Disney Profits Tumble

Walt Disney Co. said Wednesday that first-quarter profits from operations shrank 38 percent from a year earlier amid weakness in home video sales and at its ABC network.

The world's second biggest media company reported profits of $470 million, or 23 cents a share, down from $755 million, or 37 cents, a year earlier. Disney was expected to earn 24 cents a share, according to analysts polled by First Call Corp.

Including a gain related to it stake in Infoseek Corp., Disney tallied net income of $622 million, or 30 cents. Revenue rose 3.9 percent to $6.6 billion from $6.3 billion.

On Nov. 18, Disney acquired a 43 percent equity interest in Infoseek (SEEK), a Web search engine.

Shares of Disney (DIS), a component of the Dow Jones Industrial Average, fell 3/8, or 1.1 percent, to 34 3/16 in early trading Wednesday.

The only Disney unit to achieve growth in the latest quarter was its theme parks and resorts business, which got a boost from higher attendance. The operating profit for that unit rose 17 percent to $335 million.

Operating profit for Disney's creative content business swooned 39 percent to $430 million, primarily the result of slower sales of home videos and licensed merchandise. Revenue fell 2 percent to $2.9 billion.

The ABC television network, meanwhile, experienced high costs and poor ratings for its Monday Night Football program, which offset gains in Disney's ESPN cable networks, one of its cash cows. Operating profit for the broadcast unit dropped 48 percent to $265 million despite a 7 percent increase in revenue to $2.2 billion.

Separately, Euro Disney said on Wednesday it had launched a pilot study for a new park next to Disneyland Paris.

According to published reports, the new theme park would provide a home for Disney film and television studios. One attraction would be dedicated to special effects and another to the history of cinema.

Local officials, briefed on the project by the company, say the new park could open its doors as early as 2002, but a Euro Disney spokeswoman said she could not confirm that date.

Euro Disney did not give financial details of the new project, but sources familiar with it said the estimated cost of the new theme park would be $790 million.

The French daily Le Parisien reported on Wednesday that Euro Disney's decision to conduct a pilot study followed the French finance ministry's approval of the project on Tuesday.

A Euro Disney official declined to confirm the report and ministry officials were not immediately available for comment.