Spirited News & Observations II -- NGE/Baxter

[GoofGoof]

Operating income is before taxes and capital expenditures. 101-138. Lost money. Surely though they can hire the accountants that would get them zero tax liability on that.

But that really underlines my point. The Internet is stuck in 2011 when it comes to the Uni/Disney debate. When they closed Jaws in Jan 2012, they thought they could do no wrong. Then they realized they could and did do wrong. May 2013 is a completely different picture. I'm all for spending money, but as I mentioned there's definitely a growing doubt that throwing wads of cash at the Orlando parks is a good strategy because there's a sense that in 5-7 years they're going to be sitting in meetings debating what the heck they were thinking.

Right. Operating income before depreciation and taxes is $173M. This is also pretty much the same thing as cash flow from operations. If you take that number and back out the $138M spent on capital projects this quarter the theme park division had $35M of free cash flow which gets rolled back into the Comcast corporate free cash flows and is used to either return money to shareholders or keep in cash on hand for further investments. That may not be as impressive as the free cash flow thrown off by the cable segment, but the point is the segment had positive free cash flow. Even if the free cash flow number was negative they could justify it since they are in the middle of an expansion. Using the operating income after depreciation number makes no sense since depreciation is a non-cash expense.

 

[BryceM]

WWoHP is a flawlessly executed immersive environment, but it's the first one they've even attempted, let alone executed.

Then what is Port of Entry, Seuss Landing, The Lost Continent, Jurassic Park, Toon Lagoon, Marvel Super Hero Island, New York, Hollywood, San Francisco, etc.?

In fact, Islands of Adventure is one immersive theme park. You can't deny it. Yes, both Islands of Adventure and Universal Studios have flaws. Every theme park does. No theme park is perfect. Production Central is not very pretty. KidZone needs to be re-built. A better transition between Marvel Super Hero Island and Toon Lagoon needs to happen. But to say that both Universal parks don't have any immersively themed environments besides WWoHP?

Blasphemy.

 

[GoofGoof]

Their strategy is correct for them. They needed a big attendance boost, so they spent big to get it. Disney needs slow and steady growth, so they have a different, more deliberate approach.

This is definitely true to an extent. They are in 2 different stages of the life cycle. Universal had to spend to grow and it now has a sugar daddy with deep pockets and hordes of excess cash just waiting to be deployed.

 

[BryceM]

Ah, yes. The old, "Uni has nothing but roller coasters" has now become, "Except for Harry Potter, Uni has nothing but coasters.

Just focus on the magic and traditional sentimentality Disney holds. Too many people have now been to Uni to keep that, "It's all thrill rides for teens!" thing working.

And the pics are available in the Uni section of this board, lol.

Of course the worst angle of Rip Ride RockIt was shown (probably so he could show the most steel possible), when you can't even get that angle when actually in the parks. And the banner was off in the picture as well. Not saying HRRR is the prettiest coaster out there, but c'mon.

 

[Tim_4]

Of course the worst angle of Rip Ride RockIt was shown (probably so he could show the most steel possible), when you can't even get that angle when actually in the parks. And the banner was off in the picture as well. Not saying HRRR is the prettiest coaster out there, but c'mon.

I'm not so devious. I just googled it and it was on the first page.

 

[GoofGoof]

Sorry but I honestly don't get your point. What are you suggesting Uni's business strategy should be? Not invest in the parks? Invest in cruise ships? Build NextGen? Create the "Universal Vacation Club"?

Any chance DVC opens a timeshare connected to Universal? I would love to trade in to stay there. Actually, I guess if Universal opened their own timeshare resort or wing in theory you might be able to do that through RCI. Trade in DVC points for Universal points. I'm off to drop a note in the Comcast suggestion box...thanks for the great idea

 

[SirOinksALot]

Sorry but I honestly don't get your point. What are you suggesting Uni's business strategy should be? Not invest in the parks? Invest in cruise ships? Build NextGen? Create the "Universal Vacation Club"?

My original point was never about what they should or shouldn't be doing. Mine was the disconnect between what people post here and reality.

The example I gave in my original post was Transformers. Online: WOW! Look how fast Transformers was built! Universal really has it's act together and knows how to spend its money efficiently!!! Reality: we had to spend more than it should have cost and run semis through our theme park during the day because "we couldn't afford another summer like last one."

You took it off on the money tangent because you didn't understand the math behind what I said.

 

[GoofGoof]

My original point was never about what they should or shouldn't be doing. Mine was the disconnect between what people post here and reality.

The example I gave in my original post was Transformers. Online: WOW! Look how fast Transformers was built! Universal really has it's act together and knows how to spend its money efficiently!!! Reality: we had to spend more than it should have cost and run semis through our theme park during the day because "we couldn't afford another summer like last one."

You took it off on the money tangent because you didn't understand the math behind what I said.

Do you have some connection to Universal? Is there some place online where we can see the drop in attendance you talk about? Other than the TEA report which isn't out yet for 2012 I don't know anywhere with those stats. Are you saying we should expect to see a drop in the Universal numbers when that report comes out? Just USF or both USF and IOA? I'm not doubting the validity of your statement, just wondering where you are getting the info from.

 

[luv]

Of course the worst angle of Rip Ride RockIt was shown (probably so he could show the most steel possible), when you can't even get that angle when actually in the parks. And the banner was off in the picture as well. Not saying HRRR is the prettiest coaster out there, but c'mon.

It is the worst possible angle, lol.

RRR is really not ugly. It's hard to hide a coaster without putting it inside, but they do a nice job with it. So does Sea World, sticking my favorite coaster in Orlando in the corner of the park and have the Manta cars ride astonishingly over the walkway and twirl above you. It's actually fun for people. They stop and watch the Manta cars come through.

But aside from Shamu, Sea World is all thrill rides for teens!

Uni parks are OF COURSE well themed, look fresh and good...and very pretty, especially is some areas.

I keep wondering if that water park rumor is true and if they'll build a bigger wave pool than Typhoon has. I'm a big Typhoon freak and don't see how a water park could be better suited to me...but I wonder what Uni would do. My only wish about Typhoon is that it would be bigger. LOVE that park! (See, I like Disney, too.)

 

[SirOinksALot]

Do you have some connection to Universal? Is there some place online where we can see the drop in attendance you talk about? Other than the TEA report which isn't out yet for 2012 I don't know anywhere with those stats. Are you saying we should expect to see a drop in the Universal numbers when that report comes out? Just USF or both USF and IOA? I'm not doubting the validity of your statement, just wondering where you are getting the info from.

It depends on what you mean by connection.

I've danced around knowing Spirit, it just went over 99% of heads. He gets his news all these years from somewhere......

 

[ParentsOf4]

My original point was never about what they should or shouldn't be doing. Mine was the disconnect between what people post here and reality.

The example I gave in my original post was Transformers. Online: WOW! Look how fast Transformers was built! Universal really has it's act together and knows how to spend its money efficiently!!! Reality: we had to spend more than it should have cost and run semis through our theme park during the day because "we couldn't afford another summer like last one."

You're going to have to explain to me how running semis through the theme park during the normal work day is somehow more expensive than running them third shift.

Earnings from Universal's theme parks remain strong. Theme park operating income grew from $830 million in 2011 to $963 million in 2012, up $14.8%. You refer to "we couldn't afford another summer like last one" but I don't see evidence in their annual report to support this.

Universal is investing heavily in their theme parks exactly because of the explosive growth they experienced with WWOHP. They are hoping lightning strikes twice. Uni's doing the same thing Disney is doing with Iron Man 3 & 4, cruise ships 3, 4, 5, & 6, DVCs 9, 10, 11, 12, etc. They have a "magic" formula and they're going to keep rerunning that formula until the well runs dry.

For any large capex project, there usually are 2 competing business philosophies. Philosophy #1 is spend like a drunken sailor so the project finishes as soon as possible and starts generating revenue. Philosophy #2 is minimize impact on current year's earnings. Having been through this many times, my opinion is Philosophy #2 stinks and, long run, always ends up costing more both in capex and lost revenue. IMHO, Uni's adapting Philosophy #1 because it believes this is how to maximize ROI. Conversely, Disney's been financially burned on most of its theme park investments since DAK and has grown cautious because of it. In being afraid to spend money, it ends up costing Disney more over the long run.

 

[GoofGoof]

It depends on what you mean by connection.

I've danced around knowing Spirit, it just went over 99% of heads. He gets his news all these years from somewhere......

They only ever mentioned increases in attendance in the quarterly and annual earnings calls, but some of that could be related to CA not FL. I guess we'll just have to wait for the report. It should be out in the next few weeks. I don't expect another 30% increase for IOA, but I don't expect a big drop off either. I wouldn't be surprised at all if both USF and IOA are pretty flat or slightly up in 2012.

 

[Tim_4]

It is the worst possible angle, lol.

RRR is really not ugly. It's hard to hide a coaster without putting it inside, but they do a nice job with it. So does Sea World, sticking my favorite coaster in Orlando in the corner of the park and have the Manta cars ride astonishingly over the walkway and twirl above you. It actually fun for people. They stop and watch the Manta cars come through.

But aside from Shamu, Sea World is all thrill rides for teens!

Uni parks are OF COURSE well themed, look fresh and good...and very pretty, especially is some areas.

I keep wondering if that water park rumor is true and if they'll build a bigger wave pool than Typhoon has. I'm a big Typhoon freak and don't see how a water park could be better suited to me...but I wonder what Uni would do. My only wish about Typhoon is that it would be bigger. LOVE that park! (See, I like Disney, too.)

You don't need to be so defensive. Here's a list of things I'm NOT saying:

Universal targets teens and young adults, and that's why they suck.
Universal targets ONLY teens and young adults.
Anyone who's not a teen or young adult should hate Universal.
There is something wrong with anyone who likes Universal because teens and young adults are stupid.

Again, those are NOT what I'm saying. What I AM saying is that, in general, Universal targets teens and young adults more than Disney. That's it. Universal wants to be the "cool" park. They TARGET Disney for not being "cool" in their ad campaigns.

Fairytales and Pixie Dust not quite your thing?

From a purely business standpoint, Disney doesn't CARE if they're "cool" or not. Take a family of mom, dad, teenage brother, and eight year old sister. Teenage brother is usually too cool for his parents and WAY too cool for his sister. Disney appeals to the family where teenage brother suddenly ISN'T too cool for his family when they're on vacation together. He drops his facade and suddenly brother leaves his Beats by Dre headphones in the hotel room and he's taking pictures with Eeyore at the Crystal Palace. Universal goes the other direction. They decide that teenage brother will always be "too cool" for magic and princesses, so their angle is to convince them that they're cool, just like he is.

 

[GoofGoof]

But aside from Shamu, Sea World is all thrill rides for teens!

This will no longer be true come Friday. I am more excited about antarctica then Transformers or Mine Train.

 

[luv]

This will no longer be true come Friday. I am more excited about antarctica then Transformers or Mine Train.

It was a joke!!

I absolutely adore Sea World and am more excited about Antarctica than anything I can recall being excited about in Orlando!

Fantasyland, Schmantasyland. Transformers, Balformers.

BRING ON THE PENGUINS!!!

...and I'm going to freaking miss the opening, damn it! If anyone goes and takes pics, PLEASE post them!

 

[RSoxNo1]

That comparison might be valid if it weren't for the fact that Transformers is a very simple ride (like a kiddie coaster) which without theming could be thrown together in a few months using off-the-shelf track pieces, versus Seven Dwarfs Mine Train which is a highly complex one-of-a-kind ride system which understandably takes years to design and build.

Oh, wait.........never mind...

I said it before and I'll say it again - The build time for Transformers is extremely fast while the build time for SDMT is relatively slow. However, the two attractions are not equal in how long it should take to build. SDMT should take longer to build because of the rockwork involved. Transformers is in a sound stage.

 

[RSoxNo1]

I might be in a minority but it's not the IP that worries me, it's the execution. At some point, WDW got into the nasty habit of spending hundreds of millions for fairly ordinary attractions. I'm hopeful but not optimistic SDMT and Avatarland reverse that trend.

Uni is "worshipped" because they generally execute well. WDW track record is much less consistent of late. Even when they get it right, they seem to let maintenance fall apart, greatly detracting from their successes (a la Expedition Everest).

Universal raises ticket prices 5% and these boards are silent. Yes, they are WDW boards but we constantly see the Uni vs. WDW comparisons. Plenty are watching Uni but few complaining. We see what's going on at Uni and feel the money is being well spent.

It seems WDW might have just spent $1B so I can wear a plastic bracelet.

It's not that this thread is anti business, it's anti bad business. Uni is trying to provide its customers with the best experience possible. WDW is trying to figure out new ways to get its customers to pay more for less.

This is an excellent point. The last time we've been "wowed" by Disney in Florida is probably Illuminations. Prior to that you've gotta look to the 90s at Splash, Tower and Kilimanjaro Safaris.

As for the ticket prices, I compare it to the Red Sox. The Red Sox were awful last year and as a result, the 10 year sellout streak ended this year. They tried some promotions like discounted hot dogs and cheaper (and smaller beer). It still didn't help because what people want is a winner. The price isn't as important as if the team is winning.

Compare this to Universal, they're going to blow past the $100 a day ticket and nobody is going to care because they're raising the bar with new attractions. The reason why Disney has to discount is because they haven't given guests a "wow" experience in 15 years.

 

[ParentsOf4]

What I AM saying is that, in general, Universal targets teens and young adults more than Disney.

When my children were 5-to-8, we had a hard time finding age appropriate attractions for them at Uni. No such problem at WDW.

No way around it, Uni appeals to a more mature crowd. Most of Uni's "best" attractions are for the 48" and over crowd. Boy or girl, a lot of the 10-to-12 crowd want to do the "grownup coasters". The ones I know followed their heights closely, hoping to reach the magical 48" and 54".

 

[luv]

After hearing so much about how it has taken forever to finish the FLE because of the attention to detail, theming and high-quality, innovative ride experience...this better be the best darn kiddie coaster we could ever have imagined.

 

[luv]

When my children were 5-to-8, we had a hard time finding age appropriate attractions for them at Uni. No such problem at WDW.

No way around it, Uni appeals to a more mature crowd. Most of Uni's "best" attractions are for the 48" and over crowd. Boy or girl, a lot of the 10-to-12 crowd want to do the "grownup coasters". The ones I know followed their heights closely, hoping to reach the magical 48" and 54".

I have taken many kids to Uni and Disney and they had tons of fun at both places. There is PLENTY for five to eight year olds there.

Your kids, of course, may not have enjoyed it, but there are many, many...millions...of kids who do.