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Disney Slips A Little In First Quarter, AOL/TW Shows Small Gain

31 Jan, 2002 By: Joan Villa

Studio entertainment, including home video, was one of the few bright spots in The Walt Disney Co.'s first quarter earnings. The segment dipped by just 2 percent, rescued by the theatrical success of Monsters, Inc. and strong growth in the DVD format.

Pearl Harbor, The Princess Diaries and Snow White and the Seven Dwarfs performed strongly, selling 45 percent of their units in DVD, according to Disney EVP and CFO Tom Staggs. The 2 percent decline -- to $1.8 billion in segment revenue and $149 million in operating income in the quarter ended Dec. 31 -- was partly the fault of numbers boosted by Toy Story 2's success the year before, he said.

Disney chairman and CEO Michael Eisner said the studio will launch two new animated films, Lilo & Stitch in the summer and Treasure Planet in the fall. The animated The Young Black Stallion will debut this year on the Imax format followed by a home video release that he believes will be "among some of the most profitable things we do." More than 100 Imax screens around the world are currently playing Beauty & the Beast with a new specially added scene, set to follow Snow White to video next fall as the studio's second title in the Platinum Collection.

"Unfortunately [Snow White] had not been rested for the full 10 years...so it was not a complete test" of the Platinum strategy, Eisner explained. Beauty & the Beast, however, "will now move to video in the fall and be the first real Platinum experiment," he added. "I am certain that will work for us."

Eisner was also optimistic that the studio's relationship with Monsters, Inc.'s creator, Pixar, will extend beyond its current deal for three films and two additional sequels, which already "takes us out quite a long ways," he noted. Since animation does not give actors, directors or producers profit participation that can reach 50 percent on big budget films, "our arrangement with Pixar is better than any single live-action film," he added.

Disney's overall pro forma revenues declined 7 percent to $7.1 billion due to weakness in the company's theme parks and television divisions. Segment operating income dropped 42 percent to $757 million, while pro forma profit fell 55 percent to $297 million from the year-ago quarter.

AOL/TW Cheerier News
Meanwhile, AOL Time Warner reported a cheerier quarter with overall revenues up 4 percent to $10.6 billion from the year-ago period. In the filmed entertainment segment, EBITDA (earnings before interest, taxes, depreciation and amortization) jumped 90 percent to $347 million on revenues of $2.54 billion, 5 percent higher than the previous year's quarter. The company credited the boost to strong theatrical releases, improved merchandise licensing revenues and higher DVD sales.

Warner reported a 44 percent increase in DVD revenues to $521 million for its fourth quarter ended Dec. 31, and a 50 percent hike to $1.4 billion for the year. Warner Home Video sold 40 million DVDs in the quarter and 116 million units for the year, 57 percent more than in 2000, the company said.

Theatrical divisions Warner Bros. and New Line Cinema led the industry in annual domestic box office with a combined 22 percent market share, according to the company. Harry Potter and the Sorcerer's Stone and The Lord of the Rings: The Fellowship of the Ring helped the studio earn the top spot.

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