DISNEY SHOWS GAINFUL SIDE INCREASE IN MOVIE REVENUE LIFTS PROFITS.

Byline: Gregory J. Wilcox Staff Writer

BURBANK - An increase in movie revenue helped boost third-quarter profits at The Walt Disney Co. 8.6 percent even though television advertising sales and theme park attendance were flat, the entertainment giant said Thursday.

Disney, the world's second-biggest media company, earned $392 million, or 19 cents per share, vs. $361 million, or 21 cents per share, in the 2000 third quarter.

Revenue decreased to $5.98 billion from $6.05 billion a year ago.

Results include a $138 million restructuring charge primarily related to eliminating 4,000 jobs companywide, the closure of Go.com and shutting 70 Disney stores.

On a pro forma basis, an adjustment to make figures comparable with the year-ago period despite items such as an accounting change for the movie business, Disney's net income was $479 million, or 23 cents a share, vs. $495 million, or 23 cents, in the year-ago period.

By this measure, Disney beat the 21-cent consensus of 16 analysts polled by Thomson Financial/First Call.

``The third quarter of fiscal 2001 says a lot about our company. We enjoyed solid earnings and strong cash flow despite sluggishness in the economy,'' Michael Eisner, Disney's chairman and chief executive officer, said in a conference call with analysts. ``When the economy rebounds we can look forward to new levels of growth.''

Part of that growth, domestically and worldwide, will be driven by last week's purchase of Fox Family Worldwide for $3 billion in cash and the assumption of $2.3 billion in debt.

Studio entertainment revenues for the quarter increased 8 percent to $1.3 billion, while segment operating income increased to $65 million compared with a segment operating loss of $1 million in the prior-year quarter.

Results reflected growth in worldwide theatrical motion picture distribution and stage plays. Three movies - ``Pearl Harbor,'' ``Spy Kids'' and ``Atlantis'' - played a key role as did the stage play ``The Lion King'' opening in more cities.

Tom Staggs, the company's senior executive vice president and chief financial officer, said that while ``Pearl Harbor'' ``may not have fulfilled our highest hopes,'' the film will generate about $450 million more at worldwide box offices and will eventually contribute about $100 million in profits.

Broadcast segment revenues fell 6 percent during the quarter to $2.1 billion and operating income decreased 29 percent to $470 million from a year ago.

This reflected a soft advertising market, lower ratings and higher prime-time programming costs.

Revenues for the parks and resorts segment remained flat at $1.9 billion as operating income slipped 1 percent to $560 million.

Revenues for the consumer products business fell 3 percent to $518 million, mostly due to declines in comparative store sales at Disney Stores North American. But cost-cutting measures across all lines of this business help boost operating income 32 percent to $58 million.

Severance and restructuring related costs totaled $95 million during the quarter. This process should be completed in the fourth quarter and, over time, will result in excess of $350 million in annual savings.

``We're running our business more efficiently (and will) further identify more cost saving opportunities,'' said Robert Iger, Disney's president and chief operating officer.

Analyst David Miller at Sutro & Co. in Los Angeles predicted that Disney would earn 23 cents a share and said management is doing a good job running the business.

``They are managing their costs very tightly. They have to be given credit for the way they are managing this business in the economic downturn,'' he said.