Universal awaits its fate
By Robert Johnson
Sentinel Staff Writer
August 5, 2002
The prospects of a sale or spinoff of Vivendi Universal's entertainment assets into a separate company has the U.S. theme-park industry buzzing, potential buyers looking and Universal Orlando executives swallowing hard.
The Orlando resort was put into play by last month's management shakeup at French parent Vivendi Universal.
Rumors of a sale have grown stronger with comments by new Vivendi CEO Jean-Rene Fourtou, who replaced embattled Jean-Marie Messier, that he plans to lower Vivendi's debt load by "significant asset disposals."
Vivendi officials haven't officially said they will unload the Universal Entertainment division, which includes theme parks Orlando, California, Japan and Spain; movie studios; and television.
But selling off the entertainment business could be a quick way for the conglomerate to reduce debt without cutting off its core assets in the sewer and water industry.
That raises questions of what the future holds for Universal Orlando and its 12,000 employees. Most experts think the Orlando resort will weather any sale and perhaps even come out ahead.
"A new owner isn't going to switch gears at Universal's theme parks," said Dennis Speigel, president of International Theme Park Services in Cincinnati, an attractions consulting firm. "They have some of the world's most popular attractions -- including thrill rides that are ranked among the world's best."
Unlike some industries in which new owners can raise the bottom line by closing certain segments of factories or slashing inventory, investors in theme parks have little choice but to ante up with new attractions to woo vacationers and lure local residents.
Although any new owner might well tweak the Orlando attraction's operations, change at the top is historically good in the theme park industry. New ownership can mean more capital investment, additional attractions and expansion.
"Things can really take off when someone new comes in with a fresh eye and enthusiasm," said Harrison Price, a theme park consultant in San Pedro, Calif.
Price cites SeaWorld as a case in point. The four-park chain was sold to Anheuser-Busch Cos. by Harcourt Brace Jovanovich in 1989. "SeaWorld never even had a ride until Anheuser-Busch bought them," Price said. Busch quickly built two rides at SeaWorld of Texas.
SeaWorld Orlando followed in 1995 with the opening of its first themed ride: Wild Arctic. In the years since, it has added a thrill ride -- the Kraken roller coaster -- and Discovery Cove, a park where visitors can swim with dolphins.
The trend is for new owners to add jobs, attractions and a variety of facilities from restaurants to kennels, said Harold Hudson, a retired vice president of engineering for rides at the 38-park Six Flags Inc.
He recalls working there from the '70s through the '90s "when we went through five owners: Penn Central, Bally, Wesray, Time Warner, Boston Ventures and finally Premier Parks. And with every owner there were acquisitions and improvements."
Indeed, Universal Orlando has had four owners in only 12 years, but the ownership merry-go-round hasn't hurt expansion. During that time, what started as a single theme park has grown to include a second park, Islands of Adventure; three hotels; and the CityWalk entertainment complex.
Universal Orlando also owns 1,800 undeveloped acres just south of its current location that seem ideal for such additions as more theme parks, hotels, shopping and golf courses.
"The current management has mapped out a future that any new investor with deep pockets can follow," said John Robinett, senior vice president at Economics Research Associates, a Los Angeles-based entertainment consulting firm. "The growth opportunities are there."
The Orlando resort has another plus if Vivendi decides to sell -- it doesn't need a lot of work.
"Universal's facilities appear to be in great shape. It's not a fixer-upper," said Jerry Aldrich, a retired Walt Disney World ride engineer and safety supervisor who is now a consultant to various attractions, although Universal hasn't been on his client list.
Though no one has stepped up as a potential owner of the Universal Entertainment empire, Barry Diller -- who currently runs the division -- has been rumored as a possible buyer.
Diller, who sold his USA Networks Inc. to Vivendi for $10 billion, was one of a team of American Vivendi executives who met with Fortou late last month to try to determine the entertainment group's future.
Diller hasn't given an indication of whether he wants to buy. But Hollywood moguls, while entertainment-savvy, aren't always considered ideal as theme-park bosses.
For example, Michael Eisner, Walt Disney Co.'s chief executive officer, who has a movie and television background, has long endured criticism that he has given more attention his company's film production operations over theme parks.
Still, under Eisner, Disney World has hardly languished -- adding the Disney-MGM Studios and Animal Kingdom theme parks in Orlando.
Chances are good that Universal's next owner will have more experience in entertainment than Vivendi, said Robinett of Economics Research Associates.
"All these chief executive officers who dream of diversifying their boring companies into media empires are going to be subject to boards of directors who will say we have seen this movie already and it wasn't very good."
Universal Orlando President Bob Gault would not comment last week when asked his thoughts on Universal Orlando's future -- including plans to build three new major attractions next year -- under possible new ownership.
Instead, he authorized spokesman Jim Canfield to say only this: "We have a successful business that's doing well. We have great confidence in our future."
Under a new ownership structure, Universal Orlando could become a bigger fish in a smaller pond, meaning it wouldn't have to vie for attention in Paris with the likes of other widespread Vivendi holdings, including French pay-television company Canal Plus, the Houghton-Mifflin publishing company and a stake in telecom operator Cegetel.
"Universal's Orlando franchise has great growth potential. It isn't some mature property at a crossroads. It's young and positioned to challenge Disney for a bigger share of the tourism market," Speigel said.
Robert Johnson can be reached at 407-420-5664 or rwjohnson@orlandosentinel.com.
Copyright © 2002, Orlando Sentinel
http://www.orlandosentinel.com/busi...080502aug05.story?coll=orl-business-headlines
By Robert Johnson
Sentinel Staff Writer
August 5, 2002
The prospects of a sale or spinoff of Vivendi Universal's entertainment assets into a separate company has the U.S. theme-park industry buzzing, potential buyers looking and Universal Orlando executives swallowing hard.
The Orlando resort was put into play by last month's management shakeup at French parent Vivendi Universal.
Rumors of a sale have grown stronger with comments by new Vivendi CEO Jean-Rene Fourtou, who replaced embattled Jean-Marie Messier, that he plans to lower Vivendi's debt load by "significant asset disposals."
Vivendi officials haven't officially said they will unload the Universal Entertainment division, which includes theme parks Orlando, California, Japan and Spain; movie studios; and television.
But selling off the entertainment business could be a quick way for the conglomerate to reduce debt without cutting off its core assets in the sewer and water industry.
That raises questions of what the future holds for Universal Orlando and its 12,000 employees. Most experts think the Orlando resort will weather any sale and perhaps even come out ahead.
"A new owner isn't going to switch gears at Universal's theme parks," said Dennis Speigel, president of International Theme Park Services in Cincinnati, an attractions consulting firm. "They have some of the world's most popular attractions -- including thrill rides that are ranked among the world's best."
Unlike some industries in which new owners can raise the bottom line by closing certain segments of factories or slashing inventory, investors in theme parks have little choice but to ante up with new attractions to woo vacationers and lure local residents.
Although any new owner might well tweak the Orlando attraction's operations, change at the top is historically good in the theme park industry. New ownership can mean more capital investment, additional attractions and expansion.
"Things can really take off when someone new comes in with a fresh eye and enthusiasm," said Harrison Price, a theme park consultant in San Pedro, Calif.
Price cites SeaWorld as a case in point. The four-park chain was sold to Anheuser-Busch Cos. by Harcourt Brace Jovanovich in 1989. "SeaWorld never even had a ride until Anheuser-Busch bought them," Price said. Busch quickly built two rides at SeaWorld of Texas.
SeaWorld Orlando followed in 1995 with the opening of its first themed ride: Wild Arctic. In the years since, it has added a thrill ride -- the Kraken roller coaster -- and Discovery Cove, a park where visitors can swim with dolphins.
The trend is for new owners to add jobs, attractions and a variety of facilities from restaurants to kennels, said Harold Hudson, a retired vice president of engineering for rides at the 38-park Six Flags Inc.
He recalls working there from the '70s through the '90s "when we went through five owners: Penn Central, Bally, Wesray, Time Warner, Boston Ventures and finally Premier Parks. And with every owner there were acquisitions and improvements."
Indeed, Universal Orlando has had four owners in only 12 years, but the ownership merry-go-round hasn't hurt expansion. During that time, what started as a single theme park has grown to include a second park, Islands of Adventure; three hotels; and the CityWalk entertainment complex.
Universal Orlando also owns 1,800 undeveloped acres just south of its current location that seem ideal for such additions as more theme parks, hotels, shopping and golf courses.
"The current management has mapped out a future that any new investor with deep pockets can follow," said John Robinett, senior vice president at Economics Research Associates, a Los Angeles-based entertainment consulting firm. "The growth opportunities are there."
The Orlando resort has another plus if Vivendi decides to sell -- it doesn't need a lot of work.
"Universal's facilities appear to be in great shape. It's not a fixer-upper," said Jerry Aldrich, a retired Walt Disney World ride engineer and safety supervisor who is now a consultant to various attractions, although Universal hasn't been on his client list.
Though no one has stepped up as a potential owner of the Universal Entertainment empire, Barry Diller -- who currently runs the division -- has been rumored as a possible buyer.
Diller, who sold his USA Networks Inc. to Vivendi for $10 billion, was one of a team of American Vivendi executives who met with Fortou late last month to try to determine the entertainment group's future.
Diller hasn't given an indication of whether he wants to buy. But Hollywood moguls, while entertainment-savvy, aren't always considered ideal as theme-park bosses.
For example, Michael Eisner, Walt Disney Co.'s chief executive officer, who has a movie and television background, has long endured criticism that he has given more attention his company's film production operations over theme parks.
Still, under Eisner, Disney World has hardly languished -- adding the Disney-MGM Studios and Animal Kingdom theme parks in Orlando.
Chances are good that Universal's next owner will have more experience in entertainment than Vivendi, said Robinett of Economics Research Associates.
"All these chief executive officers who dream of diversifying their boring companies into media empires are going to be subject to boards of directors who will say we have seen this movie already and it wasn't very good."
Universal Orlando President Bob Gault would not comment last week when asked his thoughts on Universal Orlando's future -- including plans to build three new major attractions next year -- under possible new ownership.
Instead, he authorized spokesman Jim Canfield to say only this: "We have a successful business that's doing well. We have great confidence in our future."
Under a new ownership structure, Universal Orlando could become a bigger fish in a smaller pond, meaning it wouldn't have to vie for attention in Paris with the likes of other widespread Vivendi holdings, including French pay-television company Canal Plus, the Houghton-Mifflin publishing company and a stake in telecom operator Cegetel.
"Universal's Orlando franchise has great growth potential. It isn't some mature property at a crossroads. It's young and positioned to challenge Disney for a bigger share of the tourism market," Speigel said.
Robert Johnson can be reached at 407-420-5664 or rwjohnson@orlandosentinel.com.
Copyright © 2002, Orlando Sentinel
http://www.orlandosentinel.com/busi...080502aug05.story?coll=orl-business-headlines