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Practically Speaking

Kyle and her husband moved to Brookfield in 1986. She became active in local politics and started blogging in 2004. Her focus is primarily on local issues but often includes state and national topics, too. Kyle looks at things from the taxpayers' perspective in a creative, yet down to earth way, addressing them from a practical point of view.

Even Mickey Mouse feels the economic pinch

THE ECONOMY

We used to go to Walt Disney World during the off season period following spring break. It was great. The weather warm, but not hot and the crowds light. Our American accents were in the minority however, being surrounded by Brits and Aussies. Because of the lower dollar, foreign travelers flocked to our shores for holiday. Same holds true in the National Parks, a destination for foreign travelers.

But when the airlines started raising prices because of higher fuel prices, flying to America for a 2 week vacation became less attractive.

Now Asian and European markets are in a mess too. I doubt the crowds of the past will be vacationing in the states. That loss of business is bound to hurt.

 

 

http://news.yahoo.com/s/nm/20081107/bs_nm/us_disney

Economic downturn hits Disney, shares slide Nov 6

 

LOS ANGELES (Reuters) – The global economic downturn hit Walt Disney Co's quarterly results harder and faster than Wall Street expected, with the company on Thursday reporting a sharp decline in hotel bookings and softness in advertising revenue at its networks.

Disney's shares slid 9 percent in extended trade but recovered a bit after executives announced plans to discount stays at Walt Disney World to stimulate bookings in the first half of 2009.

"Consumer confidence is the lowest we've seen in over three decades, and even the best product out there is feeling the effect," Disney Chief Executive Robert Iger told analysts on a conference call.

Disney's dour view came hours after U.S. retail chains posted their worst October sales results in more than 30 years as consumers cut spending sharply in the face of a financial crisis that has derailed the U.S. economy.

On the call, Iger said senior executives were looking at ways to cut costs companywide. "Significant savings will be delivered," he said.

The news came as the No. 2 U.S. entertainment company reported a 13 percent decline in quarterly net income due in part to a bad debt charge. Revenue, however, topped Wall Street analysts' estimates.

"We kind of expected a rapid deceleration, but this is even worse than even we or investors were expecting ... in its severity and in how fast this is affecting them," Pali Capital analyst Rich Greenfield said of the theme parks results.

Disney reported net earnings of $760 million, or 40 cents per share, down from net earnings of $877 million, or 44 cents per share in last year's fourth quarter.

Excluding items, Disney posted earnings of 43 per share. On that basis, analysts had been expecting earnings of 49 cents a share, according to Reuters Estimates.

Revenue rose 6 percent to $9.45 billion from $8.93 billion a year earlier. Analysts, on average, expected revenue of $9.33 billion for the quarter, according to Reuters Estimates.

A TOUGHER MARKETPLACE

Disney said the advertising climate had softened the performance of its cable and broadcast networks in the fourth quarter, and that its U.S. theme parks and resorts suffered under higher labor and fuel costs.

Executives said attendance at Disney's U.S. theme parks is down 1 percent so far in the current quarter and that bookings for the first two quarters of fiscal 2009 are down "a little under 10 percent" from last year.

"We are seeing a marketplace that is clearly tougher than it was in fiscal year 2008 and our ability to predict is very limited," Iger said.

He added, however, that consumers may be taking "a wait and see approach" to booking vacations next year. Typically, Disney said, consumers plan vacations 10 to 12 weeks in advance.

Caris & Co analyst David Miller saw a positive note in the fact that bookings in the current quarter were down just 1 percent versus last year's record attendance.

"People thought attendance would be down much harder," Miller said. "I think the stock price is reflecting Armageddon at the parks. Of course the parks are going to slow, but is that deserving of $20 a share?"

Shares of Disney fell 4.7 percent to $21.73 after closing down 5.9 percent at $22.81 on Thursday.

The company has seen its share price fall nearly 25 percent since its fiscal fourth quarter ended September 27, as the Dow Jones Industrial average declined about 20 percent.

Disney's theme parks showed a 7 percent increase in revenue during the most recent quarter, helped by higher guest spending. But operating profit at the unit fell 4 percent due to higher labor costs at Walt Disney World and increased fuel costs at the Disney Cruise Line.

Media networks showed 4 percent revenue growth but flat operating profit in the quarter due to lower advertising revenue at its broadcast unit and on higher costs for TV pilots and coverage of the U.S. presidential election.

Pricing for spot advertising was running low double-digit percentages ahead of last year's first quarter, Chief Financial Officer Tom Staggs said. Ad sales for the first quarter were down at ESPN, as auto and electronics companies spend less on advertising, but up "nicely" at ABC Family, he said.

SEES RETAIL SPENDING DOWN

Consumer products, the bright spot in Disney's earnings report, saw its revenue rise 41 percent and profits jump 14 percent, driven by licensing revenue from popular brands such as "Hannah Montana" and "High School Musical."

Iger said the company believes it will see a decline in consumer spending at retailers that may hit "possibly during the holiday season but almost certainly during calendar 2009."

Studio entertainment revenue and operating profit fell due to weaker movie titles and higher marketing expenses for fourth-quarter releases including "Beverly Hills Chihuahua."

Several titles performed well in the current quarter including "Beverly Hills Chihuahua" and "High School Musical 3" and DVD releases for "Tinker Bell" and "Sleeping Beauty".

 

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