DISNEY STOCK SLIDES ANALYST FEARS TRIGGER TUMBLE.

Byline: Dave McNary Daily News Staff Writer

Shares of Walt Disney Co. suffered their biggest loss of the year Friday due to continued worries over the entertainment giant's deal for pro football broadcast rights and weak ratings at ABC.

Disney shares lost 4.6 percent of their value, plunging 5 7/16 to 110-5/8 with 5.05 million shares changing hands, or more than three times typical volume. The sell-off was triggered when Jessica Reif Cohen, an influential Merrill Lynch & Co. analyst, cut her near-term rating to ``neutral/accumulate'' from ``accumulate/buy.''

The loss might have been larger, but another analyst, Linda Bannister of Edward Jones of St. Louis, upgraded her rating from ``buy'' to ``strong buy.''

Cohen sliced a nickel from her fiscal 1998 profit estimate to $3.10 a share and 30 cents for her 1999 estimate to $3.70. The consensus forecast is for a 15 percent gain to $3.16 for 1998 and 15.5 percent to $3.75 for 1999.

It was the third time in two weeks that Disney stock has slid on a negative Wall Street report. Shares have dropped 12 percent since May 4, when the stock hit a record 127-1/8, but remain 47 percent ahead of its 52-week low last July.

Cohen said ABC's lagging ratings and the $9.2 billion cost of the eight-year deal with the National Football League will cut into profit growth from theme parks, film and retail. She also said Disney will not be able to make money on the football deal, even during its latter years.

``In the face of declining earnings, stocks typically do not go up,'' Cohen said. ``We therefore expect Disney to underperform the group.''

Cohen predicted ratings for Disney's broadcast operations will improve slightly next year. ABC, which will announce its fall prime-time shows on Tuesday, saw a 9 percent decline in the current season among viewers 18 to 49.

Michael Eisner, chairman of Burbank-based Disney, said recently that Wall Street is giving too much weight to ABC's prime-time ratings and noted those revenues represent only a fraction of the income from the Capital Cities/ABC division that Disney bought in 1996.

In 1997, broadcasting profits rose 17 percent to $1.29 billion, or 30 percent of Disney's $4.31 billion in operating earnings, but only marginal improvement is expected this year. Goldman Sach's Richard Simon recently cut his forecast for broadcasting profits to $1.31 billion from $1.33 billion.

Bannister said she upgraded her rating because of strong prospects in theme parks, resorts, animated films and home videos. ``Even with additional costs of the football broadcasts, Disney has a lot of exciting things like new theme parks and the new cruise line,'' she said. ``When you look at the next three to five years in that light, the stock has suddenly become pretty undervalued.''

Bannister has cut 11 cents from her 1999 estimate to $3.66 because of football but noted steps such as adding a pregame show will help long-term performance. She said Disney clearly needed the NFL in order to maintain its status and its platform for launching Monday night sitcoms.

``Strategically, the football deal was the right decision,'' Bannister said.