Disney Eyes Theme Park In China
Walt Disney Chairman and Chief Executive Michael Eisner told shareholders Wednesday the company plans to release more "Disney-labeled" live action films in 1999 and beyond in an effort to boost feature film profits.
In his annual letter to Disney (DIS) stockholders, released as part of the company's annual report, Eisner said here were "too many instances" in fiscal 1998 when those earnings "failed to materialize."
"Stated more bluntly, either the films and marketing cost too much, or the audience rejected our ideas," said Eisner.
Shares of Disney were AWOL as Wall Street set new all-time highs Wednesday. The stock dipped 7/16 to 30 1/8 in recent trading.Despite the overwhelming box office success of its sci-fi thriller Armageddon and the animated Mulan, Disney issued a number of duds during the year, including the Eddie Murphy comedy Holy Man; the Harrison Ford-Anne Heche action vehicle Six Days, Seven Nights; The Horse Whisperer, starring Robert Redford and Kristin Scott-Thomas; and the Oprah Winfrey period piece Beloved, based on the best-selling Toni Morrison book.
Eisner said the "good news" is that fiscal 1999 "has started off like gangbusters," with the significant grosses generated by The Waterboy, Enemy of the State and A Bug's Life.
Looking ahead, the executive said the company plans to make "a higher percentage of Disney-labeled" live-action films. In recent years, Disney has issued many releases under its Miramax, Touchstone, Hollywood Pictures and Buena Vista names.
"Disney...has earned the trust of the public. Under our new strategy, we hope to build on this trust with a renewed emphasis on Disney family films," said Eisner.
The company has three animated features slated for release in 1999, the first time it's ever released so many in a single year, said Eisner. Tarzan, Toy Story 2 and Fantasia 2000 will be seen in theaters in the next 12 months.
There will be four direct-to-vide releases, including Mickey's Once Upon a Christmas.
Disney will also release new cartoon shorts featuring the familiar stable of branded characters, including Mickey Mouse and Donald Duck, packaging the films with its theatrical and video releases, Eisner said.
Addressing the other highly-publicized drain on Disney's fortunes last year - the ABC television network - Eisner pointed out that the unit "continues to comprise less than 10 percent of broadcasting's operating income."
The point of buying ABC from Capital Cities in 1995 was to get access to its "rising" sister cable networks: ESPN, Arts & Entertainment Network, Lifetime and since-launched History Channel, Eisner said. He added that ABC's owned-and-operated broadcast stations are among the nation's "strongest."
Eisner said Disney's cable reach makes it "well-positioned to play a strong role in the ongoing evolution" of television.
Disney is primed to "become a true leader" in the Internet medium, Eisner asserted. The company's Internet ventures include its Disney.com, ESPN.com and ABCNews.com Web sites; technology company Starwave; and a 43-percent interest in the Infoseek (SEEK) search engine.
The Go Network, a content aggregator set for a spring launch, "will be something of a next step in the development of the World Wide Web," said Eisner.
Eisner said Disney is considering the launch of a theme park in China. He said the idea was inspired by the success McDonald's has had in that country. "As evidenced by the popularity of McDonald's, we could be getting close to the time for a major Disney attraction in the world's most populous nation," he said.
Eisner tried to assure shareholders that Tokyo DisneySea, which just began construction, will post "strong cash flow starting with opening day" despite Asian economic turmoil.
Disney's partner in the venture, the Oriental Land Company, is making "a huge investment" in the new park that "reflects the Japanese people's underlying confidence in the future and the enormous potential upside that exists in Japan and throughout the currently depressed economies of Asia."
Eisner said Disney will continue to open entertainment centers like the ESPNZone and Club Disney, in conjunction with more branded stores that will sell Disney-related merchandise.
The executive thought the Disney theme parks had a "spectacular" 1998, and a number of improvements are planned for the existing parks in 1999, including Walt Disney World, Disneyland and Animal Kingdom.
The stock lost 9/16 to 30 in recent trading.
Written By David B. Wilkerson