Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, November 11, 1993 TAG: 9311110047
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: BURBANK, CALIF. LENGTH: Medium
Euro Disney said the 18-month-old park near Paris lost $921 million in its first fiscal year due to the European recession, and said it would cut 950 of its 11,000 jobs.
Disney Co. said it will have better news to report today, when it will disclose plans for an American history theme park in Northern Virginia.
With 17 million visitors so far, Euro Disney remains the most popular European leisure destination, Philippe Bourguignon, chairman of the Euro Disney group, said in a statement.
But the park, which charges an adult admission fee of $48 during peak months, has lost money since its opening. With unemployment higher than 10 percent across the European Community, visitors have spent less than expected on hotels, restaurants and souvenirs. A depressed real estate market put off plans to sell some of Euro Disney's six hotels.
"Europe-wide recession, high interest rates and mounting unemployment have all served to reduce disposable incomes," said Bourguignon.
Euro Disney has slowed some of its expansion plans, but said it still will spruce up the park with new attractions and make it more affordable. It now has 35 attractions, 32 shops and 29 restaurants; and four more attractions are scheduled to open before summer, the company said.
Euro Disney is managed by the Walt Disney Co., which owns 49 percent of its stock. Disney Co. has agreed to bail Euro Disney out for a limited time, saying it will require significant funding through 1994. Disney said it took a $350 million charge against earnings during the fourth quarter to cover Euro Disney losses.
Disney Co. said the French park's finances should be restructured.
Salomon Bros. analyst Margo L. Vignola said restructuring options include more writeoffs, closure or sale of some of the six hotels at the park, and additional cutbacks in expenses.
So far, Euro Disney has been a day-trip market, Vignola said. It needs a second attraction, such as the Disney-MGM Studio in Walt Disney World in Florida, to extend visitors' stays, she said, a strategy that would require more money.
Walt Disney Co.'s quarterly loss of $77.8 million, or 15 cents per share, compared with a profit of $223.7 million, or 42 cents per share, during the same period a year earlier. Revenues rose 5 percent during the quarter, from $2.1 billion to $2.2 billion.
Disney's yearly profits fell by 63 percent, from $817 million, or $1.52 per share, to $300 million, or 55 cents per share. Without mandatory changes in accounting procedures, yearly profits would have fallen by 18 percent, to $671 million.
Revenues for the year rose from $7.50 billion to $8.53 billion, up 14 percent.
Disney said U.S. theme park attendance fell and occupancy declined at its resort hotels during the quarter, causing an 11 percent drop in the division's operating profits. The filmed-entertainment division saw a 22 percent decline in quarterly profits while consumer products profits rose by 18 percent.
On the New York Stock Exchange, Disney shares fell by 12 1/2 cents to $41.12 1/2.
Vignola said Disney has several bright spots ahead: powerful sales of the videocassette of its movie "Aladdin," revival of travel demand and rising per capita spending at domestic parks.
by CNB