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+--Forum: Disneyland Paris Resort tips, trip reports, comments and questions
+---Topic: Euro Disney loss seen mounting as new park flags started by RichKoster
Posted by: RichKoster on Nov. 12, 2003 10:29 am/pm
Euro Disney loss seen mounting as new park flags
PARIS, Nov 12 - Euro Disney, the debt-laden European outpost of the Disney empire, is set to report a doubling in its annual loss as its new theme park fails to live up to expectations, adding to concerns about its future viability.
The median forecast ... was for a dip in operating profit to 135.5 million euros ($155.6 million) in the year to end-September from 175.7 million last year ... the 2002/03 net loss ballooning to 59 million euros, when the company reports on Monday, from 33.1 million loss the year before after figures leaked to the press showed a 58 million euro net loss and Euro Disney admitted this was genuine.
Increased losses are partly due to bigger financial expenses, tipped by some analysts to be escalating to around 200 million euros -- mainly interest on debt -- from 171 million a year ago.
The losses are also due to a poorer-than-hoped performance at its new theme park -- the Walt Disney Studios -- which hasn't matched its own hopes for crowd and revenue-pulling power.
That is partly because the Walt Disney Studios, the group's second theme park opened amid great fanfare beside the Magic Kingdom in March 2002, has not boosted visitor numbers to anywhere near Euro Disney's budgeted hopes of around 17 million.
However, most analysts believe Disneyland Paris is unlikely to pull up the drawbridge just yet given the immense employment and infrastructure investment around the report site east of Paris. Parent the Walt Disney Co (DIS) has granted Euro Disney a new 45 million euro credit line, but an earlier 168 million euro credit line expires in June 2004. Euro Disney is also carrying 1.7 billion euros in debt related to its non-consolidated finance companies, analysts say.
It has already won a moratorium on royalties it owes to its parent for the use of the Disney characters. Some analysts think its cash flow might just stretch to covering its financing costs, leasing payments and investment to maintain product quality.
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Posted by: RichKoster on Nov. 12, 2003 10:31 am/pm
Meanwhile, over at the Tokyo Disneyland Resort, attendance continues to be very high and the entire resort is profitable as well. That resort spared no expense in bringing a quality theme park experience to its Guests, unlike the much lower-budget Walt Disney Studios addition at the Disneyland Parish Resort.
Are you noticing the difference, Eisner? Spend money to make money. Create something with a bare-bones budget and the Guests are smart enough to notice the difference.