Disney might make play for Universal
By Robert Johnson | Sentinel Staff Writer
Posted August 9, 2002
Mickey Mouse and Spider-Man roaming the same theme parks? The idea might not be too far-fetched.
Analysts and tourism officials were intrigued Thursday by a Disney official's comment that the company could be interested in buying some assets of debt-ridden Vivendi Universal, which owns such parks as Universal Studios and Islands of Adventure.
"Any assets that are in our core business that come available, we would certainly take a look at," Disney Chief Financial Officer Thomas Staggs told Reuters news service. "Our primary focus is our core business."
Rumors of a sale have been swirling since embattled Vivendi CEO Jean-Marie Messier was ousted and replaced by Jean-Rene Fourtou, who said he plans to lower Vivendi's debt load by "significant asset disposals."
Selling off its entertainment business -- which includes theme parks, movie studios and television -- could be a quick way for the conglomerate to reduce debt without cutting off its core assets in the sewer and water industry.
Analysts said such an acquisition by Disney could erode its current efforts to strengthen its balance sheet and slumping stock price. But Staggs said, "To the extent we can do an acquisition that is not dilutive to the earnings or cash flow, we'll take a look."
The price would have to be "bargain-basement" to make good business sense, said Katherine Styponias, an analyst at Prudential Securities. "Owning more theme parks could make Disney even more cyclical because that's a cyclical business," she said.
Besides, although Disney has the borrowing power to make such a purchase, Styponias said that "given where their stock is, this might not be the best time for a major acquisition."
Shares in both Disney and Universal are trading near 52-week lows. Stock in Disney closed Thursday at $14.50 a share, up 60 cents. That compares with a 52-week range of $13.75 and $27.98.
Vivendi stock closed at $16.32 on the New York Stock Exchange, compared with a 52-week range of $13.36 to $59.35.
Disney and Universal have battled each other on the Orlando tourism front since the latter opened here in 1990.
"Owning Universal would give Disney World a huge increase in marketing power," said Peter Stapp, a theme park consultant who has been a supervisor at both properties. "Disney would get two more jewels in their crown and be able to offer tickets to both."
Disney's huge bus system also could funnel tourists back and forth. "It could mean a lot more convenience for visitors, and they might stay longer," Stapp said.
Advertising and leisure industry veteran Peter Yesawich said that the possible combination is intriguing. "You could package more exciting vacations with more options."
One possible downside cited by Yesawich: Less competition in the pricing of tickets and rooms. Another could be wages, "There wouldn't be as much pressure to pay more in this job market."
From Orlando Sentinal
By Robert Johnson | Sentinel Staff Writer
Posted August 9, 2002
Mickey Mouse and Spider-Man roaming the same theme parks? The idea might not be too far-fetched.
Analysts and tourism officials were intrigued Thursday by a Disney official's comment that the company could be interested in buying some assets of debt-ridden Vivendi Universal, which owns such parks as Universal Studios and Islands of Adventure.
"Any assets that are in our core business that come available, we would certainly take a look at," Disney Chief Financial Officer Thomas Staggs told Reuters news service. "Our primary focus is our core business."
Rumors of a sale have been swirling since embattled Vivendi CEO Jean-Marie Messier was ousted and replaced by Jean-Rene Fourtou, who said he plans to lower Vivendi's debt load by "significant asset disposals."
Selling off its entertainment business -- which includes theme parks, movie studios and television -- could be a quick way for the conglomerate to reduce debt without cutting off its core assets in the sewer and water industry.
Analysts said such an acquisition by Disney could erode its current efforts to strengthen its balance sheet and slumping stock price. But Staggs said, "To the extent we can do an acquisition that is not dilutive to the earnings or cash flow, we'll take a look."
The price would have to be "bargain-basement" to make good business sense, said Katherine Styponias, an analyst at Prudential Securities. "Owning more theme parks could make Disney even more cyclical because that's a cyclical business," she said.
Besides, although Disney has the borrowing power to make such a purchase, Styponias said that "given where their stock is, this might not be the best time for a major acquisition."
Shares in both Disney and Universal are trading near 52-week lows. Stock in Disney closed Thursday at $14.50 a share, up 60 cents. That compares with a 52-week range of $13.75 and $27.98.
Vivendi stock closed at $16.32 on the New York Stock Exchange, compared with a 52-week range of $13.36 to $59.35.
Disney and Universal have battled each other on the Orlando tourism front since the latter opened here in 1990.
"Owning Universal would give Disney World a huge increase in marketing power," said Peter Stapp, a theme park consultant who has been a supervisor at both properties. "Disney would get two more jewels in their crown and be able to offer tickets to both."
Disney's huge bus system also could funnel tourists back and forth. "It could mean a lot more convenience for visitors, and they might stay longer," Stapp said.
Advertising and leisure industry veteran Peter Yesawich said that the possible combination is intriguing. "You could package more exciting vacations with more options."
One possible downside cited by Yesawich: Less competition in the pricing of tickets and rooms. Another could be wages, "There wouldn't be as much pressure to pay more in this job market."
From Orlando Sentinal
