New Universal ride transforms into big profits
Optimus Prime is picking up where Harry Potter left off.
A new Transformers-themed thrill ride helped lift attendance and guest spending at Universal Orlando during the summer, the resort’s parent company said Wednesday.
That, in turn, powered NBCUniversal’s overall theme-park business to the strongest quarterly performance in its history. Operating cash flow — a measure of core profitability — jumped 8.6 percent during the third quarter compared with a year ago, from $316 million to $343 million
NBCUniversal’s parent company, cable giant Comcast Corp., said it was the largest quarterly operating cash flow ever produced by the parks division, which
also includes Universal Studios Hollywood in California and overseas resorts in Japan and Singapore. As recently as 2009 — the year before the opening of Universal Orlando’s smash-hit Wizarding World of Harry Potter — the business churned out about $400 million in operating cash flow for the entire year.
Total revenue across the parks rose 7.1 percent, to $661 million.
“We obviously have grown increasingly bullish about the theme- park business,” NBCUniversal Chief Executive Officer Steve Burke said on a conference call to discuss Comcast’s third-quarter earnings.
And Comcast executives expect even bigger numbers next year, when they will complete a second Potterthemed area, Diagon Alley, at Universal Orlando. Comcast Chairman and Chief Executive Officer Brian Roberts reminded analysts that 2014 will include the opening of “the much-anticipated Harry Potter II in Orlando.”
The new land, under construction in the resort’s Universal Studios Florida theme park, is scheduled to open in the spring. It will be connected to the original WizardingWorld in the Islands of Adventures theme park by a first-of-its-kind train attraction, which is expected to drive gains in sales of more expensive multipark and multiday tickets.
Burke told analysts he was in Orlando last week to check on the Potter progress. He noted that the project will be timed to open after the debut of the 1,800-room Cabana Bay Beach Resort hotel, which will be Universal’s fourth on-site hotel and will boost the resort’s inventory to 4,200 rooms. Burke has said Universal Orlando eventually could have 10,000 to 15,000 rooms.
Analysts whofollow Comcast are upbeat about its parks. Jessica Reif Cohen of Merrill Lynch called the segment’s third-quarter results “very impressive” during the conference call.
“It seems pretty clear that new attractions drive attendance,” she said.
Doug Mitchelson, an analyst with Deutsche Bank, predicted this week that NBCUniversal’s theme parks will reach nearly $2.5 billion in annual revenue by 2015 — double the $1.2 billion in yearly sales they produced in 2009.
Burke said he thinks the theme parks also help NBCUniversal’s other businesses, including film, television and, eventually, consumer products, in much the same way parks and resorts feed Walt Disney Co.’s other operations.
To maintain momentum, Comcast has stepped up the pace of newattractions for its parks, with a goal of opening new rides annually at both its East and West Coast resorts. The strategy was evident in the company’s third-quarter financials, as NBCUniversal’s total capital spending nearly quadrupled — from $75 millionto$284 million— primarily because of themepark projects.
“We’re making these investments because we really like the business,” Burke said. “We think it’s synergistic with film: We’re opening a ‘Despicable Me’ attraction in Hollywood, [and] we already opened one in Orlando. And you’ll see us continue that back and forth.”
Although they were mostly an afterthought when Comcast struck its deal in late 2009 to acquire NBCUniversal from General Electric Co., the parks have blossomed into a major profit center. The parks produced 27 percent of NBCUniversal’s $1.3 billion in operating cash flow during the third quarter despite accounting for just 11 percent of its $5.9 billion in revenue.
Philadelphia-based Comcast, the country’s biggest cable provider, reported a companywide profit of $1.7 billion for the period, down 18 percent from a year ago. Total revenue was $16.2 billion, downabout 2 percent.