The agreement to construct Disney's fourth park outside the U.S. in the world's most populous nation "marks a very significant milestone," Chief Executive Officer Robert A. Iger said in a statement. Disney and its Shanghai partners are now allowed to move toward a construction and operation agreement, the statement said.

Disney's foothold in mainland China comes after a decade of negotiations and will cost 24.5 billion yuan ($3.6 billion), according to Hong Kong newspaper Wen Wei Po. The expansion targets the wealth of China’s middle class and the fastest growth of any major economy as Burbank, California-based Disney suffers from lower spending at its U.S. theme parks, tumbling ad sales and falling DVD revenue.

"It gives Disney an opportunity to monetize its brand without necessarily having to produce filmed content," said David Bank, an analyst with RBC Capital Markets in New York. Expanding in China without facing the risk of regulatory hurdles is "the real key to making money in China for the media companies," he added.

Revenues at the Parks and Resorts division fell 9% to $2.8bn, while those at the Studio Entertainment division fell by 12% to $1.3bn.

The company said visitors were spending less at its theme parks, both in the US and in Paris, France.

Despite the market's reaction, Disney said it was heartened by the results.

"While a tough global economy impacted our performance in the quarter, we remain encouraged by the relative strength of our business," said Disney president Robert Iger.

The announcement came less than two weeks after a deadline to accept voluntary buyouts that the company offered to about 600 executives in the Parks and Resorts division. Disney officials declined to say how many executives took a voluntary buyout, but said the number was "satisfactory."

In a memo to employees Wednesday, Parks and Resorts Chairman Jay Rasulo said the cuts would help build "an organization and cost structure that meet today's economic realities."

In effect, Disney is consolidating many of its behind-the-scenes operations into one unit. For example, separate units in charge of maintenance at Disneyland in Anaheim, Calif., and Walt Disney World in Orlando, Fla., will be combined into one unit, according to a company official.

Disney has long sought a mainland park for the access to the vast Chinese market that it would offer. The $37.8 billion media giant will be able to pitch the park as creating 50,000 new jobs amid a cooling Chinese economy. The downturn has given the park new urgency, according to a person familiar with the situation. "I think it will really fly now given the current economic climate," that person said.

Still, Leslie Goodman, an executive vice president at Disney's Parks and Resorts unit, stressed the proposal is preliminary and faces a long road ahead of it.

"As part of this lengthy process, we worked on a joint application report with the Shanghai government which will be submitted to the central government for review. She cautioned: "No deal has been signed, no project has been approved."

A Shanghai government spokesman declined to comment. Approvals by China's central government could take up to a year.

The line to one popular attraction at Epcot features cameras and large interactive screens that allow visitors to see themselves and play games, such as trying to burst virtual water balloons to reveal a hidden image, Garlington said.

People waiting in line for a comedy show at Walt Disney World are asked to text message jokes that may be used during the main event.

"It works as our warm-up act essentially for the show, but it also takes time while people are working through that and so it keeps them entertained while they're waiting," Garlington said.

"We do study the psychology, try to understand what our guests are thinking and make sure that we're keeping them happy as they move through the lines."

Disney employs more than 75 industrial engineers who help the company with queue management at its parks around the world, said Marilyn Waters, director of media relations at Walt Disney Imagineering.