Club Disney play centers are closing

Company calls return on investment too low to warrant expansion

October 06, 1999|By BLOOMBERG NEWS

BURBANK, Calif. -- Walt Disney Co., the world's second-largest media company, plans to close its five Club Disney family play centers next month after concluding that investing in new ones would not generate a sufficient return.

Club Disney sites in Thousand Oaks and West Covina, Calif.; Chandler and Glendale, Ariz.; and Lone Tree, Colo., will close Nov. 1. The centers feature games and creative activities for young children and parents.

After testing the concept since early 1997, Disney decided that a broader expansion would not meet its requirements for return on investment.

The move comes amid a capital-spending review by Chairman Michael Eisner, who is under pressure to reverse falling earnings and a 17 percent slide in Disney's stock price this year.

Disney will make provisions for the closing costs, though the amounts "aren't material," company spokesman Ken Green said. Green said he did not know if Disney will take a charge against earnings for the closures.

The company said it will seek to transfer Club Disney employees to its other businesses, and will offer full refunds to consumers with annual memberships, prepaid tickets and reservations for booked events.

The move to close the sites came about a month after Disney said it would shutter its three ESPN retail stores, the first of which opened in September 1997.

The two businesses were started during a period of rapid expansion of Disney's regional theme-park business.

Disney said it will continue to look for new sites for its two other regional entertainment businesses -- DisneyQuest, its indoor, interactive theme-park operation, and ESPN Zone, a restaurant and sports entertainment complex, the first of which opened in Harborplace.

Disney shares fell 68.75 cents yesterday to close at $24.9375.

Pub Date: 10/06/99

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.