FLOPS LEAD DISNEY TO CUT OUTPUT ?SCOMPANY TO SLASH PRODUCTION IN HALF.

Byline: Bernard Weinraub The New York Times

Facing a glut of movies in an increasingly competitive marketplace and an uneven track record, the Walt Disney Co. is planning to reduce its output of films by 50 percent and trim its senior executive lineup, company officials said Sunday.

The decision by Joe Roth, chairman of the studio, marks the first effort by a major Hollywood company to limit its output because of the spiraling costs of making and promoting movies, as well as the current Darwinian atmosphere in which numerous movies fail to survive after their first weekend in release.

Top executives at rival studios said that the Disney decision, which has been rumored for weeks, was somewhat disingenuous because the studio's substantial output of live-action feature films had resulted in a series of financial disappointments.

Not only have numerous Disney films floundered at the box office, but too many of them seemed similar, particularly the comedies involving either sports or teen-agers. As the head of one studio said Sunday morning, ``The problem isn't the glut of movies, it's the glut of Disney movies.''

The company's output, last year and this year, has included such disappointments as ``Celtic Pride'' ``Eddie,'' ``Two Much,'' ``Last Dance,'' ``Before and After,'' ``Mr. Wrong'' and ``White Squall.''

Roth, who replaced Jeffrey Katzenberg as head of the studio less than two years ago, said the company's current annual output of of 35 to 40 movies would be cut to 20 films. This is less than such rivals as Warner Brothers and Sony, but more than Paramount, 20th Century Fox and Universal.

``I don't see the quality of screenplays and stories and marketing that justifies 40 pictures a year,'' Roth said. ``Nor do I see the economics justifying 40 pictures a year.'' He added: ``The audience is appropriately telling us there are too many films. They're flocking to support certain movies and running away from others. They're picking out movies that they perceive to be event movies, while others they'll catch up on video.''

More than any other studio, Disney has operated under a strategy that could be crudely defined as quantity not quality. Initially forged by Katzenberg and Michael Eisner, chairman of the studio, the tactic was designed to build up the Disney library, which lagged behind other studios' libraries, and provide movies for expanding cable markets as well as theaters abroad, an increasing source of revenue.

But many Disney movies died and even many that eked out a small profit domestically failed to generate interest abroad, where big-star action films are popular and the sports and teen-age comedies that Disney churned out are not.

The cutback will change the mix of the Disney studios' output, increasing the emphasis on what Disney considers ``family films.'' These films, produced by Walt Disney Pictures, include the new remake of ``101 Dalmatians,'' and recent hits like ``The Santa Clause,'' ``Homeward Bound II'' and ``Muppet Treasure Island.'' Still, not all family films pay off; ``James and the Giant Peach'' was one recent disappointment.

Jeffrey Logsdon, an entertainment analyst at the Seidler Co., estimated that live-action movie losses for the studio may have reached as high as $200 million from 1992-94, the last two years of Katzenberg's reign. He said the live-action division may have broken even last year, and that it was difficult to assess fiscal 1996 because the company took a substantial write-off shelving a large list of live-action projects begun in the Katzenberg era. The write-off may have reached as high as $60 million, according to financial analysts.

``It would appear that they're redefining how they're going to do business,'' Logsdon said. ``Part of it is trying to capitalize on Disney's strength. In the past you didn't find the A-talent pool of directors and producers making it their life calling to make the Disneyesque family feature film. I didn't see Barry Levinson doing `Mighty Ducks 3.' ''

Roth pointed to Disney's current success ``The Rock,'' an action-drama with Sean Connery and Nicolas Cage, as the kind of expensive star vehicle that the company traditionally shunned but is now seeking out. With marketing costs, the film's price tag may run as high as $80 million to $90 million. The film, which has grossed about $56 million in its first 10 days, is expected to gross at least $250 million worldwide.

Disney officials said that two executives, Donald De Line, head of Touchstone Pictures, and David Vogel, who runs Walt Disney films, the family division, would serve equally as Roth's lieutenants. Hollywood Pictures, a division of Disney, will be shrunk to the bone, and many employees will probably be absorbed into other Disney companies.

Studio executives said that De Line will oversee what are, essentially, ``grown-up'' or nonfamily films, while Vogel will be responsible for a beefed-up family division. That division, with the well-known Disney logo, will not only accelerate its output but increase budgets to pay for top movie-stars who have rarely appeared in the family films. For example, Robin Williams is set to appear in a remake of ``The Absent-Minded Professor.'' The family film division can be lucrative for Disney because the video market for these movies is often huge.

Disney animation, with such blockbusters as ``Beauty and the Beast,'' ``Aladdin,'' and ``The Lion King,'' will remain untouched in the current corporate and strategic shift. Miramax, an independent division of Disney, which distributes edgier films, and has proved profitable in the last two years, is also unaffected.

At the moment Disney expects its animated musical, ``The Hunchback of Notre Dame,'' which will open this Friday, to emerge as a success. Other upcoming films include ``Phenomenon,'' a drama starring John Travolta, and ``Ransom,'' an action film starring Mel Gibson.