Walt Disney Investors Get Upbeat Report

Walt Disney Co. Chief Executive Michael Eisner took his annual meeting on the road Tuesday and into the backyard of one of the company’s few bright lights--cable sports network ESPN--to put the best face on an otherwise bleak year.

In an upbeat assessment that made little mention of Disney’s financial setbacks in 2001, Eisner focused much of his comments on ESPN, the lucrative cable network Disney won in its 1996 acquisition of Capital Cities/ABC.

“The real reason we chose Hartford was because of its proximity to Bristol, home of the greatest four letters in sports entertainment--ESPN,” Eisner said in a presentation at the Hartford Civic Center. “I will tell you that if we had gotten only this incredible sports network when we purchased Capital Cities/ABC we would have gotten our money’s worth.”

Eisner praised the volunteer efforts of Disney employees after Sept. 11, but otherwise downplayed the effect on the travel and tourism industry that drives about one-third of Disney’s business.

Still, some investors remain concerned that Disney is no longer the formidable moneymaker it was during much of the 1990s, noting that dependable breadwinners in years past--video, consumer products and animation--were stumbling well before the recent economic downturn. Disney’s ABC also has fallen into third place from first place two years ago.

But Eisner, touting the strength of Disney characters and brands as well as the company’s growth prospects in cable, wireless and broadband technology, said the company’s problems are short term.

“When the economy improves, there can be little doubt that our family of brands will help propel resurgent growth,” Eisner said.

Despite Disney’s woes, company executives faced few tough questions from shareholders.

One asked about discounts for Disney’s cruise line. Another complained about the noise level on rides at Walt Disney World. An investor wearing Mickey Mouse gloves asked about prime-time programming for “Wonderful World of Disney.”

There were some serious issues raised by shareholder groups, though. One resolution called for Disney to stop awarding consulting work to its auditor PricewaterhouseCoopers to avoid potential conflicts of interest. The resolution, which came in response to the collapse of Enron Corp., failed after Disney said it would adopt a policy discontinuing its practice of contracting with the same firm for audit and consulting work.

Connecticut state Treasurer Denise L. Nappier, principal fiduciary of Connecticut’s $20-billion state pension fund, which is an investor in Disney, praised the action.

“This is a very significant announcement by the CEO of a very important U.S. company. Make no mistake, Disney’s position has evolved. Just a few months ago, Disney flatly opposed this resolution. Today, the company has truly come full circle.”

Shareholders also voted down resolutions calling for Disney to adopt a code of conduct for companies that manufacture in China and to report on its theme park safety guidelines and all ride injuries over the last two years.

A third resolution that would have barred any officer from receiving more than 5% of the total options granted in a given year also was overwhelmingly rejected. Even so, proponent Marni Thompson, of the group Responsible Wealth, drew loud applause after she said, “while shareholders’ return has been poor, Disney’s executives have gotten rich.”

After the meeting, some shareholders expressed disappointment with the presentations.

“It was a pretty tightly controlled meeting, as usual,” said stockholder Pat Rabby.

“Everything was very general and very cutesy, but I would like to have had something more specific about what the company was doing,” said Joan Weed, a preschool teacher from New Canaan, Conn.

Chief Financial Officer Tom Staggs said Disney had cut more than $500 million in costs and would emerge more profitable when the economy rebounds. “As troubling as the economic conditions are, it is important to keep them in perspective and recognize that this company has been through uncertain times before,” he said.

Disney shares fell $1.04 to $22.86 on the New York Stock Exchange.