(FORTUNE Magazine) – When the official mourning period ended 12 days after the terrorist attack on America, the Stars and Stripes on Disneyland's Main Street was returned to full staff. Fifty white doves soared into the clouds. And the crowd sang "God Bless America." After presiding over the ceremonies, Disney CEO Michael Eisner toured the park, visited new attractions, and then headed off to see Disney's hockey team, the Mighty Ducks, play a preseason game. He came away reassured. "It turned into a pretty normal day," says Eisner.

He is betting that America--and the Walt Disney Co.--will return to normalcy sooner rather than later. "People will travel," he says. "They will go to theme parks, sporting events, and movies. The only question in my mind is how quickly." And therein lies the rub. No entertainment company has been hit harder by the terrorist attack, and Disney wasn't doing all that well even before Sept. 11.

The company's two biggest units, media networks and theme parks, are reeling; together they produced 65% of Disney's revenues and 82% of its operating income during the first three quarters of its current fiscal year. The TV networks, which include ABC and ESPN, are beset by a nasty ad slump. "Even before these events, it wasn't just a soft year. It was brutal," says David Verklin, CEO of Carat North America, a media-buying firm. Now, he says, marketers have to struggle just to discern what ads are suitable. He says, "They are asking, Do we have a message that's relevant? Is the audience ready to hear it?"

ABC definitely didn't need any more bad news. Thanks to overexposure of Who Wants to Be a Millionaire, it lost 16% of its key 18- to 49-year-old audience last year--a bigger drop than any other broadcast network's--while the average age of its viewers rose from 42 to 47. As a result, the price of the average 30-second ad on ABC has dropped 22% since last season.

The theme parks, particularly Orlando's Disney World, must overcome both a weak economy and the reluctance of families to travel. Last week rooms at Disney World were being heavily discounted through Christmas. On the positive side, the parks got an unexpected endorsement from President Bush, who exhorted Americans to "get down to Disney World" as part of his effort to restore confidence in the travel industry.

Still, Disney stock has suffered. As of Sept. 10 it was down by 15.5% for the year; since then it has fallen another 21%, touching lows not seen since January 1995.

In response, Disney has trimmed the hours for the theme parks and curbed hours for about 40,000 part-time workers. More cutbacks are expected, including at ABC's news division--even though it is covering the biggest story in years.

Still, Eisner is doing his best to see a bright side. Media reports, he says, underestimate the nation's recuperative powers. Disney will heavily promote feel-good fall entertainment, including the DVD premiere of Snow White and the November release of the animated film Monsters Inc. "Good entertainment will work at a time like this--comedy in particular," Eisner says. "Am I concerned about the long term? Not at all."

--Marc Gunther