View from City Road: Mickey Mouse becomes vulnerable

What could you get on mixing the following? One of Wall Street's most desirable stocks, a troubled subsidiary, a management that is failing to grasp the nettle and a dash of acquisition fever in the markets.

Answer - a bid for Disney. Traditionally regarded as unassailable, the company may have constructed its own Trojan horse, in the shape of its disastrous Paris theme park.

Debt-laden Euro Disney is not, of course, about to bring down its quasi-parent. The loans are ring- fenced and the US group is strong enough to take its share of the pain without suffering too much.

But given that there seems to be no end to the tale of woe coming out of France, it could weaken Disney enough to put it in play. Euro Disney is turning out to be an increasingly poor investment and an even poorer advertisment for the judgement of the Disney board.

It is also one that is set to get worse before it gets better; to secure the building of the second stage of the park, without which it is unlikely ever to make money, the American group is going to have to chip in heavily.

Yet one of Disney's biggest headaches is that it cannot afford to raise its stake, since once it reaches 51 per cent US accounting rules say that all the debt - Fr23bn ( pounds 2.7bn) - would have to arrive on its parent balance sheet. And even Disney might wince at that.

As yet, US investors in Disney have still to wake up to the extent of the European mess, and how badly the company's original intentions have gone astray. But once they do, the power brokers scouring Wall Street's entertainment sector in the wake of the Bell Atlantic/TCI mega-merger may find a new target.

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