DISNEY IN HONG KONG? : ENTERTAINMENT GIANT IN TALKS OVER PARK.

Byline: Dave McNary Daily News Staff Writer

The Walt Disney Co. confirmed on Wednesday it is in talks to build a Hong Kong theme park but tossed cold water on reports that the project is a done deal.

``There is no definitive agreement,'' spokesman Ken Green said. ``We are holding preliminary discussions about building a theme park and destination resort.''

Hong Kong's finance secretary, Donald Tsang, announced a preliminary deal had been struck when he presented his annual budget speech late Tuesday. He said the park would be built on reclaimed land near Lantau Island, where the new international airport was built, with a target opening of 2005.

Tsang said a final decision will be made by June 30 with construction starting a year later but Disney declined to confirm if those targets exist.

Wednesday marked the first time that Disney - often the subject of speculation about proposed projects - had admitted it is exploring a Hong Kong project. ``I would say there's a decent probability that it's going to come to be,'' said analyst Linda Bannister of Edward Jones & Co. ``They see China as a place where there's a lot of opportunities.''

Burbank-based Disney has declined to comment if it will take on a partner, as it has with Tokyo Disneyland , or how much it will spend. But one Chinese news agency reported recently the project would cost $6.5 billion. An informed source said the figure would be closer to $2 billion.

``My guess is they'll have a partner,'' Bannister said. ``It's not that they couldn't fund it but there are a lot of benefits to partner with someone who understands the culture.''

Dennis Spiegel, a veteran of consulting to overseas theme-park operators, cautioned that supporters of the project may be far too optimistic. ``It's typical for the Chinese to put out this kind of announcement,'' he added. ``They tend to be a little bit overzealous. I would be shocked if Disney signs an agreement to build a theme park that would open before 2015 because the income is just not there.''

The sensible approach, Spiegel said, would be for Disney to build resort hotels with a minor theme park element. He also predicted the entertainment giant will be more cautious in Hong Kong than it was with EuroDisney, which lost $900 million in its first year after opening in 1993.

But momentum is moving toward a major Disney presence in China, triggered by comments earlier this year by Chairman Michael Eisner that ``we could be getting close to a time for a major Disney attraction in the world's most populous nation.''

Another sign came recently when the Chinese allowed Disney's ``Mulan'' screen in theaters a year after Disney's ``Kundun'' infuriated authorities.

Analyst Stewart Halpern of ING Barings Furman Selz said he believes the Chinese market will prove irresistible even though a vast array of issues could delay or break up a deal.

``Assuming that an acceptable agreement can be worked out, building a park in that part of the world is a tremendous business opportunity,'' he said. ``This would be a step that transcends the addition of another theme park because it would be a major introduction to the biggest untapped market for selling a whole variety of entertainment and consumer products.

``The park is not just a great moneymaker, but a tremendous vehicle for promotion of the brand.''