DISNEY'S PROFITS BEAT FORECASTS THEME PARKS, DVDS FUEL Q2 EARNINGS.

Byline: Greg Hernandez Staff Writer

BURBANK - Their movies have been tanking lately and ABC is still in the middle of a ratings mess, but The Walt Disney Co. was able to report robust second-quarter earnings Wednesday thanks largely to a healthy jump in theme park attendance in Anaheim and Florida.

The theme park success, strong DVD sales, and the performance of sports cable network ESPN helped Disney exceed Wall Street expectations with a net profit of $537 million, or 26 cents per share, compared with $314 million, or 15 cents a share, a year earlier.

Analysts had predicted earnings of about 21 cents per share.

Disney Chief Executive Officer Michael Eisner said an overall improved economy helped, but new attractions at the theme parks drove results that resulted in the segment's operating income soaring by 21 percent, to $188 million.

``This is a further indication of the resurgence under way at The Walt Disney Co.,'' Eisner told analysts Wednesday.

Slumping attendance at its theme parks had been a major drag on Disney's earnings in the years since the Sept. 11, 2001, terrorist attacks against the United States because international tourism had fallen off sharply. A sluggish economy had also contributed to a downturn in domestic tourism.

The company reported that attendance at its Disneyland Resort in Anaheim was up by 8 percent, driven largely by a surge in local attendance, while an increase in international visitors fueled an 18 percent attendance spike at the Walt Disney World Resort in Orlando, Fla.

``Things are getting back to normal thanks to an improving economy and the fact that people have sort of learned to live with a higher threat level in their lives,'' said Jack Kyser, chief economist with the Los Angeles County Economic Development Corporation. ``I think the theme parks are probably going to be a big story for Disney this year; last year it was the studios.''

Revenue for the quarter was up 11 percent, to $7.2 billion, easily beating the average $6.8 billion forecast by analysts.

Disney's media networks, which include ABC, ESPN and the Disney cable channels, saw their operating profit surge by 76 percent to $704 million.

The theme park performance and media networks improvement came at a time when Disney's movie division suffered through a dismal quarter that saw such big-budget movies as ``The Alamo,'' ``Hidalgo'' and ``Home on the Range'' under-perform at the box office.

The movie division, which had a record year in 2003, saw its operating income fall by 26 percent, to $153 million, but its results would have been far worse had it not been for the strong performance of home video.

``We have great expectations for the last half of the year,'' said Disney President and Chief Operating Officer Bob Iger, who touted such summer releases as ``Raising Helen'' and ``The Village'' as future hits.

The strong earnings report came at a good time for the embattled Eisner, who in recent months has been stripped of his title of chairman of the Disney board of directors and fended off a hostile takeover bid from Comcast Corp., which led to a shareholder revolt.

``Disney management will keep their eye on the ball and work to enhance shareholder value,'' Eisner said during a conference call with analysts. ``We've set our compass.''

Eisner, who has also been widely criticized for failing to have a succession plan, said the board has discussed the issue and is analyzing internal candidates for ``if and when I get hit by a truck, which I hope won't be for a while.''

But even a solid quarter was not enough to silence Eisner's chief critics, former board members Roy E. Disney and Stanley F. Gold, who led a campaign for Eisner's ouster earlier this year.

``The unfortunate reality is that despite the appearance of strong growth this year, 2004 earnings will only approximate those achieved seven years ago; little shareholder value has been created by this management team since 1997 and the stock price reflects that disappointing reality,'' they said in a statement. ``When will the board address this obvious leadership deficiency?''

Greg Hernandez, [phone]

greg.hernandez(at)dailynews.com

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(color) Disney CEO Michael Eisner said the strong second-quarter earnings report is a ``further indication of the resurgence'' at the company fueled by theme park success, strong DVD sales, and the performance of sports cable network ESPN.

Damian Dovarganes/Associated Press