Founder and Managing Partner
Disney and Universal again both have reported record revenue for their theme parks this quarter. Both companies have announced ambitious plans for expanding their parks around the country and the world. But it’s what the companies are doing outside of theme parks that might determine their parks’ futures.
During its earnings call earlier this month, Disney executives reiterated the company’s plans to spend $60 billion on capital expenditures for its theme parks over the next decade. When pressed for details, CEO Bob Iger demurred, saying only that the company was “hard at work” developing its plans.
With three new ships and a private port of call on the way at the Disney Cruise Line and at least $2.5 billion in new attractions earmarked for Disneyland, barely 10% of Disney’s planned capital expansion is accounted for already, leading fans to speculate what Disney might have in store for Walt Disney World and its other parks.
At Universal, the company is building its new Epic Universe theme park in Orlando, which is scheduled to open next year. Additional projects are in the works in Las Vegas, the Dallas area and England. But Universal is not ignoring its existing parks, with a Donkey Kong expansion to Super Nintendo World opening soon in Japan, a rethemed DreamWorks Animation land on tap in Orlando and a new Fast and Furious roller coaster rising above Universal Studios Hollywood.
But the biggest gift that Universal is getting is coming, ironically, from Disney. Disney is paying Universal owner Comcast at least $8.6 billion to acquire full control of the Hulu streaming service. That has prompted jokes that it is Disney that actually is paying for Epic Universe and Universal’s theme park expansions around the world.
Yet as Disney writes that big check to its rival, it recently announced plans that cut at the heart of Comcast’s business. Disney has joined Warner Bros. Discovery and Fox Corp. to launch a new app that would make all of their sports programming available directly to consumers. That means that sports fans would be able to watch everything from ESPN, TNT and Fox Sports without having to subscribe to cable TV.
Since Comcast is the nation’s largest cable TV provider, that’s a real threat to Comcast’s business. Remember, Disney’s new sports alliance does not include Comcast’s NBC, so there’s no backend protection for Comcast there.
How does this affect the theme parks? All those cable subscriptions and studio deals create access to capital that help make it possible for Universal and Disney to build attractions on a scale that no other theme park company can match. If Disney’s full control of Hulu and its new ESPN alliance allow it threaten Comcast’s cable business, that could threaten Universal’s theme parks several years down the line — despite the boost they are getting from Disney today.
Who knows? It Disney’s streaming plans win enough subscribers from cable, it could turn out that paying for Universal’s new theme park would be the worst hurt that Disney has ever put on Universal.