Sarangel
<font color=red><font color=navy>Rumor has it ...<
- Joined
- Jan 18, 2000
Reuters Business Report
By Doug Young
LOS ANGELES (Reuters) - Walt Disney Co., whose stock is at an eight-year low on concerns over its theme parks and ABC television units, is confident of its resort operations and overall finances, and sees signs of improvement at ABC this fall, Chief Financial Officer Tom Staggs told Reuters on Wednesday.
Staggs made his assessment less than a week after Disney warned of weakness at its important theme parks division in the current quarter, prompting credit rating agencies Standard & Poor's and Moody's Investors Service to warn they may downgrade Disney's debt.
In making their warnings, both agencies also cited weak performance at ABC, which finished third among the top three networks last season amid a dearth of new hits.
The bleak results were a major factor behind a sharp decline in Disney's fiscal third-quarter earnings, which were down 31 percent when the company reported last Thursday.
Despite the drop, Staggs said the company's finances remained sound.
"We've got great liquidity," Staggs told Reuters in a phone interview. He added that since Dec. 31, Disney has paid down $1.8 billion in debt, bringing its current indebtedness to $13.1 billion.
"Obviously it's a balance sheet that's been improving," he said. "It'll continue to improve. I don't have any concerns with regards to our debt levels or liquidity."
Reflecting that confidence in the company's finances, Disney's top executives plan to vouch for their earnings reports by a federally mandated deadline next week, a spokesman said.
ECONOMY TO BLAME
Staggs said current weakness at Disney's parks was a product of the economy, and that the division -- which accounted for 40 percent of company operating earnings last year -- will remain a "positive contributor" to Disney even in the current environment.
"We saw some softness in bookings," he said. "That could easily be a temporary thing ... or it could be indicative of something going on in the economy. The fact is, if there's a business I'm not worried about from a product or operational standpoint, it's the theme parks."
On the ABC side, Staggs acknowledged that the network will lose money this year, but added he and other Disney officials were encouraged by positive signs for its new schedule that will premiere this fall.
"At ABC, our ratings have been disappointing," Staggs said. "The ABC network is going to lose a lot of money in 2002. However, we have a very strong slate of new shows that was received exceptionally by both the advertising community ... and by critics."
ABC is also hopeful about two television deals announced earlier this week, one a development deal with cable network HBO and the other an agreement to repackage the popular cable TV series "Monk" for airing on ABC in prime time.
Staggs and ABC officials have acknowledged the network's return to health won't happen in a single season, and that theprocess of rebuilding will take time.
"We feel very good about positive momentum in the ratings," Staggs said. "These things don't happen overnight. But the potential upside in terms of earnings is huge, not necessarily for 2003. It takes longer than that. But for 2004 and 2005, there is tremendous" potential for upside.
Staggs' guardedly optimistic outlook comes as Disney's stock has sunk to a low not seen since 1994.
Downward pressure on the company's already-weak share price accelerated last week after Disney first said it saw signs of weakening business trends in its theme parks. That view, along with weakness at ABC, led credit ratings agencies Standard & Poor's and Moody's to say they may downgrade Disney's long-term credit rating.
Over that period, Disney shares have dropped 17 percent, from $16.83 to a Wednesday close of $13.90.
OPEN TO UNIVERSAL
On the acquisitions front, Disney would consider buying any assets of debt-riddled rival Vivendi Universal (Paris:EAUG.PA - News) that are within Disney's main focuses, Staggs said.
"Any assets that are in our core business that come available, we would certainly take a look at," Staggs said when asked if Disney might consider buying any Vivendi businesses.
"Our primary focus is our core business. That we can augment it and do acquisitions that aren't dilutive to earnings or cash flow," Disney might be interested, Staggs added.
Disney and Vivendi are close rivals in the entertainment arena, with both companies owning major assets in the theme park, cable network and movie studio business.
Vivendi Universal was formed from the merger of sleepy French water utility Vivendi with Canadian drinks company Seagram Co. Ltd, which owned Universal.
But that acquisition left Vivendi Universal saddled with $19 billion in new debt, which it is now trying to pay down.
By Doug Young
LOS ANGELES (Reuters) - Walt Disney Co., whose stock is at an eight-year low on concerns over its theme parks and ABC television units, is confident of its resort operations and overall finances, and sees signs of improvement at ABC this fall, Chief Financial Officer Tom Staggs told Reuters on Wednesday.
Staggs made his assessment less than a week after Disney warned of weakness at its important theme parks division in the current quarter, prompting credit rating agencies Standard & Poor's and Moody's Investors Service to warn they may downgrade Disney's debt.
In making their warnings, both agencies also cited weak performance at ABC, which finished third among the top three networks last season amid a dearth of new hits.
The bleak results were a major factor behind a sharp decline in Disney's fiscal third-quarter earnings, which were down 31 percent when the company reported last Thursday.
Despite the drop, Staggs said the company's finances remained sound.
"We've got great liquidity," Staggs told Reuters in a phone interview. He added that since Dec. 31, Disney has paid down $1.8 billion in debt, bringing its current indebtedness to $13.1 billion.
"Obviously it's a balance sheet that's been improving," he said. "It'll continue to improve. I don't have any concerns with regards to our debt levels or liquidity."
Reflecting that confidence in the company's finances, Disney's top executives plan to vouch for their earnings reports by a federally mandated deadline next week, a spokesman said.
ECONOMY TO BLAME
Staggs said current weakness at Disney's parks was a product of the economy, and that the division -- which accounted for 40 percent of company operating earnings last year -- will remain a "positive contributor" to Disney even in the current environment.
"We saw some softness in bookings," he said. "That could easily be a temporary thing ... or it could be indicative of something going on in the economy. The fact is, if there's a business I'm not worried about from a product or operational standpoint, it's the theme parks."
On the ABC side, Staggs acknowledged that the network will lose money this year, but added he and other Disney officials were encouraged by positive signs for its new schedule that will premiere this fall.
"At ABC, our ratings have been disappointing," Staggs said. "The ABC network is going to lose a lot of money in 2002. However, we have a very strong slate of new shows that was received exceptionally by both the advertising community ... and by critics."
ABC is also hopeful about two television deals announced earlier this week, one a development deal with cable network HBO and the other an agreement to repackage the popular cable TV series "Monk" for airing on ABC in prime time.
Staggs and ABC officials have acknowledged the network's return to health won't happen in a single season, and that theprocess of rebuilding will take time.
"We feel very good about positive momentum in the ratings," Staggs said. "These things don't happen overnight. But the potential upside in terms of earnings is huge, not necessarily for 2003. It takes longer than that. But for 2004 and 2005, there is tremendous" potential for upside.
Staggs' guardedly optimistic outlook comes as Disney's stock has sunk to a low not seen since 1994.
Downward pressure on the company's already-weak share price accelerated last week after Disney first said it saw signs of weakening business trends in its theme parks. That view, along with weakness at ABC, led credit ratings agencies Standard & Poor's and Moody's to say they may downgrade Disney's long-term credit rating.
Over that period, Disney shares have dropped 17 percent, from $16.83 to a Wednesday close of $13.90.
OPEN TO UNIVERSAL
On the acquisitions front, Disney would consider buying any assets of debt-riddled rival Vivendi Universal (Paris:EAUG.PA - News) that are within Disney's main focuses, Staggs said.
"Any assets that are in our core business that come available, we would certainly take a look at," Staggs said when asked if Disney might consider buying any Vivendi businesses.
"Our primary focus is our core business. That we can augment it and do acquisitions that aren't dilutive to earnings or cash flow," Disney might be interested, Staggs added.
Disney and Vivendi are close rivals in the entertainment arena, with both companies owning major assets in the theme park, cable network and movie studio business.
Vivendi Universal was formed from the merger of sleepy French water utility Vivendi with Canadian drinks company Seagram Co. Ltd, which owned Universal.
But that acquisition left Vivendi Universal saddled with $19 billion in new debt, which it is now trying to pay down.
