DISNEY SHARES UNLOADED 135-MILLION-SHARE SALE A DRAG ON.

BURBANK - One of The Walt Disney Co.'s largest shareholders dumped 135 million shares of the company's stock Thursday, further depleting Disney's market price, which has lost nearly 60 percent from its highs last October.

Disney shares bottomed out Thursday at $15.50, its lowest value since 1995, and closed at $16.98, down $1.52. The stock gained a nickel in after-hours trading.

Disney declined to name the shareholder but sources said billionaire investor Sid Bass and his family accounted for all of the discarded shares.

Goldman Sachs & Co. purchased the Disney shares, then sold them at nearly 20 percent below Wednesday's close. Disney bought back 50 million of the discounted shares; the rest will be resold into the market, company officials said.

Disney had already bought 385 million of its shares Monday, the first day the stock markets were open since the attacks on the United States. Also on that day, the company purchased $1 billion in bonds from Goldman Sachs to finance its $5.3 billion acquisition of the Fox Family Channel in a deal expected to close next month.

Sid Bass was among the major shareholders who brought in Walt Disney Co. Chairman Michael D. Eisner and his management team in 1984. A spokesman for the Bass family said the sale does not indicate concerns about Disney's management.

``There is a deep level of respect and appreciation for what Michael has done at Disney and for us as shareholders,'' Clive Bode told The New York Times on Thursday.

But credit rating titan Standard & Poor's Corp. indicated some potential risk and put Disney on negative credit watch, which could lead to a lowering of the entertainment giant's bond rating. Disney declined to comment on the credit rating service's decision.

Disney has not been alone in watching its stock plunge since the Sept. 11 terrorist attacks. Both AOL Time Warner and Vivendi Universal are among the entertainment sector losers.

But Disney has suffered the biggest losses since the terrorist attacks on the the World Trade Center and the Pentagon. The day before, Disney stock closed at $23.58; it has lost nearly 30 percent since.

Several analysts downplayed Disney's current market woes, saying the company is still an excellent long-term investment with theme parks, a movie studio, and the ABC and ESPN television networks, even as its stock prices continue to hover at five-year lows.

``This is as much a reflection of uncertainty in S&P's mind about what is going on in the world as it is about Disney's operations,'' said analyst Jeffrey Logsdon of Gerard Klauer Mattison & Co. in Los Angeles.

Logsdon and other analysts point to the Sept. 11 attacks and an expected drop in tourism in their aftermath as the biggest reason for Disney's situation.

``Some of the cash flow will be impacted but at the end of the day, Disney still has a tremendous ability to generate cash flow,'' said Paul Kim, an analyst with Kaufman Bros. in New York. ``The company is still rated currently at A-minus.''

``The fears are perhaps overdone,'' Kim said. ``Of course there will be a lot of risk for the next quarter or two but, long term, at these valuation levels, the risks reward scenario is encouraging.''

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DISNEY'S DECLINE

SOURCE: Stockpoint Inc.

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