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http://www.usatoday.com/money/media/2003-09-21-nbc_x.htm
Will NBC unload theme parks?
By Michael McCarthy, USA TODAY
NBC will invade new industries such as the movie business if it completes its estimated $14 billion merger with Vivendi Universal Entertainment (VUE) to create the entity known as NBC Universal.
But the General Electric-owned TV network will likely try to quickly exit one new field as soon as it wraps up the deal with Vivendi Universal: theme parks.
NBC executives are already exploring ways to unload VUE's convoluted ownership stake in the five Universal Studios theme parks, say sources close to the negotiations.
Talks on the overall deal are proceeding smoothly, they say, and Bob Wright, chief executive of NBC and vice chairman of GE, and Vivendi chief Jean-Rene Fourtou are expected to have a definitive agreement next month.
Under its vaunted Six Sigma process, GE puts an emphasis on clean ownership structures and stable operations. VUE's tangled ownership in the global theme park and movie studio chain, which features attractions based on Universal movies such as Jurassic Park, Back to the Future and Jaws, is murky at best.
VUE's Universal Parks & Resort unit operates five parks in the USA, Europe and Asia, generating sales of $977.5 million in 2002. While Universal wholly owns the flagship Universal Studios Hollywood park in Los Angeles, for example, it holds only a 50/50 joint ownership with The Blackstone Group, an investment firm, for the two Orlando parks: Universal Studios Florida and Universal's Islands of Adventure. And it manages for fees two Universal parks overseas: Universal Mediterranean in Spain and Universal Studios Japan. Investors own those parks. Another park is on the drawing board for Shanghai.
Terrorism fears and economic troubles have battered the $9 billion U.S. theme park business along with the rest of the travel industry, and have kept many international tourists away, warns Tim O'Brien, editor of Amusement Business, which tracks the industry.
While NBC executives have said they have not made any decisions, Wright recently compared owning theme parks to "being in the airline business."
As NBC and VUE merge to form the world's sixth-largest media company, financial analysts say it would be a smart move for majority owner NBC to sell their interests in the operation. "Theme parks don't really fit with what these guys are good at," says analyst Michael Nathanson of Sanford C. Bernstein. "It's not a media business. It's a fixed-asset business. They're looking for return on capital. They've never shown any expertise in managing theme parks."
NBC's pending partner for the Florida parks, The Blackstone Group, was one of its chief rivals in the auction for VUE. Blackstone was part of the financial consortium led by Edgar Bronfman Jr. that bid $13 billion to buy VUE, only to lose in the last round of the auction to NBC.
Blackstone, which has invested in 70 companies in deals valued at $60 billion, would lead a list of possible buyers for the parks, Nathanson says. Blackstone executives decline to comment on whether they're interested even in buying Universal's share of the Florida parks.
As soon as the deal is finalized, Wright and Fourtou are expected to announce details of the new NBC Universal. The board of directors is expected to have about 15 executives, with Vivendi representatives holding three seats, say sources close to Vivendi. The two companies are debating whether to give a board slot to Bronfman, who is returning to the Vivendi board after recusing himself during his VUE chase.
Will NBC unload theme parks?
By Michael McCarthy, USA TODAY
NBC will invade new industries such as the movie business if it completes its estimated $14 billion merger with Vivendi Universal Entertainment (VUE) to create the entity known as NBC Universal.
But the General Electric-owned TV network will likely try to quickly exit one new field as soon as it wraps up the deal with Vivendi Universal: theme parks.
NBC executives are already exploring ways to unload VUE's convoluted ownership stake in the five Universal Studios theme parks, say sources close to the negotiations.
Talks on the overall deal are proceeding smoothly, they say, and Bob Wright, chief executive of NBC and vice chairman of GE, and Vivendi chief Jean-Rene Fourtou are expected to have a definitive agreement next month.
Under its vaunted Six Sigma process, GE puts an emphasis on clean ownership structures and stable operations. VUE's tangled ownership in the global theme park and movie studio chain, which features attractions based on Universal movies such as Jurassic Park, Back to the Future and Jaws, is murky at best.
VUE's Universal Parks & Resort unit operates five parks in the USA, Europe and Asia, generating sales of $977.5 million in 2002. While Universal wholly owns the flagship Universal Studios Hollywood park in Los Angeles, for example, it holds only a 50/50 joint ownership with The Blackstone Group, an investment firm, for the two Orlando parks: Universal Studios Florida and Universal's Islands of Adventure. And it manages for fees two Universal parks overseas: Universal Mediterranean in Spain and Universal Studios Japan. Investors own those parks. Another park is on the drawing board for Shanghai.
Terrorism fears and economic troubles have battered the $9 billion U.S. theme park business along with the rest of the travel industry, and have kept many international tourists away, warns Tim O'Brien, editor of Amusement Business, which tracks the industry.
While NBC executives have said they have not made any decisions, Wright recently compared owning theme parks to "being in the airline business."
As NBC and VUE merge to form the world's sixth-largest media company, financial analysts say it would be a smart move for majority owner NBC to sell their interests in the operation. "Theme parks don't really fit with what these guys are good at," says analyst Michael Nathanson of Sanford C. Bernstein. "It's not a media business. It's a fixed-asset business. They're looking for return on capital. They've never shown any expertise in managing theme parks."
NBC's pending partner for the Florida parks, The Blackstone Group, was one of its chief rivals in the auction for VUE. Blackstone was part of the financial consortium led by Edgar Bronfman Jr. that bid $13 billion to buy VUE, only to lose in the last round of the auction to NBC.
Blackstone, which has invested in 70 companies in deals valued at $60 billion, would lead a list of possible buyers for the parks, Nathanson says. Blackstone executives decline to comment on whether they're interested even in buying Universal's share of the Florida parks.
As soon as the deal is finalized, Wright and Fourtou are expected to announce details of the new NBC Universal. The board of directors is expected to have about 15 executives, with Vivendi representatives holding three seats, say sources close to Vivendi. The two companies are debating whether to give a board slot to Bronfman, who is returning to the Vivendi board after recusing himself during his VUE chase.
