MIGHTY MICKEY; HONG KONG DEAL SHOWS DISNEY'S MUSCLE.

Byline: Dave McNary Staff Writer

Maybe The Walt Disney Co. can't straighten out ABC, maybe its Disney Stores are getting stale and apparently its Club Disney concept wasn't popular enough to expand nationally.

But when it comes to Disney's two core businesses - amusement parks and family movies - the Mouse's House remains the best. That's why Hong Kong officials are willing to spend billions of dollars to develop the latest amusement park and why Burbank-based Disney will only have to pony up what's believed to be $200 million to $300 million.

``This deal certainly speaks highly to the power of the Disney brand,'' said Peter Chernack, president of a Burbank-based theme-park design firm. ``The fact that Disney is a global brand and the fact that they have the ability to work out an agreement with the Chinese government is very exciting. Disney is very much in a leadership position so this bodes well for the rest of the industry.''

Industry observers noted Monday, in the hours before the official announcement late Monday of a deal between Disney and Hong Kong officials to open a park in 2005, that building a Hong Kong version of Disneyland makes sense.

``I do believe that it's important from a long-term outlook for Disney to get a foothold in Southeast Asia as the standard of living goes up,'' said Linda Bannister, an entertainment analyst with Edward Jones & Co. ``As people's disposable incomes grow in that part of the world, Disney is counting on them spending some of that money on Disney products.''

Analysts and consultants agree that Hong Kong's battered economy is not ready for a theme park at this point but could be in another six to 10 years.

``It's all about getting ahead of the curve,'' said Dennis Speigel, chief of International Theme Park Services. ``This is a `plant our flag and run it up the flagpole' approach. I think Disney will take its time because this market is not going to be ready to support a theme park for another 10 years.''

Going into Hong Kong has been under active consideration for several years and chairman Michael Eisner indicated in his message to shareholders in early 1999 that there would eventually be a Disney theme park in China.

``I'm sure that Disney looked at a lot of options,'' said theme-park consultant Harrison Price. ``It doesn't defy common sense that this is the step they're taking. They have done very well in Japan, so in some ways this is just a geographic expansion.''

Green-lighting the Hong Kong project also comes at a time when Disney has been cost-cutting in other operations in response to intense pressure to improve financial performance and lift its stock price. But the theme-parks segment of the corporation has continued to generate better results in recent years than Disney's creative content and broadcasting divisions.

``Committing to Hong Kong is not a contradiction of its corporate strategy,'' Bannister said. ``They have been cutting in areas where they do not see good returns but this area has a lot of long-term potential.''

Bannister noted that analysts generally support Disney's investments in the Internet for similar reasons. ``There is not a lot of money to be made right now but that should change down the road,'' she added.

The Hong Kong park, which will be built on reclaimed land near the massive new airport on Lantau Island, would be Disney's fifth overseas theme park. Tokyo Disneyland opened in 1983 and will add a Disney Seas attraction in 2001; Euro Disney opened near Paris in 1992 and is planning a movie studio attraction.

Speigel, who has advised a variety of theme-park builders on projects in mainland China, stressed Disney should avoid cutting corners in the new project. ``Only the highest level of quality will do,'' he added. ``People in Hong Kong are very sophisticated and always up on the latest developments.''

The work of designing the new theme park will most likely be performed under the direction of Glendale-based Walt Disney Imagineering, which recently announced plans for an ambitious makeover of its headquarters into a ``creative campus'' that would also see its first new buildings in 2005.

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Photo: (Color) A traditional Disney castle will be the signature element at Walt Disney Co.'s proposed theme park in Hong Kong.

Business Wire