HOW THIS GIRL HELPED SAVE DISNEY; `MULAN'S' SUCCESS AIDS FIRM'S FORTUNES.

Byline: Dave McNary Daily News Staff Writer

Mulan didn't just save China, she's saving The Walt Disney Co. as well.

Disney's latest animated movie, ``Mulan,'' has revived the fortunes of its most precious division following several years of less-than-stellar performances. With $84.8 million in domestic grosses in its first three weeks through Thursday, ``Mulan'' has outperformed expectations and should be hugely profitable for the entertainment giant.

Analysts believe ``Mulan'' could wind up with $140 million by the end of its run - far better than the $100 million final grosses for 1996's ``The Hunchback of Notre Dame'' and last summer's ``Hercules.''

The movie's early performance also reinforces the widespread belief that rivals like Warner Bros., 20th Century Fox and DreamWorks SKG face a rough road in challenging Disney's lock on animated movies, dating back to its 1937 release of ``Snow White and the Seven Dwarfs.''

``The fact remains that no other studio has ever been able to do anywhere near Disney's business in animated movies,'' said analyst Stewart Halpern of Furman Selz. ``If you asked most parents what they want, they'd say they were looking for more animated Disney product.''

Halpern estimates every dollar in domestic ticket sales for a Disney animated movie translates to three dollars of operating profit due to enormous markets for merchandise, home video and overseas theaters.

Halpern's estimate is conservative, with many analysts using a multiplier of four to calculate animation profits. In the case of a worldwide hit like 1994's ``The Lion King,'' Disney's operating profits have gone past $1 billion, according to Jill Krutick of Salomon Smith Barney.

``Animation is the most lucrative venue for the company, as it sparks a rainbow of related product sales over a period of years,'' said Krutick, who has a ``buy'' rating on the stock. She estimated ``Mulan'' would generate up to $350 million in operating profit with foreign box office of $125 million to $175 million, U.S. home video sales of 11 million to 13 million units and video sales of 8 million to 9 million units overseas.

Krutick, who had originally predicted a domestic gross as low as $80 million for ``Mulan,'' said its unique story helped widen the audience beyond the core of young girls to include boys and more sophisticated moviegoers. She also noted that although ``Mulan'' production costs were higher than ``Hercules,'' Disney's total costs were about equal because it spent less on marketing ``Mulan.''

For Disney, the success of ``Mulan'' also represents a bit of redemption following 1994's departure of Jeffrey Katzenberg as studio chief a few months after ``The Lion King'' became a worldwide blockbuster.

``Even though `Hunchback' and `Hercules' had respectable numbers, people's expectations were so high because of `Lion King,' '' said Linda Bannister of Edward Jones. ``You can't hit a home run every time, but I don't think that it meant in any way that Disney had lost its touch in animation.''

``Mulan's'' success is timely because Disney's other recent films - ``Armageddon,'' ``Six Days, Seven Nights'' and ``The Horse Whisperer'' - have failed to meet expectations. Even though ``Armageddon'' managed to gross an impressive $76.3 million in nine days, this weekend's openings of ``Small Soldiers'' and ``Lethal Weapon 4'' are expected to rob much of the disaster film's audience.

Additionally, ``Mulan's'' solid numbers come with Disney facing upcoming incursions in animation likely to be more formidable than recent entries by 20th Century Fox's ``Anastasia'' and Warner Bros.' ``Quest for Camelot.''

Paramount will open ``Rugrats'' in November and a ``Beavis and Butt-head'' sequel next year. Katzenberg, meanwhile, has maneuvered the openings of DreamWorks' ``Antz'' and ``Prince of Egypt'' around the November release of Disney's ``A Bug's Life.''

But Wall Street favors Disney. Shares of Pixar Animation, which co-financed ``A Bug's Life,'' have soared recently on positive forecasts about the film.

``We are very optimistic about `A Bug's Life,' '' Bannister said. ``I'm of the mind that there are Disney films and then there's everyone else. The name is synonymous with good quality, and parents feel comfortable with it.''

``Mulan'' and the buzz over ``A Bug's Life'' validate Disney's recent strategy of cutting back the number of live-action products while boosting its animated operations. It plans to release four animated movies next year - ``Tarzan,'' ``Toy Story 2,'' ``Dinosaur'' and ``Fantasia 2000,'' set for New Year's Eve.

Animated Disney

TEXT: Disney's recent fortunes in animated films peaked with ''The Lion King`` in 1994. Recent films, their release daes and domestic grosses:

The Little Mermaid, November 1989, $84.4 million (xx)

Beauty and the Beast, November 1991, $145.9 million

Aladdin, November 1992, $217.4 million

The Lion King, June 1994, $312.9 million

Pochontas, June 1995, $142 million

Toy Story, November 1995, $191.8 million

The Hunchback of Notre Dame, June 1996, $100.1 million

Hercules, June 1997, $99.1 million

Mulan, June 1998, $140 million (estimate)

(xx) 1997 re-release added $25 million

SOURCE: Exhibitor Relations

CAPTION(S):

11 Photos, Box

PHOTO (1) (Color) no caption (Mulan)

(2) (Color) no caption (Mulan scene)

(3) (Color) The Lion King

(4) (Color) Aladdin

(5) (Color) Toy Story

(6) (Color) Beauty and the Beast

(7) (Color) Pocahontas

(8) (Color) Mulan

(9) (Color) The Hunchback of Notre Dame

(10) (Color) Hercules

(11) (Color) The Little Mermaid

BOX: Animated Disney (See text)