Disney parks spared by hurricanes

[Jason]

LOS ANGELES (Hollywood Reporter) - The Walt Disney Co.'s theme parks unit has weathered a metaphorical storm the past couple of years, following the blow that tourism was dealt by Sept. 11.

Now, analysts think the high-profile Disney division will have a relatively easy time overcoming the one-two punch of a pair of hurricanes that in recent weeks have closed Disney's Orlando, Fla. parks but left them virtually unscathed save for some minor damage to the roof of one backstage structure and to landscaping.

Walt Disney World, the biggest revenue generator among Disney's parks, was closed all day Saturday and Sunday during Labor Day weekend, traditionally a high-attendance period, as Hurricane Frances ripped across the state.

In addition, last month the Orlando parks comprising the Magic Kingdom, EPCOT, Disney-MGM Studios and Disney's Animal Kingdom were all closed for a short period because of Hurricane Charley. Both times, particular attractions like Animal Kingdom were closed for a longer period because of staffing and assessment concerns.

Analysts estimate the bottom line financial impact at $15 million-$20 million from Walt Disney World and $7 million-$8 million from the Florida-based Disney Cruise Line, but say it shouldn't have a major impact overall on Disney's performance for the current quarter.

"We expect the impact (of Frances) to only be about half a penny per share. We're not revising our forecast," Sanders Morris Harris analyst David Miller said. Miller said his earnings estimate of 18 cents per share for the current quarter already is below the Wall Street consensus average, so he was especially inclined not to revise his projection.

Added Miller of the impact of this past weekend's weather woes: "It could have been a lot worse. There was really almost no (physical) damage." Tradition Asiel Securities analyst Paul Kim expects a slightly larger financial impact from the closures, but argued that any negative impact could paradoxically end up making the unit look better in investors' eyes.

The hurricanes "could extend the consensus belief that the division is in a 'trough' period and that margins will expand for the foreseeable future," Kim said in a report Monday. "Without these hurricanes, we believe that the less robust margin story would have been clearer in the reported financials for the September quarter.

Furthermore, it would have been more clear that the strong revenue gains this year were largely due to very easy comps due to the Iraqi war and the impact of 9/11 the year before." Kim also estimates earnings of 18 cents per share for Disney's fiscal fourth quarter, which ends Sept. 30. Disney shares closed up 1.4% on Tuesday at $22.69, outpacing the Dow Industrials of which it is a component.

By Marla Matzer Rose - Reuters/Hollywood Reporter