`Buy' is consensus view on Disney

Taking Stock

Your Money

July 31, 2005|By ANDREW LECKEY

Q. I have owned shares of the Walt Disney Co. the past dozen years. This company gives me a headache. What are future prospects?

C.G., via the Internet

A. The 50th anniversary of the opening of Disneyland has been a time of healing.

Besides President Robert Iger succeeding Michael Eisner as chief executive officer in September, a truce has been reached with dissident former board members Roy Disney and Stanley Gold.

The two dropped a lawsuit filed this year that challenged the naming of Iger as CEO, and they promised to back his leadership. The Eisner critics pledged not to run rival director candidates or submit share- holder resolutions for five years.

Resolving that ticklish situation and trying to improve strained relations with partner Pixar Animation Studios, whose affiliation with Disney ends next year, have been Iger's priorities. The company reconfigured its strategy unit, adding an Internet consultant and the former president of TiVo Inc., and recently introduced Disney Mobile cell-phone service.

The recent buzz about Disney stock involves speculation regarding a possible sale of its 71 ABC Radio stations, valued at $3 billion. One move being considered would provide cash for Disney and a tax-free spinoff to Disney shareholders after merging ABC Radio with another company.

"We're always open to the possibility of buying or selling assets with an eye to improving shareholder value," Iger said.

Positives include strong showings by ABC Television shows such as the Emmy-nominated Desperate Housewives and Lost and solid theme-park bookings, though there is concern that industry- wide DVD sales are on a downswing. Shares of Disney are down 8 percent this year after gaining 19 percent last year and 43 percent in 2003.

The consensus analyst recommendation for Disney shares, aided by positive signs under new leadership, is a "buy," says Thomson Financial. That consists of six "strong buys," seven "buys" and 10 "holds."

Andrew Leckey is a Tribune Media Services columnist. E-mail him at yourmoney@ tribune.com.

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