Euro Disney May Have to Close, Eisner Warns

The beleaguered Euro Disney theme park outside Paris is doing so poorly it might have to close unless it gets help soon from its lenders, the chairman of Walt Disney Co. said in an interview published Friday.

Michael D. Eisner, in his strongest remarks yet about the troubled 20-month-old park, was quoted in the French weekly magazine Le Point as saying “everything is possible” concerning Euro Disney’s future, “including closure,” if efforts to improve the park’s financial health fail.

Eisner’s comments surfaced a few days after he termed Euro Disney’s performance “dreadful.” Disney owns 49% of Euro Disney SCA, the park’s operating company; the rest is held by private investors. Disney also manages the park.

The remarks echo the pessimism that Eisner sounded in a recent interview with the Orange County edition of The Times about the proposed $3-billion Disneyland Resort in Anaheim.

Eisner indicated that the future is uncertain for the resort, which would include a theme park called Westcot and about 5,600 hotel rooms, all in the shadow of the existing Disneyland park.

“I don’t even know if there’s going to be Westcot. We’re at a real crossroads,” Eisner said. “It’s whether we can afford the investment in the project. We had a very big investment in Europe, and it’s difficult to deal with. This is an equally big investment. I don’t know whether a private company can ever spend this kind of money.”

Humbled by Euro Disney and facing costs on a similar scale if it expands in Anaheim, Disney has proposed a more modest project: an American history theme park outside Washington that could be built at a fraction of the cost of Westcot.

Even that development could be hampered by the revenue drain of the French venture.

Debt-laden Euro Disney lost $920 million for its fiscal year ended Sept. 30, which led to a $78-million fourth-quarter loss for Burbank-based Disney in the same fiscal year--the entertainment giant’s first quarterly loss in nine years.

Despite those problems, analysts say it is unlikely that Disney will close the park, 20 miles east of the French capital. The company’s reputation--not to mention hundreds of millions of its dollars--is at stake in the venture.

Eisner’s comments, and earlier tough talk about the park’s future by Disney executives, are seen by many observers as an effort to pressure Euro Disney’s bank lenders and other creditors to quickly reach agreement on a plan to ease the park’s debt burden.

“It’s more of a negotiating tactic than anything else,” one trader in Paris told the Reuters news agency.

Asked by Le Point if he had threatened Euro Disney’s lenders with the withdrawal of Disney’s support, Eisner replied: “The word threaten doesn’t seem fair to me.”

“We have always said we would support Euro Disney until March 31,” Eisner said. “If a fair accord is found from now until then between the Walt Disney Co. and all the banks and investors, then Euro Disney continues. That would be a happy end in the tradition of the Disney universe.”

Still, Eisner’s refusal to rule out the park’s closure triggered an 8% slide in Euro Disney’s stock price Friday, to 30.4 francs ($5.14) a share in Paris trading. Shares in Walt Disney Co. fell $1.125, to $42.625, in New York Stock Exchange composite trading.

Disney’s corporate offices were closed Friday, and Eisner and other officials could not be reached for comment on the French article.

Since opening in April, 1992, Euro Disney has been plagued by Europe’s recession, a strong French franc relative to other European currencies (which makes it more expensive for foreign tourists), bad weather and interest costs on the park’s debt, which is more than $3 billion.

Sales of souvenirs and meals at the park are also below expectations.

Yet Disney has noted that by drawing 17 million guests in its first 1 1/2 years of business, Euro Disney has become the leading vacation resort on the European continent. For that reason, and because Disney has so much pride wrapped up in the venture, Disney watchers do not expect Euro Disney to close.

Disney does have some other options. Besides a financial reorganization of the park, the company might close some of Euro Disney’s six hotels to cut costs, or might keep the park open only eight months a year to avoid the cold rainy season, analysts have said.

Disney itself has been coy about discussing which options it prefers, or how much more it is willing to invest to prop up the park.

In the company’s fiscal 1993 annual report, released earlier this week, Eisner did say that despite Euro Disney’s “dreadful” showing, Disney is “committed to exploring all reasonable alternatives toward helping to put Euro Disney on a sound financial footing.”

But he also warned that “we will take no action to endanger the health of Disney itself.”