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Walt Disney Internet Group Shows Financial Gain

The Walt Disney Internet Group, which is the Internet business arm of the Walt Disney Company, Thursday released positive year-end and fourth quarter results.

Walt Disney Internet Group's revenue grew 39 percent, to $277.2 million, during the fiscal year 2000 with total revenue standing at $392 million, a 13 percent growth over last year. For the quarter, Internet revenues increased 9 percent to $61.3 million.

"We accomplished what we set out to do," said Steve Bornstein, chairman of the Internet Group. "We consolidated operations in a significant way, integrated sales operations, successfully relaunched GO.com and ESPN and ABC-branded sites, built our leadership positions across our Disney and Family, leveraged Disney assets and maximized Internet buys. We are now well positioned to pursue the growth of Disney's Internet businesses during fiscal-year 2001."

Revenues for the quarter from Internet operations increased 9 percent compared to prior-year pro forma amounts, and revenues for the quarter from direct marketing catalog operations decreased 33 percent, resulting in a total decrease in revenues of 6 percent to $82.4 million.

Bornstein noted that the decrease in direct marketing revenue is part of the company's planned reduction in that arena in an effort to create online customer migration.

Operating income, net loss and loss per share for the quarter were $50.4 million, $45.7 million and $0.29, respectively, excluding non-cash amortization of intangible assets ($212.4 million).

Revenues were impacted by the one-time sale of Ultraseek Corp., a subsidiary that provides intranet search software, which it had acquired as part of its acquisition of Infoseek, according noted Spencer Neumann, CFO.

Neumann described the company's three-part plan to add to its revenue stream via advertising, e-commerce and licensing and subscription.

"We will develop and grow our market-leading sites and continue to focus on existing business," Neumann said. "In the wireless space, we have partnered in subscription delivery services with DoCoMo in Japan and have more than 300,000 subscribers signed up for the service. We are well positioned to distribute content in broadband and are building a single platform targeting broadband users, starting with our news, sport and entertainment offerings."

Excluding the gain on the sale of Ultraseek, as well as amortization and the impairment charges, pro forma operating loss, net loss and loss per share for the full year were $395.0 million, $233.4 million and $1.50, respectively.

The company reported higher advertising and sponsorship revenues, driven by increased advertiser demand and higher online site traffic at ABC.com, ABCNEWS.com, ESPN.com, Disney.com and Family.com, partially offset by decreases at the GO.com Web site.

"Throughout 2000, our collection of sites continued to perform strongly as some of the leading destinations on the Web," said Michael D. Eisner, chairman and CEO of The Walt Disney Co. "One of our singular achievements was Enhanced TV, which we believe is leading the way in the convergence of the television with the Internet. Looking forward, we will continue to bring the strength of our brands and the strength of our company to build the Walt Disney Internet Group into one of the strongest presences on the Internet."

According to a report by Media Matrix, WDIG has 83 million average daily page views and 27 million registered users.

The company operating loss, net loss and loss per share were $242.1 million, $217.1 million and $1.40, respectively, on a pro forma basis, excluding non-cash amortization of intangible assets ($909.4 million).

For the quarter, media revenues decreased 7 percent to $41.2 million, which reflects lower advertising and sponsorship revenues at GO.com during the redesign of the Web site, according to Steve Wadsworth, president of W