Disney Warns SARS May Hurt Parks Financially
Walt Disney Co. cautioned that SARS, the pneumonia-like illness sweeping Asia, could worsen the bleak travel climate that has hurt its global theme park empire.
Disney said in a filing with the Securities and Exchange Commission that concerns about the disease “and uncertainty surrounding the transmission of this illness may also contribute to a reluctance to travel. This tends to adversely affect our resort locations and in particular our largest resort location, Walt Disney World, where our guests tend to travel from farther away.”
Executives at the Burbank-based company said last month that war with Iraq and a soft economy would reduce annual earnings growth from the company’s ambitious 25% to 35% projection.
Disney restated those concerns in the filing, which stemmed from a debt offering.
Severe acute respiratory syndrome has sharply curbed Asian travel.
The disease has infected about 3,000 people worldwide, mainly in China and Hong Kong, killing 116.
The illness hasn’t yet affected Disney’s theme parks, executives said.
Disney has 10 parks, in Anaheim, Orlando, Fla., Tokyo and outside Paris, and is building one in Hong Kong.
Several analysts have lowered their second-quarter earnings estimates on Disney, citing the war and declining consumer confidence.
Merrill Lynch analyst Jessica Reif Cohen predicted the theme park unit would post a 41% decline in operating income in the second quarter.
“If this thing [SARS] keeps going, of course it will have an impact on travel to the theme parks,” said Tom Wolzien, an analyst with Sanford C. Bernstein.
“It’s all unknowable right now.”
