Media giant the Walt Disney Co. could lack some of its fabled magic when it reports fiscal third-quarter results on Thursday, as its movie division joins the struggling ABC network on its list of underperformers, analysts said.
The company's film and broadcast television business -- two of Disney's top three divisions -- should post disappointing results for the quarter based on recent weakness compared with their peers, analysts said.
Add to that continued overall weakness in the nation's theme park industry -- Disney's single biggest profit engine -- and the result should be a downbeat quarter for the entertainment giant, said Jordan Rohan, an analyst for SoundView Technology.
"It's been a pretty weak quarter all around," Rohan said. "I don't anticipate the tone of management will be all that positive. Hopeful, but not all that positive."
Indeed, the average analyst polled by Thomson First Call forecast that Disney will post fiscal third-quarter earnings of 17 cents per share, or more than 40 percent below the year-ago figure of 29 cents.
The company's ABC television network has struggled for much of the last year, falling rapidly from prominence after it failed to groom a replacement for its former red-hot "Who Wants to Be a Millionaire."
More recently, the company's movie division has also fallen on lean times.
In the first half of 2002, domestic box office receipts for Disney movies were down 14 percent, to $658.5 million from $761.6 million, Rohan said. The decline is all the more pronounced because Disney released 32 movies over the period, or four more than last year, he added.
By comparison, domestic box office revenues were up notably for all but one of Disney's biggest rivals.
ANIMATED BRIGHT SPOT
One rare bright spot on the movie front has been Disney's summer animated film "Lilo & Stitch," which has grossed $134 million since it opened more than five weeks ago, said Jeff Logsdon, an analyst at Gerard Klauer Mattison.
"Certainly there's a nice recovery in the film animation business with 'Lilo & Stitch,' which I'm sure they're pleased with and will break most records for their animated fare in recent years," Logsdon said.
But the movie's success was more than offset by other disappointments, notably weak performances by "Bad Company" and "Reign of Fire." At the same time, Disney has no summer live-action hit like its "Pearl Harbor" release last year.
While studio business was weak, Disney's resort business has also been hurt by continued weakness for theme parks nationwide, Rohan said.
Disney's parks and resorts division has been one of the company's biggest profit centers in recent years, generating nearly 40 percent of the company's operating income last year.
"It's been a difficult quarter at the theme parks and resorts unit, which is still reeling from reduced international travel" in the wake of the post-Sept. 11 downturn, Rohan said.
Lastly, Disney could also be hurt by potential lost cable television revenues stemming from the recent bankruptcy filing of Adelphia Communications Corp., Rohan said.
Cable network owners like Disney, whose properties include the ESPN and ABC Family channels, derive a major portion of their revenue from affiliate fees they receive under carriageagreements with cable companies.
"We estimate they were exposed (to Adelphia) to the tune of $55 million," Rohan said.
