Disney's Doldrums

The Walt Disney Co. is counting on spooky film master M. Night Shyamalan, a crooning Julie Andrews and a family of aging superheroes to rescue it from a cold streak that even the legendary King Arthur couldn't snap.

The studio, which last year produced a record $3 billion in worldwide box office revenue, has yet to have one film hit the $100 million mark domestically - despite high hopes for movies such as "The Alamo," "Home on the Range," and "Hidalgo."

And with a first weekend take of only $15.2 million, it doesn't look like the historic epic "King Arthur," a Jerry Bruckheimer film starring Clive Owen and Keira Knightley, will make it either.

"We're in a slump," Disney head of distribution Chuck Viane said Tuesday. "We're not pleased with our performance in the first half of the year."

"King Arthur" cost about $150 million to make and market, according to analysts, and may never turn a profit, despite its expected international appeal.

The slump will not affect Disney's profits this year, thanks to huge profits generated by home video sales of last year's hits, including "Finding Nemo" and "Pirates of the Caribbean: The Curse of the Black Pearl." Disney's studio has already produced more operating income in the first three quarters of this year than it did in all of fiscal 2003, fueled mainly by DVD releases.

But without a big box-office hit, Disney will be left with little to fill next year's home-video pipeline.

"It will leave a gap in the first quarter of 2005," said Harold Vogel of Vogel Capital Management. "That's where the pain will probably be most felt."

Things could conceivably turn in the second half for Disney, which will release the supernatural thriller "The Village," from "Sixth Sense" director Shyamalan in two weeks.

Disney is also counting on the sequel "Princess Diaries 2: The Royal Engagement," in which Julie Andrews sings on screen for the first time in years.

Other films this year include "Ladder 49" with John Travolta and the animated "The Incredibles," from Pixar Animation Studios, about a family of superheros past their prime.

"I'm about to be on a hot streak," Viane said.

Still, the slump comes at a critical time for Disney and its chief executive, Michael Eisner, who has pledged the company will increase its profits by more than 50 percent in the fiscal year that ends in September and by double digits each year through 2007.

Dramatic revenue and profit growth at Disney's theme parks is expected to offset the falloff in profits at the film studio, analysts say. And growth at Disney's cable networks and at ABC could also help the company's profit outlook.

But the disappointing studio results leaves little margin for error.

"The company is under a lot of pressure," said Paul Kim, an analyst at Tradition Asiel Securities. "It's not necessarily going to be a rosy 2005."

By Gary Gentile