement
that he was confident that once the reorganization is completed, "Our operating units
will be in a better position to capitalize on our brand strength and generate long-term
growth."

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