Disney's Revenues Slip
The Walt Disney Company has reported earnings for the quarter ended June 30, 2001. Pro forma revenues and segment operating income for the quarter decreased 1% and 7% to US$6 billion and $1.1 billion, respectively, from the prior-year quarter. "In a soft economy, Disney's overall performance continues to be solid," said Michael D. Eisner, chairman and CEO of The Walt Disney Company. "Our studio has added yet another quarter to a year of strong growth. At our parks, effective expense-management measures have largely compensated for the weaker attendance that we had anticipated. We also continue to take steps to build for the future, as evidenced by our acquisition of Fox Family Worldwide. Once the economy begins to strengthen, we will be well positioned for accelerating growth." On July 23, 2001, the company announced that it had entered into an agreement to purchase Fox Family Worldwide for $3 billion in cash, plus the assumption of $2.3 billion in debt. Studio Entertainment revenues for the quarter increased 8% to $1.3 billion, while segment operating income increased to $65 million compared to a segment operating loss of $1 million in the prior-year quarter. Media Networks revenues for the quarter decreased 6% to $2.1 billion and operating income decreased 29% to $470 million from the prior-year quarter. The decrease is being blamed on the soft advertising market. Parks & Resorts revenues for the quarter remained flat at $1.9 billion and segment operating income decreased 1% to $560 million. Consumer Products revenues for the quarter decreased 3% to $518 million and segment operating income increased 32% to $58 million. The decline in revenue for the quarter is primarily due to declines in comparative store sales at Disney Stores North America. Internet Group revenues for the quarter decreased 17% to $38 million; however, segment operating loss improved by 47% to $31 million. The performance of the Internet Group is based on the elimination of operating losses at toysmart.com, due to its closure in June 2000. In March 2001, Walt Disney announced that it would eliminate 4,000 full-time jobs through a combination of voluntary and involuntary reductions. As a result, the company incurred $95 million in severance and other costs during the quarter.