Disney Expects Slightly Higher 1998 Earnings Despite Softness in Fourth Quarter Results.

BURBANK, Calif.--(BUSINESS WIRE)--Sept. 11, 1998--The Walt Disney Company said today that it expects its fiscal 1998 earnings will be slightly higher than those of the prior year despite softness in fourth quarter results. Earnings per share for the fiscal year ending September 30, 1998 are expected to range from $0.88 to $0.89, compared to $0.86, on a pro forma basis, for the 1997 fiscal year.

In the fourth quarter, shortfalls in operating results and charges related to strategic downsizing in the Company's consumer products business, particularly in response to Asian economic difficulties, and in its filmed entertainment business are expected to result in lower earnings per share. Fourth quarter earnings per share are expected to range from $0.15 to $0.16 before the charges relating to the downsizing, which will amount to approximately $0.02 per share. These results compare to $0.19, on a pro forma basis, for the corresponding 1997 quarter. Both fourth quarter and full year results will reflect increased start-up and operating costs associated with the Company's investment in new business initiatives.

Theme Park and Resorts operating income is expected to be higher for the full year and fourth quarter compared to the prior year periods, primarily due to increased attendance and guest spending.

Creative Content operating results for the full year and fourth quarter are expected to be lower than the prior year. The results for the year will reflect lower theatrical and international home video performance and weakness in consumer products internationally. Fourth quarter results are expected to be lower primarily due to charges relating to strategic downsizing, including elimination of unprofitable operations and the consolidation of certain creative, administrative, warehousing and distribution functions. In addition, softness in international markets is expected to impact operating results for the quarter.

Broadcasting operating income for the full year is expected to be comparable to the prior year, with growth at ESPN being offset by lower television network results. Broadcasting operating results for the fourth quarter are expected to be lower compared to the prior year, reflecting weakness in primetime ratings, the impact of the new NFL agreement and higher program cost amortization.

Overall results for the full year and fourth quarter will also reflect increased investment in new business initiatives, including international Disney Channels, Disney Cruise Line, Toon Disney, DisneyQuest, Radio Disney, ESPN Classic Sports Network, ESPN Zone restaurants, ESPN-The Magazine, and Disney s Internet initiatives, including Disney.com, ESPN.com, and ABCNews.com.

The Company is continuing to evaluate further measures to address the impact of weakness in international markets and other opportunities to reduce costs and improve profitability in its operations.

To enhance comparability, the pro forma results for the prior-year quarter and full year reflect the disposition of certain ABC publishing assets, finalization of the ABC purchase price allocation and the sale of KCAL, a Los Angeles television station, as if these events had occurred at the beginning of 1997.

Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of risks and uncertainties, and actual results may differ materially from those expressed or implied. Such differences may result from actions taken by the Company prior to its current fiscal year end, as well as from developments beyond the Company's control, including changes in global economic conditions that may, among other things, affect the Company's international sales of theatrical and home video releases, television programming and consumer products. In addition, changes in U.S. economic and financial market conditions may also affect actual performance of significant Company businesses, by influencing attendance and spending at the Company's resort operations or the performance of the Company's broadcasting operations.

CONTACT: The Walt Disney Company, Burbank

John Dreyer, 818/560-5300