Disney to buy Universal?

[Empress Room]

Here's an interesting thought: I was reading a recent article about 2004 financial performances of various theme parks/companies across the country (can't remember the publication or author off-hand). In any event, the author's analysis is that Disney's theme park division did VERY, VERY well over the last year (not pre-9/11 numbers, but trending way up) and Universal (because of management changes and other factors) underperformed - so much so that the author opined that Disney could (or may) purchase their Florida rival, thus eliminating the competition.

That has me wondering: would/should Disney consider such a bold move? It is not without precedent (Verizon buying Sprint to name a recent example) and Disney could certainly once again claim the "only flame in town" title and assure that vacation dollars are not spread out between the two theme parks.

Would there be political or consumer fallout (consumers liking the apparent choices)? Would Disney close Universal entirely and/or make it part of the World? I remember talk about twenty years ago about Disney buying Sea World (never happened, obviously, and The Living Seas were created instead).

If the author was accurate, what do you think?

 

[DisneyFan 2000]

Universal just turned a profit after a few years in the red. I doubt they're underperforming.

 

[tazhughes]

Very interesting concept and certainly from a business perspective it would have some merit. However, I can't seem them doing it. I think it would create too many logistical nightmares, just imagine getting on a bus at the Grand Floridian to go over to IOA and having to drive through all of that off site mess, where's teh magic in that. I just think that there would be no way to tie them together properly. On the other hand I could see them possibly buying a controlling share and having it run independently of WDW, just to capitalize on the dollars.

 

[ThreeCircles]

The Universal media group was sold by Vivendi (French company) to NBC in late 2003. At that time, rumors grew that NBC may liquidate certain parts of the company and keep the core media production concepts. (Articles indicated that NBC had no interest in the theme park branch of the company.)

I haven't really followed the story since that time but it certainly isn't unrealistic that NBC may at some point want to sell off or spin off that branch of the company. In fact, I believe they are in the process of selling or spinning off the music group currently.

With that said, if Disney did want to purchase the property they wouldn't do so just to get rid of the competition. And they certainly wouldn't spend major dollars to buy it and then close it.

If it ever happens, I can see them operating the property under the Theme Parks and Resorts division of TWDC as a separate, wholly owned subsidiary.

But, given recent articles in the news, Disney may be more interested in branching into other types of business rather than ramping up and investing more in theme parks. From a financial perspective, it makes sense.

What if Disney did buy Universal and their theme park division grew to account for 60% of the total companies (TWDC) operating revenue rather than 40%. [These numbers are made up and are only being used to illustrate a point.] Well, let's say there is another major terrorist attack (more than probable) and it impacts the tourist business like it did after 9/11. Well, the company only has 40% of other types of income generating ventures to fall back on (after buying Universal) rather than 60% before buying it.

 

[PlaneJane]

i dont think it will happen
but...If it did Disney would then control two of the major telelvision networks NBC and ABC. CBS would then whine and complain that Disney is turning into a monopoly and Disney would have to split and that would suck.

EDIT: of course if you read the post above me then my argument goes down the drain

 

[ThreeCircles]

i dont think it will happen
but...If it did Disney would then control two of the major telelvision networks NBC and ABC. CBS would then whine and complain that Disney is turning into a monopoly and Disney would have to split and that would suck.

No, you're more than correct. Disney would more than likely never be able to own two of the major network companies because of anti-trust laws and such. I believe the OP was just speaking of the Universal theme park operations, as was I.

 

[GoofMaul]

i dont think it will happen
but...If it did Disney would then control two of the major telelvision networks NBC and ABC. CBS would then whine and complain that Disney is turning into a monopoly and Disney would have to split and that would suck.

I think the understanding here is that Disney would just buy the Universal Theme Park assets and not all of NBC. I don't think Disney has enough equity to buyout NBC.

 

[prufo]

Universal selling? NOOOOO where is going to be the fun then?

Disney could go and do the move even if it means a serious investment but remember that universal Theme park is about movies, a mean, BIG MOVIES. If Disney do so what could happen with men in Black atraction, The Mummy (*recently oppened), Jaws, Back to the Future, ET, and so on? Remember Universal have the rights of those movies, should Universal then give the rights to Disney?

I doubt Universal make thaT mistake IF THEY DO SO WHERE IS GOING TO BE THE COMPETITION BETWEEN wdw AND universal? I visit that park last month (i am from Puerto Rico thought) and I found that the Park is ALWALS FULL! I know there are some slow days but think again, invest so much money, effort to sell it then? Dont think so.. Have a nice evening

 

[WDW_Sam]

I severely doubt this will happen for 2 reasons:

1) Universal are not likely to sell they're company and parks since they are making prophit now after a very long money-losing spree.
2) Disney would then have 6 theme parks, 2 of which are 20-30 mins away from the rest...

I know i didnt argue that very well but hey.. i tried LOL!

Sam

 

[tigsmom]

GE owns NBC outright so it technically owns Universal, right?

 

[Shaman]

I think its highly unlikely this will ever occur...if Disney would have wanted Universal...they could've made a bid for it when Vivendi was selling not only the theme parks, but I think the actual movie studio as well...

 

[Shaman]

GE owns NBC outright so it technically owns Universal, right?

Yup.

(I think :lookaroun )

 

[Empress Room]

Universal just turned a profit after a few years in the red. I doubt they're underperforming.

The article was quite clear - as to theme park revenues, there is Disney...and then there is everyone else.

The fact that Universal was/has been "in the red" the last few years underscores their financial position. The fact that, as you attest, they "turned a profit..." may actually make Universal even more attractive to a suitor like Disney. (Disney could, in effect, buy out the competition, run it as a subsidiary and have less of a finanicial burden since the Universal park(s) may actually make some money. Sounds win-win.)

 

[peter11435]

GE owns NBC outright so it technically owns Universal, right?

correct, thus the reason GE no longer "...brings good things to life" every night at Epcot.

 

[GoofMaul]

1) Universal are not likely to sell they're company and parks since they are making prophit now after a very long money-losing spree.

Sam

Although I do agree with you that Disney most likely would not even attempt to buy the Universal Theme Park Assets. I disagree that a company won't get sold simply because it is profitable. It really depends on GE/NBC management. If they determine that they don't want to get into tourism then they may put the theme park division up for sale. The only thing profitablility would do is give GE/NBC more leverage as far as pricing.

 

[ThreeCircles]

Although I do agree with you that Disney most likely would not even attempt to buy the Universal Theme Park Assets. I disagree that a company won't get sold simply because it is profitable. It really depends on GE/NBC management. If they determine that they don't want to get into tourism then they may put the theme park division up for sale. The only thing profitablility would do is give GE/NBC more leverage as far as pricing.

I agree. As I stated earlier, there was some dialoge between GE and Vivendi about spinning off the theme parks when they were working out the deal. I think the fact remains that NBC is not interested in operating theme parks.

And, if the Universal parks are finally becoming profitable, then that would mean it's even a better time to sell them if the parent company doesn't want to hold on to them, as GoofMaul has said.

 

[Ralph Wiggum]

the parks just squirted out a little red ink after years of 50 to 60 million in the black, each year. UO has a long way to go to become a profitable venture. it's never going to happen. NBC wanted the production studios, they have no interest in the parks themselves. with Nickelodeon not renewing their contract with UO, we'll see what happens.

 

[Disneyfan1981]

It would be a bold move but in the end I think Disney wants no part of Universal. Not only will it create a strange situation have one set of parks 15 minutes out from the others but trying to tie these two together would be a task in its own. Also, I think that Disney would just sit back and enjoy the strugglings of rivals in the area because it strengthen their properities by having everything together. But you never know, stranger things have happened.

 

[shoppingnut]

Never say Never. It indeed would be the ideal time to sell UO because it is profitable. Would Disney be interest, just never know, since Eisner is no longer in charge of keeping the financial belt so tight. Why they didn't buy when it was up for sale last time was probably because when Disney bought ABC a/k/a the money pit and they were still reeling from that.

The fact remains that UO has been taking away business from Disney more so these past few years and have had increased attendance percentages higher than Disney. I could see them owning both and running UO as it is a separate company. Whether or not that will happen, remains to be seen.

 

[djronnieb]

It is not without precedent (Verizon buying Sprint to name a recent example)

That's not right. Nextell merged with Sprint.