What are the parks worth ?????

[Bob O]

So what do people think about the worth of the parks???
Are they worth more or less??

http://cbs.marketwatch.com/news/intuit/story.asp?guid={D8DA0668-B7FC-4788-BF46-6D2C66CEACE0}

 

[Bob O]

SAN FRANCISCO (CBS.MW) -- Walt Disney's amusement parks could be worth $15 to $18 billion, according to an analyst picking apart the entertainment giant after Comcast's $66 billion hostile takeover bid.







While no one on Wall Street can guess exactly what will happen with Disney's (DIS: news, chart, profile) struggling parks, they wouldn't fit with Comcast's aim to sweeten its channel content, in the view of David Mantell, cable and media analyst for Loop Capital Markets.

The bid by Comcast (CMCSA: news, chart, profile) (CMCSK: news, chart, profile) is widely seen by analysts to be a move to acquire Disney-owned ESPN and ABC, as well as its stakes in the E! Entertainment, A&E and Lifetime cable channels and in the History Channel.

Although a top Comcast executive vowed that the parks would remain part of the Disney portfolio should the takeover bid succeed, Mantell said, "It's kind of hard to imagine the theme park side being a part of Comcast's business." Discuss the bid.

Disney has parks in California, Florida, France and Japan. Another is scheduled to open in 2005-06 in Hong Kong, according to Disney's Web site.

While Comcast probably wouldn't keep the parks over the long term, it has 21 million viewers to whom it could cross-market visits and vacations, Mantell said.

Entertainment companies that own amusement parks and could be potential Disney bidders include Vivendi Universal (V: news, chart, profile), Six Flags (PKS: news, chart, profile), Cedar Fair (FUN: news, chart, profile) and Viacom (VIA: news, chart, profile) (VIAB: news, chart, profile). Viacom owns a substantial stake in MarketWatch.com, the publisher of this report.

While the price tag of $15 to $18 billion doesn't necessarily eliminate any of the park companies as bidders, a potential suitor would have to carefully weigh the purchase price, the cyclical nature of the business and that amusement park attendance generally has faltered in the wake of the Sept. 11, 2001, terrorist attacks and the war in Iraq, Mantell said.

"That's a pretty massive acquisition for anyone," Mantell said.

Annual revenue from Disney parks and resorts has tumbled $600 million, or 9 percent, from $7 billion in 2001 to $6.4 billion in 2003.

Some analysts see Disney's amusement park misfortunes turning around. The company reported fourth quarter earnings for 2003 Wednesday that included a marginal increase in parks and resorts sales of 5 percent to $1.6 billion, segment operating income increased 3 percent to $232 million. See full story.

"We believe that Disney is at the front end of a powerful cyclical recovery in its theme park business," said William Drewry, media industry analyst for Credit Suisse First Boston, in a press release.

Shares of Walt Disney closed Wednesday among the top three NYSE gainers. The company's stock hit at a 52-week high of $28 a share earlier, before closing at $27.60, up 14.6 percent. Comcast traded at $31.23, down $2.70, or 8 percent.
Edward Carpenter is a reporter for CBS.MarketWatch.com.




Latest Industry News Get Alerted on News in this Industry
•Cox declines after Q4 earns, outlook 10:30

 

[wtg2000]

Disney doesn't actually own Tokyo but collects royalties - I understand 10 per cent on admissions and 5 on food/merchan.

Last year Tokyo had 25 million guests. Let's say $50 a pop. Disney gets $5 per ticket that's $125 million. Guest per capita spending is high so tack on many more millions. I could see someone doing this with all the parks. Just sit back and let the royalties pour in.

 

[VAN]

Anybody else acquiring the parks would have to pay royalties for the Disney characters. It would be hard to separate the two from the "mother company" without paying a fortune for use of their trademarks/images!!!

 

[wtg2000]

Anybody else acquiring the parks would have to pay royalties for the Disney characters.

But isn't the OLC doing this with its 10/5 royalty plan? It seems to work for them.

 

[Dznefreek]

What interests me is that with all the parks, resorts, recreation shopping, dining, etc. 1.63 billion seems kind of low.

 

[Another Voice]

"Anybody else acquiring the parks would have to pay royalties for the Disney characters."

Psst... lean in close. I don't anyone else to hear this 'cause it's kinda a secret. Those numbers about how much the park earns...well they already include a big fat charge for licensing the characters and even the name "Disney".

Walt cut a really sweet deal with the state of Florida. After Walt left, Roy (the first one, not the current one) made it a whole lot sweeter. So sweet in fact that Disney hires herds of lawyers to keep the sugar buzz going for over thirty years.

Most people think The Walt Disney Company runs those amusement parks in Florida. Wrong. That bit of former swamp land is run by a company called the Walt Disney World Company. To you and me they look the same – but to tax collectors and to lawyers that are as different as night and day.

It gets interesting because The Walt Disney Company* owns Mickey, Minnie and the rest of the gang. Therefore, if another wants to use them, they gotta pay. Now sure, WDW Co. is owned by the TWDC – but to the tax orcs they're separate companies. And just as TWDC charges a royalty for General Mills to plaster Mickey's face on a box of oat flakes, they gotta charge WDW Co. to put Mickey's face on that tissue paper they used to wrap the glasses in your hotel room. It's tax law and it's meant to keep companies from giving freebie services to related companies and avoiding paying taxes.

But that's the fun part. You see, generally a business pays taxes on its profits. So if you bring in a $100 and spend $25, you pay taxes on $75. But if bring in the same $100 and "spend" $50, you've just cut the amount of money you pay taxes.

Soooooo, you're the WDW Company and you make a $100. You spend $25 to pay the guy to clean up the gum and you have to pay taxes on your $75 profit. But say you bring in a the $100, pay the gum guy $25 and now you "pay" $25 to this little movie company out in Burbank for the rights to use a picture of a mouse. To the government – your profit is now only $50…and that's what you pay taxes on.

Kinda a neat trick.

But, I hear people saying, the people in Burbank will have to pay taxes. True – to the federal government. But the State of Florida only taxes the Walt Disney World Co, not those guys out in Burbank. Remember, The Walt Disney Company is a whole different corporation, and unless they do business in Florida (they don't), there's no way Florida can send them a bill.

In reality, this isn't such a secret because intercompany charges are a big issue for any corporation with multiple legal entities. Most of the time it’s a burden; but if you have enough lawyers and accountants you can figure out a lot of fun ways to play with the rules.

So just because the financial statements say $600, don't think that's all the cash that flows into the Disney Empire. And just don't expect that a non-Disney company would have higher "expenses" than those already being charged to WDW.


* - technically it looks like a new company called Disney Enterprises owns a lot of the rights now be reading all those © and ® and ™ hieroglyphs that appear these days. It seems like the herd has been busy.

 

[ChrisFL]

So now Vivendi Universal could buy the Disney parks?

funny how the roles were reversed last year it sounded like