Experts expect NBC to part with parks
Even in good times, theme parks don't provide the kind of returns parent company GE demands.
By Sean Mussenden | Sentinel Staff Writer
Posted May 13, 2004
By the time the finalized NBC Universal deal became public Wednesday morning, the Peacock had already infiltrated Universal Orlando's theme parks.
The question now: How long will NBC Universal -- and its mascot bird -- stick around?
Though Bob Wright, NBC's chairman and chief executive officer, expressed an optimistic interest in the global theme-park business Wednesday, entertainment-industry analysts repeated predictions that the company eventually would cut its ties.
For now, the company has no immediate plans to sell the parks, a spokeswoman said. Nor will it add "NBC" to the names of Universal Studios or Universal's Islands of Adventure, but the NBC branding already has begun.
Late Tuesday, even before the finalized merger was announced, workers had installed "NBC Universal" signs, complete with a peacock, at the parks' gates. And, the spokeswoman said, executives will begin exploring ways to incorporate NBC properties into the parks.
At a news conference Wednesday, Wright sounded far more optimistic about the state of Universal's theme parks than he did seven months ago, when the merger was announced.
Back then, he said they planned to look "very closely" at a travel slump hurting the theme-park industry, and even mentioned the possibility of selling the parks -- though he said the poor economic environment made it "not the ideal time" to do so.
Since then, the tourism industry has shown more signs of an extended recovery. "We have an excellent global parks business that gets our brand in front of 30 million viewers," Wright said, predicting that this year and next would be record years for the parks.
Entertainment-industry analysts, though, remain convinced that NBC Universal parent General Electric will push its subsidiary to sell its portion of the parks, which are expensive to operate and, even in flush times, do not offer the sorts of returns GE demands.
"They are not in any hurry to dispose of the parks, but I think the probability is that they will not hold on to them," said longtime media analyst Harold Vogel, owner of Vogel Capital Management, a venture-capital and trading fund in New York.
"It's not that the parks are bad -- the parks are fine -- but they won't grow as fast as GE would want," he said.
If NBC Universal were to sell its stakes in the parks, the expense would keep the list of suitors small, theme-park industry experts said.
"This is not buying Six Flags, which is a second-string parks company -- we're talking about top-shelf parks at the level of Disney," said Dennis Speigel, president of International Theme Park Services, a Cincinnati-based consulting firm.
A few years ago, Speigel said his firm produced a valuation estimate for a would-be buyer of Universal's parks. It placed their value well into the billions, he said.
"There aren't too many players in the industry that could step up to the plate," he said.
Universal owns 100 percent of its theme park in Hollywood and has stakes in theme parks near Barcelona, Spain, and Osaka, Japan. It also owns a 50 percent stake in Universal Orlando.
The other half of Universal Orlando is owned by the New York-based private equity firm Blackstone Group, which purchased its stake for $275 million in 2000.
If NBC Universal were to sell its parks, Blackstone is frequently named as the most likely buyer. Last spring, Blackstone was in advanced negotiations with Vivendi Universal to purchase its worldwide parks business. Vivendi eventually sold the parks -- and the rest of Universal's entertainment assets -- to NBC.
Blackstone spokesman John Ford said this week that the company had no active plans to purchase a larger stake in Universal's parks.
"It's pretty well status quo," he said.
Even in good times, theme parks don't provide the kind of returns parent company GE demands.
By Sean Mussenden | Sentinel Staff Writer
Posted May 13, 2004
By the time the finalized NBC Universal deal became public Wednesday morning, the Peacock had already infiltrated Universal Orlando's theme parks.
The question now: How long will NBC Universal -- and its mascot bird -- stick around?
Though Bob Wright, NBC's chairman and chief executive officer, expressed an optimistic interest in the global theme-park business Wednesday, entertainment-industry analysts repeated predictions that the company eventually would cut its ties.
For now, the company has no immediate plans to sell the parks, a spokeswoman said. Nor will it add "NBC" to the names of Universal Studios or Universal's Islands of Adventure, but the NBC branding already has begun.
Late Tuesday, even before the finalized merger was announced, workers had installed "NBC Universal" signs, complete with a peacock, at the parks' gates. And, the spokeswoman said, executives will begin exploring ways to incorporate NBC properties into the parks.
At a news conference Wednesday, Wright sounded far more optimistic about the state of Universal's theme parks than he did seven months ago, when the merger was announced.
Back then, he said they planned to look "very closely" at a travel slump hurting the theme-park industry, and even mentioned the possibility of selling the parks -- though he said the poor economic environment made it "not the ideal time" to do so.
Since then, the tourism industry has shown more signs of an extended recovery. "We have an excellent global parks business that gets our brand in front of 30 million viewers," Wright said, predicting that this year and next would be record years for the parks.
Entertainment-industry analysts, though, remain convinced that NBC Universal parent General Electric will push its subsidiary to sell its portion of the parks, which are expensive to operate and, even in flush times, do not offer the sorts of returns GE demands.
"They are not in any hurry to dispose of the parks, but I think the probability is that they will not hold on to them," said longtime media analyst Harold Vogel, owner of Vogel Capital Management, a venture-capital and trading fund in New York.
"It's not that the parks are bad -- the parks are fine -- but they won't grow as fast as GE would want," he said.
If NBC Universal were to sell its stakes in the parks, the expense would keep the list of suitors small, theme-park industry experts said.
"This is not buying Six Flags, which is a second-string parks company -- we're talking about top-shelf parks at the level of Disney," said Dennis Speigel, president of International Theme Park Services, a Cincinnati-based consulting firm.
A few years ago, Speigel said his firm produced a valuation estimate for a would-be buyer of Universal's parks. It placed their value well into the billions, he said.
"There aren't too many players in the industry that could step up to the plate," he said.
Universal owns 100 percent of its theme park in Hollywood and has stakes in theme parks near Barcelona, Spain, and Osaka, Japan. It also owns a 50 percent stake in Universal Orlando.
The other half of Universal Orlando is owned by the New York-based private equity firm Blackstone Group, which purchased its stake for $275 million in 2000.
If NBC Universal were to sell its parks, Blackstone is frequently named as the most likely buyer. Last spring, Blackstone was in advanced negotiations with Vivendi Universal to purchase its worldwide parks business. Vivendi eventually sold the parks -- and the rest of Universal's entertainment assets -- to NBC.
Blackstone spokesman John Ford said this week that the company had no active plans to purchase a larger stake in Universal's parks.
"It's pretty well status quo," he said.
