Disney Whirl

Investors wish upon a star

A shortage of enchantment is beleaguering the Magic Kingdom. Annual profits of Walt Disney Productions have fallen 30% since 1980, when it earned $135 million. Disney has failed to charm audiences with films like Tron, a write-off of $10 million. Even its fantasy lands have lost some of their drawing power. During the first quarter of fiscal 1984, attendance at Florida's Walt Disney World fell 8% from the previous year.

Disney's troubles have kept its stock price low enough that some Wall Streeters believe the company (1983 revenues: $1.3 billion) could soon be a takeover target. Last week Reliance Financial Services, a company headed by New York Financier Saul Steinberg, announced that it had quietly bought a 6.3% stake in Disney. Reliance described its move as simply an investment, but some observers think Steinberg may try to gain control of Disney by teaming up with other large buyers of its stock.

A second potential contender is Roy Disney, a look-alike nephew of Walt's. Disney controls about 2.7% of the firm's stock and is rumored to be gradually acquiring more. Others mentioned as possible buyers are Coca-Cola, RCA and Press Lord Rupert Murdoch. As a takeover subject, Disney will be no Bambi. Current management bitterly opposes a sellout. Last week Disney officers boosted their credit line from $400 million to $1.3 billion in order to fill the firm's war chest.

The takeover speculation is building just as the so-called Imagineers seem to be getting back their touch. The firm's latest film, Splash, a romantic comedy about a mermaid, is a smash. During its first weekend, Splash earned $6.2 million, the best performance in Disney's history.