Comcast Corp. CMCSA, a leading cable MSO (multi service operator) and media and entertainment firm, is focusing heavily on its theme park business for future growth. After the acquisition of the NBC Universal division from General Electric Co. GE, Comcast gained ownership of Universal theme parks. Currently, the company operates theme parks in Orlando, Florida and California.
Over the last three to four years, the theme park business has turned out to be a very successful endeavor for Comcast. In the first half of 2015, this business generated $1,424 million in revenues, up 29.2% year over year and $617 million in operating cash flow, up a substantial 48.9% year over year. At present, the theme park business accounts for roughly 10.3% of NBC Universal division’s total revenue and 19.2% of operating cash flow.
Comcast has lately decided to invest billions of dollars in its theme parks. In Orlando, the company is on the verge of opening resort hotels and other major attractions. In Florida, a big waterpark will be operational in 2017 while the California theme park is undergoing a $1.6 billion expansion anchored by a snow-capped Hogwarts Castle. Moreover, the NBC Universal division is constructing a $3.25 billion park in Beijing in partnership with a consortium of Chinese companies, which is slated to open in 2019.
The ongoing momentum at the theme park business reflects strong attendance and per capita spending driven by the continued success of Harry Potter Diagon Alley in Orlando, which opened in Jul 2014. This new attraction has driven double-digit growth in park-to-park ticket sales, record attendance levels and per capita spending. On Jun 25, 2015, Comcast introduced several new attractions in its California theme park which has already been seeing double-digit attendance growth.
Nevertheless, the theme park business is gradually becoming competitive. The Walt Disney Co. DIS is the leading player in this field. Twenty-First Century FOX Inc. FOX is slated to enter this business in 2016. In addition, smaller players like Cedar Fair L.P. and Six Flags Entertainment Corp. are also in the fray. Therefore, large investments are likely to help Comcast to stay ahead in the theme park business. Comcast currently carries a Zacks Rank #3 (Hold).
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