View from City Road: Walt Disney holds all the Parisian cards

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Euro Disney has come home to roost on Uncle Walt's shoulder. The dollars 350m provision just taken by the Walt Disney Company for its Parisian offspring marks the first time the troubled theme park has seriously dented the American group's profitability.

The dollars 78m quarterly loss, and Euro Disney's admission that it is in effect bust, has awoken Wall Street to the fact that keeping the park going could be expensive. Even Disney's limited commitment to meeting Euro Disney's funding needs until next spring may end up costing the group a further dollars 100m or so.

But wait before shedding too many tears on its behalf. Disney picked up its 49 per cent stake in Euro Disney for a song. Before yesterday's provision, Disney's investment in the park was less than dollars 150m.

That compares with about Fr20bn ( pounds 2.4bn) put into the venture by banks and the French government, as well as those unhappy investors who still have shares. It is they, not Disney, who will pay the price of restructuring.

The fact that Euro Disney has admitted that with current debt there is no realistic prospect that it will ever make money, no matter how many visitors it attracts or how much they spend, has left Disney with all the cards.

The American group has made it plain that if it is going to stump up the millions needed to wipe out enough of Euro Disney's debts to make it self-financing, it is going to extract every last ounce of flesh in return.

Hence the brinkmanship of recent months; the Americans have indicated that they are prepared to see Euro Disney fold.

While that means a poor deal for the French government and the banks, they at least have some bargaining chips. Ordinary shareholders, on the other hand, are about to discover that the emperor's clothes have vanished.